South Bay Home Inventory Remains Historically Low

What the heck do we make of this market?

Many news headlines are stating record highs in home prices, while other media outlets are talking about a slow down in real estate at the same time.

Even in my blog posts, I have reported incredibly bullish results and news throughout the entire South Bay. See a few posts below that I have written just in the last few months…

• PVE Valmonte Records: “Valmonte’s Record Sale Driving Submarket to All-Time Highs“

• Townhome Price Surge: “South Bay Townhomes Showing Signs of Price Surge“

• Redondo Beach New Construction: “North Redondo New Construction Town Home Prices Surge to Huge Records“

• Manhattan & Rolling Hills Records: “Record Home Sales on the Manhattan Beach Strand and Rolling Hills“

And then of course, just like the media, I throw you a curveball with the C.A.R. Affordability Index number potentially flashing a warning sign that the market could be reaching a top.

• Affordability Index Flashing Warning: “California Housing Affordability Index Might Be Flashing Warning Signs“

All in all, it can be difficult to make sense of all the information at hand.

When things get a little hazy, I like to try and keep it simple. Economics, at its core, is about supply and demand.

It is difficult to measure demand in the residential real estate world, and although many might attempt with mortgage applications or newly signed escrows, there is no way to accurately measure demand.

Thankfully, supply is easy to accurately measure and can tell 50% of the story, and oftentimes much more when it is a seller’s market.

Below, I am going to keep it simple and share inventory levels (active listings) in the month of August for specific markets we cover on the weekly blog.

Manhattan Beach Supply

• August Supply: 77 Listings

The active inventory of property for sale is very low in Manhattan Beach. It is not at all-time lows, but this is the lowest August inventory number the expensive beach city has seen since August 2013 when listings were at 67.

Although it is not at all-time lows, it is still the lowest part of the inventory spectrum except when compared to the MB inventory squeeze between 2013 and 2015, and the couple of months following the stay-at-home orders.

Currently, these inventory levels continue to favor sellers.

Palos Verdes Peninsula Supply

• Palos Verdes 90274 Zip August Supply: 81 Listings

• Palos Verdes 90275 Zip August Supply: 95 Listings

For both zip codes on the Palos Verdes Peninsula, this is the lowest active inventory in the month of August…ever.

In fact, on a rolling 12-month average, the entire Palos Verdes Peninsula has seen its lowest inventory on record for the entirety of 2021. The squeeze is so great that the rolling average at record lows is 20% to 30% lower than the original record.

The supply squeeze on the Palos Verdes Hill is simply unprecedented.

Hermosa Beach Supply

• August Supply: 45 Listings

Hermosa Beach’s inventory for sale has much of the same characteristics of its neighbor, Manhattan Beach. This number is certainly low historically, but August 2013 and 2014 were lower at 44 and 40, respectively.

That said, there have been very few times over the past five years where inventory has been lower, save for a couple of holiday slow seasons. However, 2013 to 2015 was a major squeeze by the beach and Hermosa has experienced times with even lower inventory levels.

On a rolling 12-month average, Hermosa Beach does not look so bad, seemingly in line with historical precedents. The main item remains that summer inventory plummeted and if it continues, then Hermosa will begin to really feel the crunch of fewer homes on the market.

Redondo Beach Supply

• Redondo 90277 August Supply: 57

• Redondo 90278 August Supply: 50

Finally, we are on to Redondo Beach.

South Redondo (90277) is seeing its lowest August inventory levels, ever.

Supply has been lower in past years, but it was during the traditionally slow holiday season. On a rolling 12-month average, South Redondo is experiencing its greatest supply squeeze on record and the trend line does not look to be easing up anytime soon.

North Redondo (90278) is a different story. For the month of August it is just a shade below where inventory levels tend to sit historically. It is certainly low for an August number, but inventory levels have been lower than this every single year since 2012.

North Redondo supply is still on the lower side of the spectrum, but the affordable pocket of North Redondo has seen an inventory squeeze for almost a decade thanks to its wonderful mix of housing options, affordable prices, and proximity to the beach/schools/commuting. So, this is nothing new for the 90278 zip code.

Conclusion

When the real estate news and data gets a little confusing, it is always good to go back to basics.

In general, supply in Palos Verdes and South Redondo are at all-time lows, while Manhattan, Hermosa, and North Redondo Beach are trending at some of their lowest levels in years.

While anecdotally, buyers seem to be more patient and open houses are not as crazy as they were at the beginning of the year, buyers are still absolutely making offers and continuing to search.

If demand keeps supply low, home prices will hold their ground or go higher.

It will take an imbalance in supply/demand or a jump in interest rates to change things.

As always, I will be watching and continue to report the latest for you each and every week.

Cheers.

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