Multifamily Sales Volume Is Declining in Santa Barbara

Multifamily investment sales volumes are continuing to slow in Santa Barbara. In the first quarter only four properties larger than five units traded hands, according to a report from the Radius Group. The decline in sales activity isn’t the result of waning demand. Rather, there are limited opportunities for investment in the market with few owners willing to bring assets to market.

“Santa Barbara has always been a market where people truly understand the value of investment in real estate, especially multifamily,” Paul Gamberdella of Radius principal, tells GlobeSt.com. “We see properties held through generations and the typical practice has been that you do not sell unless you need to. That pattern is slowly changing as investors become more educated about the opportunities of exchanging properties and leveraging your equity to increase your returns.”

Santa Barbara is home to a significant rental market with strong demand for rental housing, and that has fueled long-term hold business models. Additionally, there is limited new construction, which helps to put pressure on rents. “We have a lifestyle that is very desirable and we also have a strong renter base here,” Gamberdella says. “More than 60% of the housing in our area is rental housing and with natural barriers to entry such as limited land for development combined with local governments that can make it difficult to develop new housing units, we see a real lack of supply that pushes rents and property values upward. This makes our market very attractive to local and out of area investors.”