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    South Bay Q3 Home Statistics: Markets Split on Strength & Weakness

    October 4, 2022

    By: Richard Haynes
    South Bay Q3 Home Statistics Markets Split on Strength & Weakness

    What an incredible moment for our local home market. Thanks to the Federal Reserve’s aggressive rate policy, surging interest rates are having a swift impact on the South Bay home market, national home market, and quite frankly, all markets in general.

    The old term, “Don’t fight The Fed” is holding truer than ever.

    Beginning Q1, 30-year fixed rates sat at 3.22% on average nationally according to the St. Louis Fed. Ending Q3, just nine months later, the average is an astounding 6.7%.

    I am amazed to see this shift occurring in such a short time, but it makes sense considering mortgage rates have more than doubled in nine months – the fastest doubling of mortgage rates we have seen.

    Furthermore, rising rates have dropped housing affordability in the state of California to one of its lowest rates ever – an ominous sign. See the numbers here and tune-in to my podcast which goes even deeper with historical comparisons.

    While the local South Bay housing market remains on very solid ground, the numbers are showing rates might be taking their toll.

    Below I am using Q3 2022 over Q3 2021 numbers to compare information post-2020 pandemic volatility. Not only are we exploring median price and sales, but I am keying inventory levels at the end of the post. Rising inventory is what will put pressure on sellers and prices.

    Manhattan Beach

    It seems no matter the interest rate pressure, Manhattan Beach is able to buck the headwinds. This luxury beach city continues its ascent in upward prices.

    Take a look at median prices for Manhattan Beach homes:

    • Manhattan Beach Median Prices: UP +11.5%
      • Q3 of 2022: $3,470,000
      • Q3 of 2021: $3,122,500

    Manhattan Beach is still on fire when it comes to median prices. In fact, it was a record hitter for this quarter hitting a median price of $3.47 million.

    Sales are dropping significantly, but active homes for sale remain contained in a big way. Until that changes, slower sales may not be a worry especially considering record high prices that do not quit.

    • Manhattan Beach Closed Sales: DOWN -43.9%
      • Q3 of 2022: 83 sales
      • Q3 of 2021: 148 sales

    That is a big drop in sales, however, Q3 of 2021 was one of the hottest times ever for our local South Bay housing market. Considering interest rates and low inventory (as you will see below), I do not think this is a worry just yet but will certainty keep a watchful eye.

    Palos Verdes Peninsula

    I was shocked at the home price growth that continued in Palos Verdes Estates and in Rancho Palos Verdes last quarter. While both markets are up on median price in Q3, the rates are certainly decelerating, and median prices are lower sequentially for both PVE and RPV.

    Below are 2022 Q3 prices vs. 2021 Q3 prices:

    • Palos Verdes Estates Median Prices: UP +5.1%
      • Q3 of 2022: $2,525,000
      • Q3 of 2021: $2,402,000


    • Rancho Palos Verdes Median Prices: UP +6.7%
      • Q3 of 2022: $1,763,187
      • Q3 of 2021: $1,652,800


    • Rolling Hills Estates Median Prices: DOWN -1.5%
      • Q3 of 2022: $1,723,000
      • Q3 of 2021: $1,750,000


    • Rolling Hills Median Prices: UP +12.2%
      • Q3 of 2022: $4,475,000
      • Q3 of 2021: $3,988,000

    Last quarter I wondered if the pandemic had permanently changed the Palos Verdes home market with buyers demanding larger homes and properties. That notion is being challenged just a quarter later.

    Palos Verdes Estates was up 63% in Q1 and 25% in Q2 and it is now coming back down to earth with 5% growth in median price for Q3. Sequentially, PVE is down by $500,000 in price when last quarter it challenged Manhattan Bach as the South Bay’s most expensive city. Now, it is not even close.

    The same goes for Rancho Palos Verdes where its growth rate is decelerating quarter over quarter and prices are lower on the quarter sequentially. While seasonality is back and sequential comparisons are not necessarily fair, it is worth noting that sellers might be losing pricing power on The Hill.

    Rolling Hills Estates saw its median price drop for the second quarter in a row. This market has been extremely volatile due to the Rolling Hills Country Club catching fire during Covid, while currently condos have picked up the pace presently and caused price swings. The full 2022 vs. 2021 at the end of Q4 will give us the real insight into this city’s home market.

    And lastly, “Behind the Gates” is another tricky market since it is so small. That said, if you take bigger data, the market remains steady from a sales, price and inventory standpoint – the one blemish is pending sales which is falling.

    Now let’s look at closed sales in Palos Verdes:

    • Palos Verdes Estates Closed Sales: DOWN -48.7%
      • Q3 of 2022: 40 sales
      • Q3 of 2021: 78 sales


    • Rancho Palos Verdes Closed Sales: DOWN -38.3%
      • Q3 of 2022: 108 sales
      • Q3 of 2021: 175 sales


    • Rolling Hills Estates Closed Sales: DOWN -22.4%
      • Q3 of 2022: 38 sales
      • Q3 of 2021: 49 sales


    • Rolling Hills Closed Sales: DOWN -63.6%
      • Q3 of 2022: 4 sales
      • Q3 of 2021: 11 sales

    Just like Manhattan Beach, sales are down big across the board.

    That is where the similarities end. Unlike Manhattan Beach, median prices are softening and below you will see how inventory is rising on The Hill representing that it may be at-risk to being a “pandemic market” that overly benefit from housing trends brought about by the Coronavirus.

    Dropping sales and rising inventory could be an ominous sign for Palos Verdes home sellers.

    Hermosa Beach

    Slow and steady Hermosa Beach keeps chugging along.

    • Hermosa Beach Median Prices: UP +3.2%
      • Q3 of 2022: $2,115,300
      • Q3 of 2021: $2,050,003

    While price growth is decelerating this quarter and prices are slightly lower sequentially, if any city gets a pass for one quarter, it is Hermosa Beach which has been solid as a rock for the past two years.

    Sales are down big in Hermosa:

    • Hermosa Beach Closed Sales: DOWN -37.5%
      • Q3 of 2022: 45 sales
      • Q3 of 2021: 72 sales

    This is a larger drop compared to Q2, but much of this is likely due to lower inventory. Hermosa Beach seems to be moving in similar ways to Manhattan Beach, not the slowing Palos Verdes Peninsula.

    Redondo Beach

    Redondo Beach had a nice quarter for price growth despite slowing sales.

    Take a look at the median prices year-over-year on the quarter:

    • Redondo Beach Median Prices: UP +7.1%
      • Q3 of 2022: $1,405,000
      • Q3 of 2021: $1,311,375

    While this is a solid result, the median price is lower sequentially and growth does seem to be decelerating. This makes sense since half of the city, North Redondo, is likely the most dependent are on affordable interest rates for entry-level buyers.

    Now onto closed sales for Redondo:

    • Redondo Beach Closed Sales: DOWN -33.8%
      • Q3 of 2022: 153 sales
      • Q3 of 2021: 231 sales

    All things considered, sales are slowing even faster in Redondo Beach but it is hanging in there even with inventory flat as you will see below.

    Home Inventory Updates

    A major theme during the incredible market run higher the past two years has been the supply / demand imbalance. Far too few homes for sale and far too many buyers.

    National news says that theme is changing quickly with inventory is growing throughout the country. Is it happening here in the South Bay to give buyers more options and put pressure on sellers?

    While the South Bay’s home market has remained resilient, I want to focus on active listings to see what areas might be due for continued strength or perhaps some softness. Take a look at the data below:

    • Manhattan Beach Active Listings: DOWN -11.5%
      • September 2022: 83
      • September 2021: 110


    • Palos Verdes Estates Active Listings: DOWN -14.6%
      • September 2022: 35
      • September 2021: 41


    • Rancho Palos Verdes Active Listings: UP +20.3%
      • September 2022: 83
      • September 2021: 69


    • Rolling Hills Estates Active Listings: UP +60%
      • September 2022: 24
      • September 2021: 15


    • Rolling Hills Active Listings: UP +28.6%
      • September 2022: 9
      • September 2021: 7


    • Hermosa Beach Active Listings: DOWN -18.9%
      • September 2022: 43
      • September 2021: 53


    • Redondo Beach Active Listings: DOWN -0.9%
      • September 2022: 109
      • September 2021: 110

    You can see the shift in inventory occurring on the Palos Verdes Peninsula. Three out of the four markets are seeing inventory rise compared to last year with Palos Verdes Estates rising since the beginning of the year.

    Pair the Palos Verdes markets with slowing sales, decelerating price growth, and sequentially lower median prices – it looks as if Palos Verdes is beginning to feel the rising interest rates / slowing markets first. If inventory continues to rise and sales remain slow, one has to think The Hill could be in for some weakness.

    Redondo Beach is an interest active case study with inventory remaining flat in back-to-back reports. The affordable beach city is on solid footing, but any significant rise in inventory might send it down the same path as Palos Verdes real estate.

    Lastly, Manhattan and Hermosa Beach have seen its inventory drop even further compared to the same time last year. It is simply incredible seeing prices rise (in some cases record prices).

    These two luxury beach cities at this point are insulated from challenges other markets face. If inventory does not loosen up, these home markets will continue to stay strong despite headwinds in mortgage rates.


    After a smashing start to the year and solid Q2, some markets are showing imperfections of a challenged market – it was not going to last forever.

    By far, Palos Verdes statistics are the weakest, and it is the first market to show signs that buyers are ready to take back the market. We feel this deeply with our buyers throughout Palos Verdes and there are few catalysts for sellers to look forward to.

    Redondo Beach is on solid footing, but flat inventory suggests things could go either way in the coming quarters. All time low affordability makes things challenging for this city’s home market.

    And lastly, the fabulous numbers for Hermosa and Manhattan Beach are the best in show. The numbers show great strength not just in pricing but in even lower inventory. It is simply incredible and currently, the best of breed in the South Bay.

    I can’t wait to see the full trailing-12 numbers next quarter to close out the year. It will be telling to see those statistics with another quarter of high interest rates. Will Palos Verdes weaken further, and can Manhattan Beach continue to rise despite headwinds?

    I am excited to share in three months and will update you over the coming weeks.


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