We are starting to gear up here at Manhattan Pacific Realty for the upcoming busy Spring selling season. It is busier than normal with a lot of clients starting to plan in January to execute on their 2020 real estate goals.
Inventory is still a bit slow to come and I will get back to writing about specific cities and pockets soon.
For now, the most important and influential data is the year-over-year price performance in 2019.
Normally, I do not discuss quarterly or yearly data in the blog as I tend to share that information on my IGTV page and quarterly mailer. That said, it feels very relevant for the blog presently as there has been a big shift in pricing.
You read it in the title. Year-over-year, South Bay median prices are down. Everywhere.
Take a look at the quick snapshot:
- Palos Verdes Peninsula down 3.48%
- Manhattan Beach down 2.04%
- Hermosa Beach down 3.34%
- Redondo Beach down 2.73%
These numbers are not crushing anyone, but without question, it is a big note showing a huge shift in our local home market.
This data is important to keep in mind because the narrative throughout Los Angeles, California, and the country is that prices are increasing.
- L.A. County median prices will end 2019 higher.
- California median prices will end 2019 higher. (Probably around 4%.)
- Nationally, median prices will end 2019 higher.
But all real estate is local, and if your intentions are to buy or sell in the above South Bay areas, then you need to pay attention to this data and our shifting local market.
Palos Verdes Peninsula
The Palos Verdes Peninsula is a huge area with a lot of sales. So, there is a vast amount of data in general and numerous sub-markets to analyze.
For now, I will break it down by zip code…
This zip code essentially covers the city of Rancho Palos Verdes.
There are many expensive and exclusive areas in this zip code, but generally speaking, it is more affordable than the rest of the Hill. Over the past few years, affordable areas throughout greater Los Angeles have surged higher. The same was true for Rancho Palos Verdes.
That all changed this year when the red-hot Rancho Palos Verdes home market dropped by 4.05% year-over-year.
Previously, in 2018, it had a gain of 5.04% and the years prior showed even stronger gains.
This is the one market in this blog post that is not down but actually flat. It includes Palos Verdes Estates, Rolling Hills Estates, Rolling Hills, and unincorporated areas of The Hill.
The median price of this zip code held steady at $1.619 million, reflecting no change from 2018.
For this zip code, I want to focus on one of the cities — Palos Verdes Estates.
The city was a bright spot and prices were actually up 3.6% year-over-year.
Of the four areas in Palos Verdes Estates, all markets were up with the exception of Valmonte being down. This past year, I wrote a blog post on how the high end of the P.V. luxury market is struggling, but the middle range in Lunada Bay, Montemalaga, and Malaga Cove are very healthy and performed well. If you missed that luxury post, you can read it here.
The drop in pricing can be attributed to other markets in the 90274 zip.
So make sure you are very specific when looking in this particular zip code.
Manhattan Beach median prices are down year-over-year for the first time in nine years.
When you break down prices by area, interestingly enough, those sub-markets are slightly up. The Sand Section is up. The Tree Section is up. The Hill Section is up. And, East Manhattan Beach is up. So you may be wondering how the city is down from a data standpoint?
It is the city as whole that failed to perform when looking at the big data. I think it is fascinating and something to monitor how the big data is not so hot, but the smaller data looks just fine.
With Manhattan Beach having a huge amount of its sales occur off-market, that also could have contributed to the data being a bit skewed one way or the other.
According to some builders and agents that follow new construction closely, there will be an extremely low-level of new construction inventory in 2020. New construction has been one of the biggest sectors of growth in Manhattan Beach over the years and the demand from buyers have made record after record highs for new product.
New construction drives land and existing home values.
Will the lack of new construction be a drag or a boost for Manhattan Beach in 2020? Is the big data too big and giving a false signal to the downside? Or, is the big data signaling potential for strength in the coveted beach city?
Manhattan Beach’s data remains solid, but the drop in median price is very note-worthy and something I will continue to watch over the next year.
Hermosa Beach prices fell in 2019 and from a numbers standpoint, the blame can be placed on the Sand Section.
Sand Section median prices were down big, while the Hermosa Valley and East Hermosa were essentially flat. I have written about the Hermosa Strand declining in value which certainly did not help, but this looks to be bigger than just the Strand.
Anecdotally speaking, East Hermosa enjoyed tons of new construction sales in 2017 and 2018 due to spec home development and big townhome developments on Pacific Coast Highway. In 2019, that tailwind subsided, and the city lost a lot of momentum that fueled price growth.
Another large market with a lot of factors at play here, but for the purposes of this post, I will break it down between North Redondo and South Redondo.
They are both similar and both are down.
- North Redondo declined by $23,000 in median price (down 2.22%).
- South Redondo declined by $25,000 in median price (down 2.13%).
The biggest surprise here for some market watchers is the decline in North Redondo, which has been one of the hottest markets in all of the South Bay. I am proud to say that I called this decline, along with the Rancho Palos Verdes decline, in my 2019 predictions blog…stuck my neck out in a big way!
Since the bottom in 2012, North Redondo has gone straight up, almost doubling in price in seven years. It has climbed year after year, but 2019 is the first year we have seen a decrease since the bottom. Declining affordability is likely to blame here since buyers can only afford so much.
South Redondo land pricing on the “spec-happy” Avenues saw a lot of weakness as well, suggesting some of the luxury builders in Redondo are pulling back much like the builders in Manhattan Beach.
2020 Will be Fun
No doubt, the shifting marketplace will make for a thrilling 2020.
There is so much conflicting data on both the positive side and negative side.
- Price declines in markets
- Sales meaningfully down since 2017
- Affordable areas beginning to struggle along with certain luxury sectors
- Why are prices not higher with all-time low rates and a surging stock market?
- Low inventory
- New construction still making records in Manhattan Beach
- All-time low unemployment
- Affordability went up in L.A. County
- The stock market is roaring higher and at all-time highs
It will be a battle between the bulls and the bears.
Be sure you are watching closely.