The new year is officially in full swing.
That means the full 2023 home market data is here for me to share with you. For all you data geeks (like me), the full year statistics are always fun to sort through and see how our South Bay home markets truly performed.
Last year’s 2022 Q4 results were ugly and a precursor to what some submarkets might experience in 2023. That came true in some cities as you will see below.
This year, I kept things simple and eliminated Q4 numbers since they were not as helpful as 2022 amid a shifting market. I think simplicity will help us all digest the 2023 market performance.
Manhattan Beach
Manhattan Beach is coming off record highs in 2022. And while this wealthy enclave is immune to many macro-economic challenges, it was not immune to surging mortgage rates.
- Manhattan Beach Yearly Median Prices: DOWN 10.7%
- 2023: $2,800,000
- 2022: $3,137,000
As you can see, Manhattan Beach is down over 10% on the year and it is the city’s first down year since 2019. This is a trend you will see in other cities below with a few exceptions.
Now onto the sales numbers…
- Manhattan Beach Yearly Closed Sales: DOWN 21.4%
- 2023: 253 sales
- 2022: 322 sales
In 2022, closed sales hit a record low in Manhattan Beach, barely outdoing the low hit during the Great Recession in 2009. This year, sales shattered the previous historic low yet again decreasing by another whopping 21.4%.
All in all, Manhattan Beach prices fall about once a decade and this year’s pull back was warranted after an incredible three-year run. Sales are shockingly low, and it will be fascinating to see if this trend will continue.
Palos Verdes Peninsula
The Palos Verdes Peninsula wrapped up an interesting 2023. Its two largest markets (Palos Verdes Estates & Rancho Palos Verdes) really set “The Hill’s” theme this year of weakness and lower prices. That said, its other two markets saw impressive price increases.
- Palos Verdes Estates Yearly Median Prices: DOWN 8.4%
- 2023: $2.565,500
- 2022: $2,800,000
- Rancho Palos Verdes Yearly Median Prices: DOWN 4.3%
- 2023: $1,675,000
- 2022: $1,750,000
- Rolling Hills Estates Yearly Median Prices: UP 3.1%
- 2023: $1,700,000
- 2022: $1,649,000
Palos Verdes Estates pulled back significantly after an amazing three-year march higher. Once hitting median price highs of $3.1 million, matching Manhattan Beach’s median price, Palos Verdes Estates is now much lower at a $2.5 million median price point.
Rancho Palos Verdes, the peninsula’s most affordable market, also saw a decline after a nice run higher post Covid. Interest rates were likely the main culprit of the decline.
And lastly, Rolling Hills Estates bucked the lower trends on the hill and made a nice gain of 3.1% in 2023 which is a rebound from its slight loss of 0.4% back in 2022.
- Rolling Hills Yearly Median Prices: UP 25.3%
- 2023: $4,480,000
- 2022: $3,575,000
Easily the most impressive housing market on the Palos Verdes Peninsula was “Behind the Gates” in Rolling Hills. This small but expensive housing market saw parabolic appreciation during the Covid years, surging more than 50%; however, 2022 saw the Covid surge end with the market falling 15.2% when most markets were still increasing strongly.
But in 2023, the market came screaming back up a whopping 25% which is astounding.
Simply put, buying the most expensive city in the South Bay requires real wealth and lots of cash…something surging interest rates do not really affect.
This is a record high for the city and the most impressive gain anywhere in the South Bay for 2023.
Now onto the sales numbers…
- Palos Verdes Estates Yearly Closed Sales: DOWN 11.7%
- 2023: 143 sales
- 2022: 162 sales
- Rancho Palos Verdes Yearly Closed Sales: DOWN 22.4%
- 2023: 354 sales
- 2022: 456 sales
- Rolling Hills Estates Yearly Closed Sales: DOWN 33.6%
- 2023: 91 sales
- 2022: 137 sales
- Rolling Hills Yearly Closed Sales: UP 27.8%
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- 2023: 23 sales
- 2022: 18 sales
Like every city you will see in this blog post, sales are down big throughout the South Bay. A combination of high interest rates forcing buyers to the sidelines and a major lack of supply of home for sale thanks to long-time owners and “golden handcuffs” due to ultra-low fixed mortgage rates.
While the Palos Verdes Peninsula was mixed, the true narrative was a down year overall. The combination of Palos Verdes Estates and Rancho Palos Verdes vs. the combination of Rolling Hills Estates and Rolling Hills are homes sales of nearly 5 to 1 in favor of Palos Verdes Estates/Rancho Palos Verdes. And since those markets were down, much of the hill was feeling the pain of depreciation despite the 25% gain in Rolling Hills and the nice year in Rolling Hills Estates.
Hermosa Beach
In years past, I have dubbed Hermosa Beach the slow and steady, “Mr. Dependable” real estate market. This has been due to solid growth before the pandemic, during the pandemic, and after the pandemic. Nothing could shake this city’s real estate market.
Unfortunately, 2022 was the year that broke the streak with prices down a meager 1.8%, but not in 2023…
- Hermosa Beach Yearly Median Prices: UP 2.3%
- 2023: $2,200,000
- 2022: $2,150,000
Of course, Hermosa Beach has reversed that and is up an equally small 2.3% this year, offsetting the 2022 losses.
With regards to sales, again, home sales are down significantly and reached record lows to end 2023.
- Hermosa Beach Closed Sales: DOWN 25.3%
- 2023: 136 sales
- 2022: 182 sales
All in all, Hermosa Beach is back to being dependable in a year when Manhattan beach fell by double digits and Palos Verdes (for the most part) was weak.
The bounce back for Hermosa is impressive, regardless of the small gains and we will see if the city can jump more than $50,000 next year to re-assert its record median price highs.
Redondo Beach
Please note, these calculations also include Hollywood’s Riviera’s Redondo PO which is technically Torrance.
The South Bay’s most affordable beach city slipped slightly in 2023.
- Redondo Beach Yearly Median Prices: DOWN 3.3%
- 2023: $1,402,500
- 2022: $1,450,000
After climbing double-digits in 2022, Redondo took a step back falling just over 3%. In my opinion, it is an impressive result considering many buyers, especially in North Redondo, depend on mortgage rates due to entry-level prices. With a surge borrowing costs, a slight decline is a decent result considering the major interest rate headwind.
- Redondo Beach Closed Sales: DOWN 14.7%
- 2023: 564 sales
- 2022: 661 sales
And of course, yet again, sales are down in Redondo Beach just like the South Bay across the board.
Major Take-Aways
The major take-aways in 2023 is a phrase I use a little too often: “The numbers don’t lie.”
In 2023, there was so much noise in real estate and the economy. Noisy topics included:
- All-time supply shortage in homes for sale.
- Surging mortgage rates.
- Potential banking crisis in regional banks.
- Plummeting sales data.
- Affordability at close to its worst levels, ever.
- Home builders’ stock prices and profits surging.
- Etc., etc., etc.
This is what you can take from 2023 based on the numbers and facts of this post.
- Manhattan Beach, Palos Verdes Estates, and for the most part Rancho Palos Verdes all saw solid declines in home prices for 2023.
- Rolling Hills Estates, Hermosa Beach, and Redondo Beach all can be considered somewhat neutral with small gains or losses in their home markets for the past year.
- Rolling Hills was an absolute rocket ship of surging prices and strength in the gated city.
- Sales plummeted. Nearly all South Bay cities reached all-time lows or close to all time lows in closed transactions.
Without question, 2023 was a year in flux depending on what home market you follow.
Final Thoughts
All in all, the yearly numbers are mixed but they certainly skew more negative.
It was in fact a weaker year for the South Bay housing market from a price perspective. Obviously, sky-high mortgage rates and low affordability affected buyers’ ability to purchase and drive prices higher.
In theory, the historically low inventory supply squeeze likely saved the our local markets from even greater declines (or turned positive markets negative).
With all that said, the South Bay housing market weathered strong headwinds in 2023 and came out OK. If those headwinds begin to lighten up, then 2024’s set-up could be better.
If mortgage rates come down, and in turn affordability improves, then perhaps 2024 can outperform 2023.
For now, we have a long year ahead of us that will be full of twists and turns.
I’ll be here to cover it for you weekly.
Richard Haynes
DRE: 01779425
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The Richard Haynes Real Estate ShowA leader in South Bay real estate for the better part of a decade, Richard thrives as an advisor to his clients with over $248 million in sales as a broker or investment principal at his boutique agency, Haynes. Richard is known for his keen local market insights which have been featured in the L.A. Times, The Street, and Forbes, along with his weekly South Bay real estate blog. [read more]