The Secret Reasons That Make Santa Barbara a Great Investment

The Secret Reasons That Make Santa Barbara a Great Investment

Stearns Wharf (credit: cielodlp, Flickr)

Stearns Wharf (credit: cielodlp, Flickr)

Read through a list of the most desirable locales in California (or the country, for that matter!) and it won’t take long to find Santa Barbara.  The beachside oasis nestled at the foot of the Los Padres National Forest has long been sought after by the most affluent home buyers (Hi, Oprah Winfrey!  Hi, Ellen Degeneres!).  It would follow, then, that people of all ilk would dream of home ownership in our town.

But is Santa Barbara nothing more than a playground for the rich?  Can mere mortals survive and thrive here?

Without further ado, here are some notable factors that continually yield such great returns for those who invest in Santa Barbara.

 

Geological Constraints

Santa Barbara features very unique geographic constraints.  In sharp contrast to areas with limitless sprawl (Phoenix, Las Vegas, etc.), development in Santa Barbara is limited on all sides.  To the north, the steep mountains of the Los Padres National Forest.  To the south, the Pacific Ocean.  To the east, a collision of peaks and sea.  And to the west, the protected Gaviota coast. 

The result?  Limits on new development, which keeps supply constant while demand continuously grows.  It's Econ 101: constant supply and increasing demand means home values go up!

 

Silicon Beach 2.0

Los Angeles was the original Silicon Beach. Santa Barbara, long synonymous with Raytheon, has developed into Silicon Beach 2.0.  Local companies have increased efforts to keep top UCSB talent and are already seeing dividends as the local tech economy is bustling.

Carpinteria tech staple Lynda.com was bought out earlier this year for $1.5 billion by LinkedIn.    Web-based construction management company ProCore is perched on the bluffs above Rincon beach.  Ontraport has offices on the Riviera with million-dollar views and attracts top tech talent to develop their sales and marketing tools.  Founded in 2006 and now with a market cap of over half a billion dollars, AppFolio creates user-friendly cloud-based software for legal and property management industries.  Founded in Santa Barbara thirteen years ago, Sonos is now one of the preeminent consumer electronics companies in the country and is expanding into 100,000+ square feet of commercial space downtown.

Anyone who has kept tabs on the real estate market in San Francisco can attest to the effects of a flood of young tech employees.  Could Santa Barbara be in for its own skyrocketing property values?

 

Independent Market Characteristics

Limited supply means that home prices don’t fall as quickly in a downturn, and prices increase faster in an upturn.  This “high floor, higher ceiling” behavior is critical for homeowners who are looking for their property to appreciate while they own it.  

There is also a large number of second homes in Santa Barbara.  What does this mean?  Home prices are buoyed by a stream of investment money that pours into the area.  No property will plummet in value without a swarm of interested buyers, whether they’re looking for a primary residence or an investment property.

 

Weather 

Who doesn’t like an endless parade of “75 and sunny” forecasts?  And that doesn’t just apply to people, but also homes.  The lack of rain, snow, and extremely hot or cold days eases the wear and tear on a property.  Pipes don’t burst, roofs don’t melt, water damage is kept at bay, etc.

Another overlooked aspect of good weather is that it deemphasizes indoor living.  Homeowners are free to actually USE that outdoor patio or pool or BBQ area.  Open the doors!  Let the fresh air in!  Pass freely between indoors and out!  Expand the useful living area of your home beyond its walls.

 

Upward/Downward Mobility 

Looking to downsize?  Looking to upsize?  Santa Barbara features a broad spectrum of home prices and sizes.

Burgeoning families are free to move from their one bedroom apartment into a two bed, two bath starter home in a great school district.  Empty nesters can handoff their four bed, three bath family compound and trade down into a worry-free two bedroom condo by the beach.

This ability to move vertically within the area allows for movement and turnover.  Homeowners aren’t locked into a wrong-sized property.  Switch between properties as life events dictate.

 

Great for Families

There exists an outdated saying: “Santa Barbara is for the newly wed and nearly dead”.  Grim as that might sound, it did somewhat reflect reality years ago.  Students and young professionals could afford (and tolerate!) renting a room in a house with other tenants.  Retirees who had sufficient funds could buy their final home.  But most of the people between those two demographics struggled.

However, we are now beginning to see Santa Barbara in a different light.  The city has a renewed focus on workforce housing.  A new children’s museum (MOXI) is being built at the bottom of State Street.  The Dos Pueblos High School Engineering Academy is the crown jewel atop an inspiring education platform in the area.  Concerts in the Park and the farmer's market further strengthen the family-friendly vibe.

 

Keep these factors in mind when you are considering Santa Barbara homes.  Be the success story you dream about.  Buy a piece of the good life.  Santa Barbara is a real estate investment like no other.  

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