This is one of those weeks where the business of real estate is crazy. We have been slammed.
I am going to take this opportunity to share three transactions we are working on and share my thoughts on the market as a whole.
After writing this I will be recording a podcast on the quarterly numbers from last week, and diving even deeper to the topics written here on market dynamics and some recent successes that you can take for yourself. The podcast will be live next week.
Fewer Transactions – Same Busy Market
If you read the news, follow real estate on social media, and study our local market data, you will know what I am talking about.
While interest rates are higher and have eliminated or stalled many buyers, there are still buyers out there that can afford a home.
Due to most homeowners having a sub 4% interest rate, fewer and fewer sellers remain motivated to list their home, which has created a historic supply shortage of homes in most of our South Bay submarkets.
As a result, a smaller pool of buyers is fighting over an even smaller pool of homes.
So, while agents are handling fewer transactions – as in 30%, 40%, or 50% fewer – in a way, things are still busy because you are seeing loads of homes, offering multiple times on behalf of buyers.
The same goes for listing agents managing a client’s expectations in a shifting market, and if they convince their clients to price appropriately, then there is a lot of work managing multiple offers to find the right price.
In the end, personally, I end up showing the same number of homes to fewer buyers and we write more offers.
Our sellers still want to meet, but ultimately wait for the right property to exchange or are on pause until rates come down and can afford the move-up home.
Current buyers are motivated and active. Current sellers are few, and when they list right, become popular. It is an interesting dynamic to say the least.
Transactions and Anecdotes
I am going to share just a little insight gained from three current transactions that are keeping us busy, along with other buyers on the hunt and sellers preparing to list.
- 3 beds, 3 baths, 1,784 sq. ft.
- Asking price: $2,295,000
This property was recently secured in escrow on behalf of our buyers.
In a nutshell, the Manhattan Beach Tree Section has been one of the most difficult places to acquire homes in the past few months. It has not slowed down at all in 2023.
We have a handful of buyers still frustrated at the options, but this property was a nice success story.
To summarize, this cute older home is the ideal “covered land play” for buyers looking to break into the Tree Section and build a new construction dream home later.
Retail land value here is pegged at $2 million, so you get the salvageable home for just $300k as a bonus. Enjoy the backyard, charm of the current home, and amazing Laurel Avenue location.
Down the road, this will act as a great land play in which to construct a forever home.
Win-win while avoiding competition from all-cash developers.
- 3 beds, 3 baths, 2,337 sq. ft.
- Asking price: $2,100,000
This is another newly secured property on behalf of our buyers.
Palos Verdes Estates has a squeeze on entry-level homes. While markets like Lunada Bay and Valmonte were known for providing dependable move in ready homes for first-time home buyers, that has proven to be a rarity in 2023.
Again, we have a handful of frustrated Palos Verdes home buyers, however, this was another nice win.
It is almost impossible to find a livable home in Palos Verdes Estates under $2 million – if you can, it is on a busy street with a tiny footprint at a premium price per sq. ft.
This home was offered at $1,000 per sq. ft., move-in ready, with an incredible lot / ocean view / and potential to remodel down the road or even go big with a new home.
Via Carrillo is one of the most desirable Palos Verdes Estates streets east of Palos Verdes Drive West that provides walkability to Yarmouth and when you get one with this charm, lot, and ocean views – it is hard to go wrong long-term.
4612 W 168th Street, Lawndale
- 4 beds, 2 baths, 1,836 sq. ft.
- Sold price: $830,000
Finally, our Lawndale duplex is closed.
If you have listened to previous podcasts, you know I think income properties are a great place to steal a deal on the year. As it turns out, the answer is firmly EXCLUDING duplexes.
Thanks to the mortgage rate surge and inventory squeeze, many owner-occupied buyers are turning to duplexes to offset higher mortgage payments.
Thankfully, our client took the “underprice and let the market determine the value approach.” This resulted in 14 offers – many of them primary residence buyers.
Our quick and efficient sale was a great result, and the price was fabulous considering 65 years of deferred maintenance and unpermitted work on the property.
Insight we gained from this – duplexes are a hot option for owner-occupied buyers. Stick to three and four units or more for the best deals.
Despite all of the challenges of high interest rates, tech lay-offs, and uncertainty in the stock market – transactions are still getting done.
Thanks to low supply, prices are being supported in most South Bay submarkets.
Sure, median price is going down in the big data but that seems to be the top of the market slowing much more – the mid and entry-level range remains strong.
For now, we continue to have motivated buyers and are working our tails off to locate and secure great homes.
On the flip side, sellers are mostly relocations, probate/trust sales, or a sale motivated by a 1031 exchange. Why sell if you are happy and have a 3% rate?
The dynamic is fascinating and seems to be shifting by the week.