Beach Cities Real Estate Market Update: January-June 2023
With half the year in the books, there’s one thing we can say for sure about the ever shifting market: forecasts are useless until the Fed and the economy stabilize.
We entered the year still in the throes of the mortgage interest hangover with buyers just saying no. But in a surprise move to many, they came back resigned to the high rates with the hope if they buy today, that at some point they will be able to refinance at a more advantageous payment. And historically, it’s a pretty good bet that could happen. Just not anytime soon.
And, believe it or not, full price offers and bidding wars are back. That’s because sellers have quit the market. For the home owners locked into 4% or lower mortgages (and there are a lot of them), no more selling locally and moving out of state to work from home. Turns out WFH just not the “thing” it was anticipated to be. So, low inventory and more buyers than sellers has extended the seller’s market after about a 6 month vacation.
Which just underscores the fact that markets don’t always perform as we expect. Unless they do.
That’s because……..
“Change is ongoing and inevitable in people’s lives.”
The lifecycle of family formation, babies, divorce, job loss, promotions, relocation, down sizing, disease and death continues no matter what. That means that there’s always a segment of the population making changes to their living situations and on the move. Doesn’t matter if rents or mortgage rates or high or low or there’s a lot of homes on the market or low inventory. Change happens.
One more data point.
Yes, sales are down as you’ll see in my analysis. That’s because there’s less inventory. However, even though overall unit sales are down, that hasn’t translated to prices being down. That’s because……
“All markets are driven by supply and demand.”
We are for the most part in a “have to” market. Those that have to sell, will sell and those that have to buy will buy.
But what happens when there is not enough supply to meet demand?
Prices stabilize - or go up. And that’s not what many of the industry podcasting “experts” predicted at the beginning of the year. We heard a lot about prices would plummet by 20% or more and that this was 2008 all over again. But it didn’t turn out like that. At all.
With that out of the way let’s take a look at Beach Cities sales for the time period of January 1 through June 30th 2023.
If you read my blog, you are most likely familiar with what I’m referring to as the Beach Cities: Manhattan Beach, Hermosa Beach and Redondo Beach sometimes also referred to as the South Bay Beach Cities. But usually not by locals.
Here’s the total sales for the first six months of 2023 including all townhomes, condos, and single family residences as reported through the multiple listing service (MLS).
REDONDO BEACH 255
MANHATTAN BEACH 118
HERMOSA BEACH 69
Let’s look at how that compares to the same time period going back to 2019, pre-pandemic.
WHAT ARE WE SEEING HERE?
There’s more sales when rates are lower and inventory is higher.
The first six months of 2023 were the worst in the last five years.
Make no mistake, the low sales are due to extremely low inventory which also is happening elsewhere in California and through the US.
Let’s take a look at the same data expressed another way.
In every instance, sales are lower than in 2019 which was the last “normal” year we had in real estate. Here’s what has happened since 2019.
In March of 2020 business ground to a halt March through the end of May because of the pandemic.
During the first six months of 2021, we were in the throes of the “great migration” as people uprooted and moved all over.
January through June of 2022 were reasonably strong but not on pace with 2021 because inventory started to decline and then the rate hikes started.
As we entered 2023, rates were high and continue to be high. That has kept many sellers locked into their sub 4% and sometimes sub 3% rates. They aren’t moving unless they are “have-to” moversI.
Let’s do a deeper dive, city by city.
MANHATTAN BEACH
As mentioned above there were 118 sales January through June 2023. Here’s some other statistics:
The highest priced sale was $13,500 for a house on The Strand.
The lowest priced sale was $1,160,000 for a 2 bedroom condo on Manhattan Beach Blvd.
Median sold price $2,800,000.
Median days on market (DOM) 11.
Median price per Square Foot $1,196.
98 properties sold were Single Family Residences (houses).
17 condos / townhomes were sold
also included in this analysis are 2 duplexes and 1 triplex.
Based on closed sales, as of this writing there is 2.5 months of inventory on hand - technically still a Seller’s Market.
Based on properties under contract, the absorption rate is slightly less than 2 months.
Here’s the neighborhoods the sales were in based on MLS assignments.
Manhattan Beach Sales displayed by MLS Area
ARE MANHATTAN BEACH PRICES UP OR DOWN?
Recap of median prices looking back five years. Because most of the homes in Manhattan Beach are SFRs (houses), we’re only going to consider that for this analysis.
2019 $2,390,000
2020 $2,500,000
2021 $3,200,000
2022 $3,200,000
2023 $3,045,000
So prices are down about 5% from the height, but look at that jump compared to 2019. Or as I often say, if I had told you at the beginning of the pandemic lockdown that your home would be worth 20% more in three years, i think you would have been pretty happy with that outcome. Particularly when many were forecasting a 20% decline!
HERMOSA BEACH
Let’s take a look at some of the same criteria. Remember there were only 69 sales here.
The highest priced sale was $18,590 for a house on The Strand. (For those following along at home, that was higher than in Manhattan Beach.)
The lowest priced sale was $493,900 for a mobile home on Pier Ave. But to be fair in these comparisons, the lowest priced condo was $730,00 for a bedroom condo at 1600 Ardmore.
Median sold price $2,1850,000.
Median days on market (DOM) 12.
Median price per Square Foot $1,148.
32 properties sold were Single Family Residences.
31 condos / townhomes were sold
also included in this analysis are 4 duplexes and 2 mobile homes.
Based on closed sales, as of this writing there is slightly over 3 months of inventory on hand which is considered a neutral market if such a thing exists.
Based on properties under contract, the absorption rate is exactly 2 months. So maybe there is a slight seller’s advantage in Hermosa.
Here’s the neighborhoods the sales were in based on MLS assignments.
Hermosa Beach Sales displayed by MLS Area
REDONDO BEACH
Let’s take a look at some of the same criteria but I’m going to break Redondo into the two zip codes 90277-90278. Or, as they are more typically described, North and South Redondo Beach.
NORTH REDONDO BEACH 90278
Of the 255 total Redondo Beach sales the first half of 2023, 135 of those were in North Redondo Beach.
The highest priced sale was $3,490,000 for a new construction house 5 bedroom SFR in the El Nido neighborhood. Five years ago, pre-pandemic, we just didn’t talk about over $3M in North Redondo.
The lowest priced sale was $527,500 for an age restricted condo at 2750 Artesia Blvd. The lowest price condo that anyone could buy without restrictions was $755,000 for 2 bedroom on Gates.
Median sold price $1,362,500.
Median days on market (DOM) 19.
Median price per Square Foot $761.
64 properties sold were Single Family Residences.
69 condos / townhomes were sold (there’s a lot of 2 and 3 on a lots here).
also included in this analysis are 2 duplexes.
Based on closed sales, as of this writing there is slightly over 3 months of inventory on hand which is considered a neutral market if such a thing exists.
Based on properties under contract, the absorption rate is exactly 2 months. So maybe there is a slight seller’s advantage in Hermosa.
Here’s the neighborhoods the sales were in based on MLS assignments.
North Redondo Beach Sales displayed by MLS Area
SOUTH REDONDO BEACH 90277
Of the 255 total Redondo Beach sales the first half of 2023, 120 were in North Redondo Beach.
The highest priced sale was $4,100,000 for a new construction house 4 bedroom SFR on “the Avenues”.
The lowest priced sale was $530,000 for a one bedroom in Brookside Village.
Median sold price $1,412,500
Median days on market (DOM) 11.
Median price per Square Foot $839.
39 properties sold were Single Family Residences.
81 condos / townhomes were sold.
Based on closed sales, as of this writing there’s about 1 3/4 months of inventory on hand which is considered a Seller’s Market.
Based on properties under contract, the absorption rate is about 3 weeks.
Here’s the neighborhoods the sales were in based on MLS assignments.
MAJOR TAKE AWAYS
“As long as inventory stays low, prices will hold.
Don’t expect to see more listings or lower rates anytime soon.”
IF YOU ARE INTERESTED IN THE BEACH CITIES, HERE’S SOME OF THE TOPICS I COVER HERE
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