The first quarter numbers for 2022 are here and I am excited to share them with you.
This is one of the most incredible home markets real estate professionals have seen in the South Bay. The insatiable demand for homes, rising prices, and few homes for sale make for one of the greatest seller markets of all-time.
What is so exciting about finally getting to Q1 of 2022 is that we are officially past “easy comps” from 2020 where market statistics were whacky thanks to a novel virus and stay-at-home orders.
Today’s blog gets to explore Q1 of 2022 versus Q1 of 2021, which is a tough set of comparables. Any strength beyond 2021’s numbers will be a red-hot number for any particular city.
The only problem I see in the data is that there are fewer and fewer homes sales, and without the robust “big data” of sales, it does make for a more volatile market when just looking at quarterly data. Additionally, some markets are seeing more condo sales now that we are getting past the Coronavirus, and of course, fewer home sales which keep median prices in check.
I am nit-picking but it is good to keep the above in mind.
For next quarter’s Q2 report, I might also include trailing 12-month numbers as well to help smooth out the results for perspective – but for this post, it is all about quarter-over-quarter comparisons.
Let’s get it started.
The market is so strong – perhaps it is silly to start with a little cold water on the Manhattan Beach market. With our buyer clients in Manhattan Beach, we have experienced ferocious competition, but the slower numbers are the slower numbers.
Look at median price for Manhattan Beach homes:
- Manhattan Beach Median Prices: UP +0.8%
- Q1 of 2022: $3,125,000
- Q1 of 2021: $3,100,000
While Manhattan Beach has been on fire, it is surprising to see that the market is up only a fraction of a percent. It shows you just how strong the luxury beach city was to begin 2021 and that year-over-year comps are now no joke, it is very tough to push prices higher.
I believe some of the strength of the market is “hidden” due to fewer homes for sale. Take a look at closed sales:
- Manhattan Beach Closed Sales: DOWN -21.6%
- Q1 of 2022: 69 sales
- Q1 of 2021: 88 sales
Inventory was trending down to low levels in 2021 in Manhattan Beach, and you can see those effects with closed sales. Inventory was tight in 2021 and fewer closings by 21% might explain the hamstrung prices – or maybe it is a signal that Manhattan Beach has topped?
It certainly does not feel that way, but these are important numbers to study and check-in on next quarter.
Palos Verdes Peninsula
The growth in prices for half of the Palos Verdes Peninsula are absolutely mind-boggling. It seems the pandemic has permanently changed how buyers and sellers look at The Hill. You have to see the Palos Verdes Estates and Rolling Hills Estates numbers to truly believe it.
Below are 2022 Q1 prices vs. 2021 Q1 prices:
- Palos Verdes Estates Median Prices: UP +63%
- Q1 of 2022: $3,175,000
- Q1 of 2021: $1,916,450
- Rancho Palos Verdes Median Prices: UP +17.7%
- Q1 of 2022: $1,680,000
- Q1 of 2021: $1,427,500
- Rolling Hills Estates Median Prices: UP +87.6%
- Q1 of 2022: $2,700,000
- Q1 of 2021: $1,439,000
- Rolling Hills Median Prices: DOWN -4.6%
- Q1 of 2022: $3,600,000
- Q1 of 2021: $3,775,000
Is that not simply incredible?
Palos Verdes Estates is up 63% on its median price when comparing Q1 of this year to Q1 of last year. Palos Verdes Estates now boasts a higher median price than Manhattan Beach, albeit if just for one quarter.
The same insanity goes for Rolling Hills Estates, however, if you examine the numbers further, much of the prices are skewed higher thanks to Chadmar Homes and Toll Brothers unloading their last inventory off-market in the Rolling Hills Country Club and posting it to the MLS. The city is on fire, but not as much as it seems thanks to Rolling Hills Country Club and some condo sales being flushed out.
Rancho Palos Verdes, up against tough comps, is up a whopping 17.7% for the Peninsula’s most affordable city – which in many cases is still a steal under $1.7 million when you compare it to other single-family home markets at the beach.
And lastly, while “Behind the Gates” in Rolling Hills is showing weakness down 4.6% on price, I always caution you on its quarterly numbers because of the small amount of data out of the tiny town. Quite frankly, this is the best performing luxury market in the entire South Bay since 2020 so nothing really to see here on slightly lower numbers.
Now onto closed sale in Palos Verdes:
- Palos Verdes Estates Closed Sales: DOWN -19.2%
- Q1 of 2022: 42 sales
- Q1 of 2021: 52 sales
- Rancho Palos Verdes Closed Sales: DOWN -4.2%
- Q1 of 2022: 115 sales
- Q1 of 2021: 120 sales
- Rolling Hills Estates Closed Sales: UP +16.1%
- Q1 of 2022: 36 sales
- Q1 of 2021: 31 sales
- Rolling Hills Closed Sales: DOWN -41.7%
- Q1 of 2022: 7 sales
- Q1 of 2021: 13 sales
Just like Manhattan Beach, sales are down across the board with the exception of RHE. Sluggish sales numbers is mostly due to historically low inventory in Palos Verdes. Not only is it at all-time lows, but the all-time lows are also significantly lower than previous records. More on inventory levels later in the blog.
The small but mighty city of Hermosa Beach keeps on chugging.
- Hermosa Beach Median Prices: UP +9.1%
- Q1 of 2022: $2,150,000
- Q1 of 2021: $1,970,000
Solid growth yet again from Hermosa Beach. It is as steady and as strong as they come, even during the pandemic. Incredibly, it seems to have avoided volatility over the years.
I am a broken record, but Hermosa sales have dropped significantly like many cities in the South Bay.
- Hermosa Beach Closed Sales: DOWN +30.5%
- Q1 of 2022: 41 sales
- Q1 of 2021: 59 sales
Nothing more to say here other than fewer sales thanks to inventory shortages.
This quarter, I have a little bit more data to share on the inventory side of things, so I am sharing the numbers for Redondo Beach as a whole. There is no breakdown between North and South Redondo.
Take a look at the median prices year-over-year on the quarter:
- Redondo Beach Median Prices: UP +8.5%
- Q1 of 2022: $1,345,000
- Q1 of 2021: $1,240,000
While this was not the 20% growth Redondo saw in Q3, nor double-digit growth we saw back in Q4, I would say an 8.5% jump in prices is still incredibly strong. These are some of the toughest comps around and Redondo is filled with many condos and townhomes.
This is an incredibly solid result for Redondo Beach.
Now onto closed sales for Redondo:
- Redondo Beach Closed Sales: DOWN -30.3%
- Q1 of 2022: 140 sales
- Q1 of 2021: 201 sales
Same story, different city. Sales down big due to fewer sellers and options for buyers.
Important Home Inventory Stats
A major impact to this market is the supply/demand imbalance. Too few homes for sale with too many buyers.
National headlines suggest inventory is rising and there are some local pundits claiming the South Bay inventory is rising on a short-term basis.
I have not done the work on short-term inventory for sale because quite frankly, the year-over-year numbers offer better insight right now at the supply/demand strains in our local home markets here in the South Bay.
Look at the active listings data:
Manhattan Beach Active Listings: DOWN -52.4%
- March 2022: 59
- March 2021: 124
Palos Verdes Estates Active Listings: DOWN -54.5%
- March 2022: 20
- March 2021: 44
Rancho Palos Verdes Active Listings: DOWN -20.5%
- March 2022: 58
- March 2021: 73
Rolling Hills Estates Active Listings: UP +114.3%
- March 2022: 15
- March 2021: 7
Rolling Hills Active Listings: DOWN -4.6%
- March 2022: 7
- March 2021: 12
Hermosa Beach Active Listings: DOWN -52.4%
- March 2022: 30
- March 2021: 63
Redondo Beach Active Listings: DOWN -39.3%
- March 2022: 65
- March 2021: 107
The homes for sale in the above South Bay cities have contracted in a big, big way.
We continue to see multiple offers on properly priced listings and the competition is widely competitive. With the big yearly drops in inventory, as long as there are multiple offers/demand, there will still be pressure on prices to rise.
Sure, there might be a tick-up in inventory from last month, but did it surge 25%, 30%, 35% higher to offset the lost active listings a year ago? Anecdotally, I am not seeing that type of increase in homes for sale.
It is important speak to your agent to understand if there are still bidding wars or if properties are getting fewer offers – that might be a nice clue to your local market.
For now, the strength seems to still be there in the South Bay, but I recognize that it can change in an instant.
All that said, it does not seem like there is any data or anecdotal evidence to suggest softening in the South Bay home market anytime soon.
I seem like a broken record, but this continues to be an incredible market.
Prices continue to rise in almost all markets against tough comps, not to mention there are some insane price jumps in specific cities.
Sales are slower, but likely, it is due to lower inventory which is truly the news story of our local marketplace.
The statistics support a strong market that will keep on keeping on. Affordability numbers in the coming months will be impactful as well as the Q2 data to follow.
I’ll be sure to watch it all for you in real time.
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- 44 The Strand, Hermosa Beach
- 5 beds, 3 baths, 2,300 sq. ft., 3,607 sq. ft. lot, Duplex
- Asking Price: $7,300,000
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