The South Bay home market continues to work through the post-pandemic real estate environment with historically low inventory amidst generationally high mortgage rates.
While certain submarkets displayed weakening prices in the second half of 2022, the historically low inventory squeeze might be pushing buyers to pay sky-high prices as 2023 matures.
I can say from my buyers’ perspective, they are disappointed with home options and new listings to kick off the year.
And that feeling is valid thanks to home listings being few and far between historically, however, trends suggest that February is low on listings and we can expect more homes in March, April and May.
For this week’s post, I am going to take a small set of data but zoom out to give a bird’s eye view of how low inventory is compared to past years, but also show how the spring market tends to deliver.
By no means can we expect a flood of new homes for sale, but it is safe to assume there will be more homes for sale in the coming months. Let’s go look at the inventory numbers in areas to see what is happening right now and what we can expect into the spring.
Palos Verdes Estates
February 2023: 25 listings
February 2022: 22 listings
March 2022: 22 listings
April 2022: 29 listings
May 2022: 34 listings
The home market in Palos Verdes Estates offered up a few more homes this February than last year.
As you can see, inventory steadily climbed as the spring season hit its stride. So, it is still a bit early to just the market on ultra-low inventory. We’ll see if sellers make their spring debut or opt to keep their ultra-low interest rates.
Trailing-12 2015-2019: 53 to 83 listings
Historically, you can see how previous years offered way more homes for sale. Buyers have a reason to fret over squeezed options.
Manhattan Beach
February 2023: 65 listings
February 2022: 61 listings
March 2022: 58 listings
April 2022: 60 listings
May 2022: 71 listings
Manhattan Beach also offered slightly more listings compared to last year. Unfortunately, if 2023 is anything like 2022, buyers are going to be extremely disappointed with coming listings.
We are seeing clients have the worst time finding homes in Manhattan Beach, even if you are all-cash, it is a battle for move-in ready homes.
Trailing-12 2015-2019: 64 to138 listings
What’s more, Manhattan Beach has seen even worse inventory squeezes in the past. It can get harder from here, and that would be pouring it on hard with record-high prices and exceptionally expensive mortgage rates.
Hermosa Beach
February 2023: 34 listings
February 2022: 43 listings
March 2022: 36 listings
April 2022: 39 listings
May 2022: 39 listings
Hermosa Beach’s inventory squeeze this February is real, however, the 2022 spring selling season was even harder. If inventory trends the same way as 2022, it could be one of the most difficult buyers’ markets on record for the small beach city.
Trailing-12 2015-2019: 42 to 63 listings
As you can see, Hermosa is far below recent historical levels on homes for sale.
Rancho Palos Verdes
February 2023: 56 listings
February 2022: 58 listings
March 2022: 63 listings
April 2022: 63 listings
May 2022: 71 listings
Rancho Palos Verdes has been the victim of lower prices the past few months, but its inventory remains tight compared to last February. Rest assured; it looks like homes for sale will climb in the coming few months based on last year.
Trailing-12 2015-2019: 119 to 148
For Rancho Palos Verdes home buyers, it is excruciating to see that past history normally produces double to triple the inventory today and even into the spring. That said, a softer local market might ameliorate the inventory squeeze.
Redondo Beach 90277
February 2023: 34 listings
February 2022: 35 listings
March 2022: 41 listings
April 2022: 44 listings
May 2022: 52 listings
South Redondo homes for sale are trending the same as last year. So, while it is easy to complain of low inventory, it was the same story last year. There should be some relief in the coming months, per 2022 numbers but buyers will have to patiently wait and see.
Trailing-12 2015-2019: 68 to 91
Again, double to triple the inventory before the pandemic. Ugh.
Redondo Beach 90278
February 2023: 44 listings
February 2022: 23 listings
March 2022: 30 listings
April 2022: 45 listings
May 2022: 39 listings
North Redondo is a surprise here with almost double the inventory from last February. It also boasts more inventory than last 2022’s spring!
Perhaps North Redondo being the most affordable market by the beach, buyers simply cannot handle the high interest rates causing a pull back and a rise in inventory. This could be a sign or dichotomy that financing-driven markets could offer more options, while more affluent market hang tough or continue to climb.
Trailing-12 2015-2019: 50 to 77 listings
The near-term historical number for inventory is normally higher, but North Redondo is approaching the bottom end of the range. It might rise further as spring gets rolling.
Final Thoughts / Conclusion
All in all, Realtors and pundits are correct about few homes for sale in the South Bay market.
When you dig into the numbers, in most areas it was the same story in 2022 and we can hope to see a rise in the next three months.
If inventory does not rise in the spring, then even amid sky-high mortgage rates, it will almost certainly be a sellers’ market.
On the flip side, if inventory mimics 2022 for the most part or begins to exceed those levels, then buyers might be able to take back some control if the sellers grow higher with a smaller buyer pool able to afford some of the worst affordability since 2007.
There is still hope for more homes – hang in there!
Richard Haynes
DRE: 01779425
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The Richard Haynes Real Estate ShowA leader in South Bay real estate for the better part of a decade, Richard thrives as an advisor to his clients with over $248 million in sales as a broker or investment principal at his boutique agency, Haynes. Richard is known for his keen local market insights which have been featured in the L.A. Times, The Street, and Forbes, along with his weekly South Bay real estate blog. [read more]