Multifamily Market Overview
Santa Barbara attracts many residents who enjoy its trendy atmosphere and miles of beaches. Additionally, its strong aerospace and defense-related employment sector has brought in many families and young entrepreneurs. The area has seen annual rent growth reach an all-time high of 11 percent and a .5 percent decrease in vacancy, with year over year at 2.1 percent. Private local investors attribute to most of the development in the area, as Santa Barbara has about 660 units in the pipeline to meet demand. Despite increases in rent, demand in Santa Barbara is steady which can be attributed to its proximity to multiple local universities, locking in renters.
The vacancy rate in Santa Barbara has been 3.3 percent over the past decade with recent hikes in demand to fill new luxury units after a short-term supply-induced vacancy bump. Properties in Santa Barbara rise in value leading to investors holding on to their properties for extended periods.
Asking rents have increased in the past five years. Students at the University of California Santa Barbara are a demand driver in the area, as the university has seen a shortage of housing. Developers are eager to match the demand, but obstacles by local opposition groups and coastal commission restraints have slowed down momentum.