Another Labor Day Weekend is on the books – school is in full swing, summer vacations are concluded, and football is BACK! We now unofficially begin the fall selling season after what seems to have been a sleepy summer. For the most part, we seem to be back to traditional seasonality.
Contrary to popular belief, summer is not a hot time to sell.
In the South Bay and southern California, spring is residential real estate’s busiest time, followed by a summer lull, and then picking up again in the fall.
The past two years, thanks to the Coronavirus, seasonality was thrown off and summer was a busy time – so was fall, winter and spring in that incredible two-year market.
Now that affordability is historically low, life is returning to normal post-Coronavirus, and our euphoric market has cooled thanks to the doubling of mortgage rates. The majority of South Bay cities saw closed sales slow this summer season.
There are some pockets of weakness we are seeing in specific cities. Namely, what I like to call “Pandemic markets” which over benefited from the WFH demands – which I will get into in a future blog. For this week’s post, I want to cover a submarket that bucks the slowing trends.
Despite the shifting sentiment and rising headwinds facing the home market, in the words of Jim Cramer, “There’s always a bull market somewhere.” And one of those bulls happens to be the Manhattan Beach Tree Section.
Recent Tree Section Closings
Big data sometimes shields what is truly happening in a market right now.
Residential real estate is slow to change thanks to emotional sellers unwilling to cut prices and buyers inking deals with lower interest rates – the big, yearlong data is sometimes living in the past.
I always check the most recent sales (one month, two weeks, etc.) to get a gauge on what is happening in a submarket. If you look at the Tree Section, its recent closings are incredibly robust.
Just in the last two weeks, there are eight sales in the MLS with more than half going above asking price. Some examples below:
2209 Valley Drive, Manhattan Beach
- 4-beds, 3-baths, 3,524 sq. ft.
- Sold: $3,475,000
This busier location made a deal in three days almost $300,000 over asking price.
562 33rd Street, Manhattan Beach
- 5-beds, 4-baths, 3,548 sq. ft.
- Sold: $4,460,000
This Sand Dune Park adjacent residence inked escrow in one week $165,000 over ask.
There were three other examples of fast, over-asking deals, however, even the other sales not above asking were extremely impressive.
849 12th Court, Manhattan Beach
- 5-beds, 6-baths, 3,528 sq. ft.
- Sold: $4,750,000
This former spec build sold for full asking, inking a $1 million gain in just two years.
1817 Elm Avenue, Manhattan Beach
- 5-beds, 4-baths, 3,184 sq. ft.
- Sold: $4,500,000
A remodeled 1999-build landed a monstrous $1,413 per square foot, one of the highest PPSF deals in the Trees this year.
And this is all just in the past two weeks!
Strong Statistics to Back It Up
The statistics behind home trends are also there to back up the Tree Section’s strength. Check out the impressive numbers below:
- Inventory: Tree Section Active inventory is lower in 12-month and 3-month rolling averages, demonstrating its lack of supply during low interest rates and high interest rates.
- Days on Market: Properties are moving quickly with days on market at tending between 10 and seven days during the 12-month and 3-month rolling averages.
- Months Supply: This is miniscule at just 1-month’s supply.
- Median Price: Median price in the Trees stood at $2,850,000 in August 2021 and at the end of August today, median prices are up 14.2% to $3,255,000. The 3-month rolling average is up in a similar manner and you have seen above some of the strong sales that occurred the past two weeks, with a couple huge closing numbers clearing the MLS to start September not already factored in.
The Tree Section rise continues even during the summer swoon many markets are experiencing.
Thanks to its location west of Sepulveda, the Tree Section holds that “premium” feel for buyers, as it has the trifecta of proximity to downtown Manhattan Beach, the beach, and office commutes throughout L.A., all while getting a single-family property and yard space.
This market looks to be perfectly situated for the part-time “return to the office” and work from home/beach moment. Great public schools, developer appetite to build and drive new record sales, and lastly, a seemingly insatiable demand from wealthy buyers looking to plant their flag in Manhattan Beach.
As one of the strongest submarkets in all the South Bay, if the Tree Section were to slow down, then that might spell trouble for the greater South Bay as a whole.
For now, there are no signs of slowing any time soon.