The Cheapest Home in One of America's Priciest Cities: Santa Barbara

Welcome to our first installment of a series on the cheapest homes in America's most expensive real estate markets.

Santa Barbara, CA, is currently the most expensive market on In this stately city along California's central coast, buyers are looking at an average cost of $626 per square foot, and an average home price of $1.5 million.Yes, those are averages.

In this dreamy city, the privilege of dropping $1.5 million gives you access to only a modest ranch. Of course, if you decide to splurge, the region is also home to one of the most expensive listings in the country: a $125 million compound on 237 acres.

So we wondered, what's an unassuming $120,000 house like this doing in such a tony market? It's a sweet little place -- a two-bedroom (plus "bonus room") cabin set in Los Padres National Forest.

It's assuredly modest, with retro knotty pine paneling, a well-used fireplace, a drop ceiling here and there, and a kitchen and bathroom that can certainly use some love. It's heavy on (potential) charm and, man, the setting: If Thoreau had gone West, he'd have been happy here.

But there is a catch -- quite a few of them, actually, and they're biggies. Because it's a vacation property, it's not eligible for financing. It's pretty much cash money or no deal, unless the seller cares to finance (an agent who gave us background on the property said they'd be crazy to do this). So you'll need a little liquidity before you can even consider an offer.

Residents pay $3,000 a year in property tax, which is just for the house. You don't actually own the national land it sits atop and, alas, you can't Airbnb this baby. According to the agent we spoke with, there's no possibility of putting it up for rent.

In addition, there's no planting of non-native species and no material changes can be made to the exterior, because the cabin is a historic building from 1915. Naturally, you have to behave yourself. (No turning it into a meth lab, or you'll get kicked out -- which is what happened in a nearby cabin.)

Also: Would-be buyers must have an interview with the U.S. Forest Service, during which all of this is explained. If a buyer can abide by the stipulations, and the Forest Service gives its nod, he or she can go forth.

The final consideration: You can't live here more than 182 days a year. This is strictly a vacation property, so you gotta bail for more than half the year.

If you don't have 183 days to spend outside the forest, the next cheapest single-family house in the city is adorable but tiny: a one-bedroom, one-bathroom, 672-square-foot cottage.

This one has all the sparkling updates that the cabin does not: new appliances and carpeting, a fresh coat of paint, and a vibrant neighborhood. Alas, you have to pay far more for a full-time residence -- $479,000, to be exact. It's just the cost of doing business in the country's most expensive market.