Notice anything different? We have a new website! Our team has been diligently working on a rebrand over the past few months. More to come on this, but we hope you enjoy a sneak peek with our first blog on the new site.
Low Inventory
All anyone talks about these days in residential real estate is low inventory. “There are just no homes for sale–I have never seen anything like it.” For those of you who might not understand the real estate vernacular, inventory references the number of available homes for sale.
Say for example, you live in the Tree Section of Manhattan Beach, there could be 10 homes currently on the MLS being marketed for sale. To further the example, inventory (or listings) would increase by 50% if there were 15 homes on the market the next month. Conversely, if inventory/listings dropped to six listings the next month, then that would be a 40% decrease in inventory.
Inventory is shockingly low when compared to options seen by buyers in the last few years. This simply comes down to supply and demand. While demand from buyers has decreased thanks to surging interest rates, the inventory squeeze has counteracted that…and then some.
Below I am going to show just how tight the home market is to give you a better understanding of this low inventory conversation.
Starting Broad with the Entire MLS
I want to begin with the big data beyond the South Bay.
Most professional agents in the South Bay subscribe to the CRMLS, which also shares data with other MLS platforms throughout Los Angeles County and beyond. This allows for big, juicy datasets which are valuable to understand larger market trends.
Let’s explore active listings (inventory) in the month of May for the past five years:
- May 2019 – 102,219 listings
- May 2020 – 83,052 listings
- May 2021 – 57,002 listings
- May 2022 – 59,052 listings
- May 2023 – 32,461 listings
The homes for sale over the past five years on the MLS is quite telling. I have highlighted 2019, 2022, and 2023 as they really illustrate the supply challenges and tough sledding faced by buyers.
If you look towards 2019 as the “baseline” of homes for sale, before the craziness of the pandemic and low interest rates, we enjoyed over 100,000 active homes for sale on the MLS. That number dropped by 40% as the peak of the market started to fizzle in May 2022. And today, inventory is almost cut in half from last year. Even more shocking, when compared to 2019, there are 70% fewer homes on the market.
Refining Low Inventory to Los Angeles County
While the entire MLS is a massive dataset, it is not going to tell our local market story and can sometimes have some funky information.
The largest (and best) set of numbers will come from refining Los Angeles County inventory. This gives us the big numbers which are normally better for trends over smaller South Bay cities:
- May 2019 – 20,425 listings
- May 2020 – 17,638 listings
- May 2021 – 13,863 listings
- May 2022 – 12,143 listings
- May 2023 – 9,236 listings
The Los Angeles County numbers point to squeezed inventory as well. It was dire in 2022 compared to 2019, but the squeeze is still worsened in 2023. There is truly a major home supply challenge in Los Angeles County.
And then taking homes for sale last year compared to today, homes for sale contracted almost another 24%. There is no relief for buyers!
Let’s look at sales volume:
- May 2021 – $15,295,689,466
- May 2022 – $14,564,718,236
- May 2023 – $9,999,660,968
The almost $15.3 billion in real estate volume in May 2021 was a behemoth number in Los Angeles County.
It slipped to $14.5 billon which is not terrible considering that homes for sale was squeezed by 40%.
The lower volume really comes to light in 2023 with closings below $10 billion. Wow.
Lastly, let’s look at median price:
- May 2021 – $742,000
- May 2022 – $840,000
- May 2023 – $835,000
The higher median price, thanks to surging real estate values as a result of lower interest rates, is what kept sales volume strong in May 2022.
And while the median price slipped by just $5,000, it shows how the drop to sub $10 billion volume (33% drop from May 2021) came from fewer transactions in 2023.
South Bay Inventory – City by City
I would suggest to readers to really study the Los Angeles County numbers to fully grasp this supply issue in our markets.
From there, use the information in the South Bay section to study how your favorite Beach City or Palos Verdes Hill market is performing. I will briefly touch on each city but won’t overdo it since you can simply read it and come to your own conclusions.
Palos Verdes Estates Inventory
The Palos Verdes Estates inventory continues to get smaller:
- May 2019 – 98 listings
- May 2021 – 54 listings
- May 2023 – 44 listings
Not only are homes for sale fewer than 50% of what is considered “normal,” the inventory has dropped over 20% from last year and lingering homes are typically well-above the median price for the city.
Manhattan Beach Inventory
You can see Manhattan Beach inventory is not quite as pronounced as Palos Verdes Estates in 2021:
- May 2019 – 155 listings
- May 2021 – 120 listings
- May 2023 – 69 listings
That said, Manhattan Beach’s inventory drop has been incredible from 2021 to 2023. Buyers have so few options in this highly desired city, it is one of the most challenging markets in the entire South Bay to acquire a home that is not at record pricing.
Rolling Hills Estates Inventory
Rolling Hills Estates mirrored Palos Verdes Estates during the pandemic, however, inventory is just a tick higher in 2023:
- May 2019 – 39 listings
- May 2021 – 15 listings
- May 2023 – 16 listings
I say this over-and-over again, but inventory was always higher until Rolling Hills Country Club sold out its new development. And the reasoning for inventory not dropping in Rolling Hills Estates in 2023 is likely condo owners more ready to sell now that we are past the pandemic.
Redondo Beach Inventory
Redondo Beach is certainly showing off its inventory squeeze:
- May 2019 – 162 listings
- May 2021 – 103 listings
- May 2023 – 80 listings
There were clear drops from 2019 to 2021 in Redondo Beach, and that has continued into 2023.
High-end homes in South Redondo are tough to land at affordable prices and new construction townhomes in North Redondo continue to be strong. Not to mention, some of the most affordable resale inventory by the beach are still receiving multiple offers.
Rancho Palos Verdes Inventory
The Hill’s most affordable city saw its inventory plummet during the pandemic:
- May 2019 – 155 listings
- May 2021 – 66 listings
- May 2023 – 54 listings
It has fallen further in 2023 but not as much as other areas – this market truly is bifurcated depending on specific submarkets in the city.
Hermosa Beach Inventory
Lastly, Hermosa Beach was slow and steady during the pandemic as you can see not much of a drop off in homes for sale from 2019 to 2021:
- May 2019 – 67 listings
- May 2021 – 66 listings
- May 2023 – 41 listings
But the city is not immune from the larger inventory squeeze as the city is seeing close to a 39% drop today compared to 2019.
Final Thoughts
As we are slowing rolling out our new website, there are no listings or comps to share as we ensure the IDX listing feed is working as it should, but my hope is this latest post highlights the challenges of home inventory in Los Angeles County and our local South Bay markets.
It truly has been an incredible four years of rapid changes in the home market seemingly every year.
Thanks for sticking with us through the website and brand transition. We appreciate your support!
Richard Haynes
DRE: 01779425
For more South Bay real estate insights, subscribe and follow Richard’s social channels below:
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]