Beach Cities October Market Snapshot
if you’ve been following the Real Estate market at all, you most likely know that almost on a national basis we’ve been seeing the prefect storm or low inventory and mortgage rates plus crushing buyer demand. This has created an extreme Seller’s Market with over bids, multiple offers and waiving contingencies being the new normal. Now as we enter the winter months, it might seem like there’s a market slowdown. Even so, Sellers are retaining an advantage.
While I usually only talk about the hyper local market (as in which side of PCH a house is located on), I am going to reference some national trends in this post because they are in this instance indicative of what we are seeing in the LA area.
Before I jump into my thoughts, I want to share some data that really has surprised me.
Through the first full nine months of 2020, sales in the Beach Cities are for the most part, on par with or slightly ahead of 2019 with the exception of North Redondo Beach which has taken a hit.
Beach Cities Sales Comparison 2019-2020
PRICES MAY BE STUCK AT LAST SUMMER’S LEVELS
This is not necessarily a bad thing because quite frankly we needed a bit of a breather. So we’re not seeing the weekly price increases we were during the summer. Prices are relatively steady and Buyers are just saying no to any over priced listings.
On a national basis, realtor.com®'s Weekly Housing Report for the week ending Oct 3.found that for the first week in October, the U.S. median home price stayed near its summer peak, hitting a record-high growth of 12.9 percent year-over-year. Prices have grown over the past 21 consecutive weeks. Wow.
What about other market indicators? Current market inventory is down 38 percent year-over-year, a small improvement over last week when total inventory was down 39 percent. Additionally, new listings decreased 7 percent year-over-year, a drop from last week's 6 percent decline. Buyer activity is still going strong as well. Homes nationally are selling in 53 days — 13 days faster year-over-year and on par with last week's report.
"While buyers would normally begin to hunker down this time of year, we expect to see an unusually high number remain in the market this fall," said Danielle Hale, Chief Economist at realtor.com®. "This gives sellers a rare opportunity to get top dollar for their home outside of the prime selling season, which may be motivating some to stay in the market. However, even with record-breaking prices, we're not seeing sellers rush into the market with the same eagerness as buyers. Looking forward, a key question is whether this frenzied demand will continue into the spring or if we'll see more balance between home buyers and sellers."
SEPTEMBER SALES WERE STRONGER THAN EXPECTED
September is typically the sweet spot for buyers: the summer frenzy is slowing down and competition isn't as fierce. This year, however, things were different. According to realtor.com®'s September Monthly Housing Trends Report, this fall, homebuyers are typically paying roughly $20,000 more for a home, facing 25 percent more competition than at the start of the year.
According to the report, in 2019, the best week to purchase a home was Sept. 22 – 28. However, this year, listings have decreased 21 percent compared to the start of the year and there are 25 percent more buyers in the market. This means that homes are flying off the market — 12 days faster than expected, in fact. For the first time since 2016, according to the report, homes sold faster in September than August. In the largest 50 U.S. metros, the typical home sold in 44 days in September, which is 10 days faster than last year.
Inventory is also still lacking. According to realtor.com®, the number of newly listed homes on the market in September declined by 13.8 percent since last year. This is a larger decrease than the 11.8 percent year-over-year loss in August.
"Many buyers tend to put their home search on hold after the start of the school year, but remote learning and the desire for more space continued to fuel buyer interest in September," said Danielle Hale, Chief Economist, realtor.com®. "Unseasonably high buyer interest, coupled with historically low inventory and favorable mortgage rates, are creating a perfect storm in the housing market. While this is good news for anyone looking to sell their home, it has created tremendous competition among buyers."
Locally, September was the best month for Manhattan Beach and North Redondo Beach sales.
EVEN IF THE MARKET SLOWS DOWN, SELLERS WILL RETAIN AN ADVANTAGE
Things may be slowing down for real estate markets across the nation, but sellers are still at an advantage as inventory drops to record lows.
According to Zillow's Weekly Market Report for the week ending Oct. 3, the buying frenzy may be coming to a close. Total for-sale inventory decreased 1.2 percent week over week, now 5.7 percent lower than last year — the largest annual decline since Zillow's weekly data series began in 2019.
Prices, however, are holding strong. The median list price increased slightly over the previous week, according to Zillow, now standing 10.9 percent over last year's number. This is the largest year over year increase since at least 2019, states the report.
"The consequences of months of tightening inventory are being felt keenly by the nation's housing market in the form of jaw-dropping price appreciation this fall," said Zillow Senior Economist Jeff Tucker. "Our data on closed sales show sellers within a hair's breadth of double-digit year-over-year appreciation, an outcome almost unthinkable after prices stalled out in the depths of nationwide lockdowns this spring. Strong price growth seems poised to continue into the near future as buyers battle to outdo each other, bidding on a record-small pool of homes for sale."