When 60 to 70 percent of buyers in a market are spending accumulated real estate wealth rather than current earnings, the market operates by different rules than national economic indicators suggest. In Santa Barbara, that disconnect between price levels and income-based affordability is not a temporary distortion – it is the market’s defining feature, according to Bob Curtis, a 40-year residential real estate veteran and president-elect of the Santa Barbara Association of Realtors.
Santa Barbara’s residential market has a median price of approximately $2.2 million. Curtis estimates that roughly 60 to 70 percent of buyers are not earning their way in. They are transferring equity out of properties they already own, or receiving wealth that was itself generated by appreciated real estate.
“A lot of the buyers are already in California real estate,” Curtis says. “They have equity. They’re going into new properties with large down payments because they’ve already benefited from highly appreciated real estate.”
Some buyers are inheriting money from families whose wealth was also built through real estate holdings. Curtis says this recycling of appreciation – rather than income growth or favorable mortgage terms – is what sustains prices at levels that would otherwise look unsupportable.
Curtis describes the buyer composition through recent transactions. One involved a couple in their late 30s to early 40s who paid $1.6 million in cash, with much of the money coming from family wealth built through real estate. In another, a buyer sold a Washington, D.C. home for approximately $950,000 and used those proceeds as a down payment on a $2.2 million Santa Barbara property, supplemented by a high-paying institutional job and a below-market rate offered by their employer.
A third transaction involved a retired couple selling a home roughly an hour south of Santa Barbara for around $950,000 and using the full proceeds to purchase a Santa Barbara condo – an all-cash, lateral move in price that would be impossible without the equity accumulated in their prior property.
None of these transactions depended on a buyer qualifying for a large mortgage based on current income alone. The capital is already in the system, circulating from one appreciated asset to the next.
Curtis estimates that roughly 30 to 40 percent of buyers enter the market without a prior real estate equity base. These buyers tend to be high earners in industries like technology, which has a presence in Santa Barbara, or professionals in senior institutional roles. Some receive employer incentives, including below-market financing, that extend their purchasing power beyond what standard mortgage qualification would allow.
“We do have some first-time buyers that have very healthy incomes,” Curtis says. “They may be in the tech industry – we do have a tech industry here in Santa Barbara – where they have very high incomes that can afford the high prices.”
This segment is more sensitive to interest rate movements than equity-transfer buyers, since it relies more heavily on conventional financing. Curtis says this group represents a smaller share of overall transaction volume, which may help explain why Santa Barbara’s market has remained relatively stable even as borrowing costs have risen.
Curtis says supply constraints reinforce the pricing dynamic. Santa Barbara’s political environment has long favored slow or no growth, and developers sometimes spend 10 to 20 years getting projects approved – if they try at all. Within the city itself, little buildable land remains.
The result is persistent scarcity. Curtis says the south coast – from Carpinteria through Goleta – currently has 274 homes for sale with 98 sales in the most recent 30-day period, putting inventory at a 2.8-month supply. That figure is well above the two-and-a-half-week supply during the peak of the pandemic frenzy, but still below the four-to-six-month range Curtis considers a balanced market.
Prices have been relatively flat since 2022, according to Curtis. A spike in the median price during 2025 – roughly 10 percent – was driven by an unusually high number of upper-end sales above $5 million rather than broad-based appreciation. In 2026, the median has dropped by about 9 percent, but Curtis says actual prices have not declined by that amount. “If you go back to 2022, ’23, ’24, and now, we’re pretty flat,” he says.
Curtis says some buyers have stepped to the sidelines as rates have moved from the sixes into the sevens, hoping that resolution of geopolitical tensions and lower oil prices will bring rates back down. But he describes this as a temporary pause rather than a structural retreat.
“I don’t think those buyers have left the market altogether,” Curtis says. He points to a pattern he has seen across multiple rate cycles: buyers initially freeze, waiting for rates to decline, then adjust to the new level and re-enter the market.
For sellers, Curtis says the primary risk remains overpricing, not market weakness. Properties that come on at the right price still attract multiple offers, while those that start too high become “shop worn” and ultimately sell for less than they would have at a correct initial price.
In a market where the majority of purchasing power comes from accumulated equity rather than borrowed money, rate movements affect the margins – the smaller share of income-dependent buyers – without reshaping the core demand structure.
About the Expert: Bob Curtis is a residential real estate professional with Village Properties and president-elect of the Santa Barbara Association of Realtors, covering the south coast of Santa Barbara County, California, from Carpinteria through Goleta.
This article is intended for informational purposes only and does not constitute legal, financial, or investment advice. The views and opinions expressed herein reflect those of the individuals quoted and do not represent an endorsement of any company, product, or service mentioned. Readers should conduct their own due diligence and consult qualified professionals before making any investment decisions.
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