Santa Barbara Real Estate and the Local Economy

On May 7th, Tyler Hayden reported in the Santa Barbara Independent that the Santa Barbara economy was looking good, but that the rental market was a mess. Here’s an excerpt from that article:

“Unlike the rest of the world’s economies, which generally “kinda suck,” Santa Barbara’s is looking up, said Peter Rupert on Thursday. The director of the UCSBEconomic Forecast Project spoke to a Granada Theatre packed with South Coast business elite for the think tank’s 34th annual summit. “Everything seems to be moving in the right direction,” he said. “Things are basically positive.”

During his speech and in an accompanying report, Rupert described how our area’s GDP is still rising, employment growth is outpacing California’s, new businesses are springing up, and home values are increasing. Those sunny statistics are expected to continue over the next few years, he said.

The report ​— ​which also addresses lingering issues, like the drought and tough post-Recession regulations on banks ​— ​puts finer points on those topics. (Most of the data, however, only goes up to the end of 2013 because of slow responses from government agencies.)

• In 2013, onshore oil production went through its largest growth spurt since 1996, jumping 26 percent over the previous year. Offshore production grew 10 percent.

• Santa Barbara’s total agricultural crop value rose 10 percent between 2012-2013. The wine industry output grew by 79 percent. The drought has had only a “moderate effect” on agricultural production so far, the report claims, with avocados, apiary products, and cattle feeling the worst of it.

• Real estate remains the biggest industry in Santa Barbara County, comprising 19 percent of its GDP. The ag industry had the largest growth rate (12 percent); mining shrunk the most (-14 percent).

• Retail sales grew the fastest for clothing and clothing accessory stores (10.6 percent) and building material and supply dealers (9.4 percent).

• Total employment throughout all industries increased by 3,145 workers, a gain of 1.6 percent. The forecast suggests 2,692 more jobs will be added in the county between December 2014 and December 2015

• Home values continued to rise across all cities, ranging from 4.12 percent to 30 percent year-over-year growth. The speedy increase in value during 2013, which peaked at an average annual growth rate of 21 percent, started to decline in early 2014.

The report’s mostly happy bulletins were tempered by a less-than-positive update on Santa Barbara’s rental market. Analyst Dawn Dyer with Dyer Sheehan Group, Inc., wrote that 2014 was a “tough time” for renters as “record-breaking” demand for housing “spiraled out of control.” Millennials deciding to finally set out on their own and thousands of foreign students flocking to the area forced the average South Coast rent to soar 7.1 percent in the last year.