It's hemmed in by steep hills and the Pacific ocean and a lot of the available area has already been developed. https://www.google.com/maps/@34.4127513,-119.7096148,12z/dat...
On the other hand, despite great zoning in the core parts of Santa Barbara that outlaws the typical strip mall construction pattern, leaving a relatively dense-feeling downtown, it's extremely car centric. There's noticeable traffic both on the 101 and downtown, especially on weekends.
Spending time in Santa Barbara, you can't help but feel that a) there isn't a lot more room to spread out for more development, but b) there is definitely a lot more "room" for Santa Barbara to improve in terms of sustainably improving density. Santa Barbara makes a lot of concessions to cars, which is not going to scale at all if the population grows. If you take car dependence as a given, Santa Barbara probably cannot afford to grow much more.
On the other hand, Santa Barbara is famed for its nearly perfect weather year-round. Good weather and and its small size means that almost all trips within Santa Barbara proper can be made easily via E-bike, if only there were more bike lanes, but there are too many 2 lane roads with cars that move too quickly driven by drivers who are not used to sharing the road. But I suspect that Santa Barbara may be too dependent on famously car-centric Los Angeles to ever consider de-prioritizing cars..
It's all moot point, though, because I think most people who actually own homes in Santa Barbara are older and quite wealthy and do not really care too much about abstract things like "sustainable growth" and would quite prefer if Santa Barbara could just stay "the same" for the next 20 years until they die.