The blog for the majority of this year has covered lack of inventory, surging prices, and a seller’s market like we have never seen before.
Last week, I did my best to help buyers find some sort of value in our South Bay home market. It was a struggle to find any semblance of a deal, but a few readers reached out with appreciation for the effort.
If you would like to revisit that post, then you can check it out here: “Looking for Value in an Expensive South Bay Home Market”
Setting the meager value options aside, the parabolic surge in home prices paired with a severe shortage of homes for sale has turned the market on its head.
As much as I would like to change the subject, I feel it is necessary to emphasize to readers how fast this market is moving higher thanks to incredible demand and an acute shortage of homes.
If you read my “Fearless Predictions” post to start the year, you will note that I forecasted double-digit price growth and lack of home inventory. While I felt strongly about the prediction, the market is so strong, we could get to double-digit growth just in the first half of the year. Incredible, and a little scary all at the same time.
For reference, here is the predictions post from earlier this year: “South Bay Real Estate 2022: Fearless Predictions”
This week, I am going to demonstrate new closings that are a result of the feeding frenzy of the South Bay home market with buyers desperate to do anything in order to land a home. Comps and prices be damned.
Manhattan Beach Huge Price Jumps
The “flat walkstreets” south of the Manhattan Beach Pier is a special neighborhood. So special that the lack of options is cause for some incredible price jumps.
- 341 4th Street, Manhattan Beach
- 2 beds, 1 bath, 879 sq. ft., 2,694 sq. ft. lot
- Asking Price: $3,899,000
- Closing Price: $4,554,000
This was an incredible result with the sale going for $655,000 over-asking.
What’s more is its closest comp just seven months earlier in a better location:
- 341 6th Street, Manhattan Beach
- 3 beds, 2 baths, 1,394 sq. ft. lot
- Closing Price: $3,575,000
With both sales considered land plays to build homes worth in the high $6 millions, it is amazing to see a less desirable location sell for about $1 million more, or about 28%, higher than a prime location just a measly seven months later.
We are seeing prices in East Manhattan Beach accelerate higher as well.
- 1300 8th Street, Manhattan Beach
- 4 beds, 4 baths, 2,778 sq. ft., 7,812 sq. ft. lot
- Asking Price: $2,989,000
- Closing Price: $3,312,000
This existing home was cute and livable, however, it had some floor plan challenges, upgrades needed, and was on a busy corner location. Comparable sales could potentially justify a closing in the low $3 millions.
Instead, it closed for about $330,000 higher than asking, even after a $140,000 reduction in price due to a low appraisal. The appraisal might have even been high, but the buyer was willing to go almost a half million higher if allowed.
Redondo Beach Townhome Surge
If you read my blog post a few weeks ago, I discussed a beautifully developed townhome complex that demonstrated growth year-over-year with two sales in separate years with massive price increase.
For reference, you can find the post here: “South Bay Home Deals Driving Sky-High Prices”
Now, we have an official closing so you can see the result.
- 2604 Huntington Lane, #A, Redondo Beach
- 5 beds, 4 baths, 2,594 sq. ft., 7,358 sq. ft. lot
- Closing Price: $2,050,000
Simply an incredible $440,000 appreciation in price from its back unit sale just last year. An explosive 27% higher without a private backyard like its neighboring sale.
Coming to market the same week as the newer subject above, an older two-on-a-lot option came to market on Huntington Lane.
- 1905 Huntington Lane #B, Redondo Beach
- 4 beds, 4 baths, 2,535 sq. ft., 7,451 sq. ft. lot
- Asking Price: $1,649,000
- Closing Price: $1,900,000
A few blocks west, the multiple buyers chasing property knew a rising tide was lifting all ships and pushed this older, but very desirable floor plan / backyard $251,000 over asking.
These two sales will only serve to push the North Redondo townhome market even higher with poor buyers left with very few options.
Palos Verdes Hill Bonanza
First up is Palos Verdes Peninsula’s Academy Hill. I am excited to discuss this one because we rarely cover P.V.’s unincorporated markets of Westfield and Academy Hill.
- 4304 Cartesian Circle, Palos Verdes Peninsula
- 5 beds, 4 baths, 2,508 sq. ft., 15,672 sq. ft. lot
- Asking Price: $1,899,000
- Closing Price: $2,250,000
Another surge in price for a South Bay submarket with this home going for $351,000 over asking.
Its bullseye tract home floorplan sold about a year ago on Academy Drive.
See below:
- 26562 Academy Drive, Palos Verdes Peninsula
- 5 beds, 4 baths, 2,508 sq. ft., 9,688 sq. ft. lot
- Closing Price: $1,764,000
That is a jump of almost half a million or another 28% just under 13 months prior.
If we head over to Rancho Palos Verdes’ Crest submarket, you will see the absolute feeding frenzy that occurred over at a 2,100 square foot home on Queenridge Drive.
- 6128 Queenridge Drive, Rancho Palos Verdes
- 4 beds, 3 baths, 2,096 sq. ft., 10,232 sq. ft. lot
- Asking Price: $1,899,000
- Closing Price: $2,400,000
Again, an astonishing $501,000 increase from asking price in an area where pre-pandemic, we rarely would see bidding wars or large increases.
It’s almost perfect comp closed just three months earlier with the same livable square footage, large lot, and backyard.
- 28710 King Arthur Court, Rancho Palos Verdes
- 4 beds, 2 baths, 2,100 sq. ft., 10,670 sq. ft. lot
- Closing Price: $2,050,000
So, while buyers who missed on King Arthur were eyeing that comp, someone decided to pay more than that sale by $350,000 just three months later or a 17% increase.
How do buyers try to keep up with this pace?
Conclusion
If it is not clear to you already, the market is approaching a moment where comps seem to not matter.
Buyers are dialing up their own prices knowing they are up against 5, 8, 10+ offers who were burned from missing the last home, and they are determined to not miss again.
We have never seen a market like this, ever.
The local South Bay home market needs a big chunk of new listings to increase the supply of available homes for desperate buyers.
Without more homes for sale, we will continue to see prices increase until buyers decide to sit it out and wait for things to change.
For now, the buyers keep bidding prices higher with no end in sight.