Fall has officially arrived. After one of the rainier summers in recent memory, autumn is ready to bring about its crisp cold by the beach and Palos Verdes.
Surging home mortgage rates and lack of affordability in the South Bay might also bring a chill to our local real estate markets. This Q3 quarterly report is a big one since we are comparing Q3 of 2022 when interest rates really started to gap-up and affect buyers’ purchasing power.
From here on out, quarterly comparables are going to be a good measure of our local markets.
No more caveats of unique market swings due to pre-pandemic, post-pandemic, or the start of rising rates. We are now in an environment where rates are notably higher for 12 months. And, they will be “higher for longer,” according to the Federal Reserve.
Without further ado, let’s get into the ever-important South Bay Q3 home market results.
Over the past decade, Manhattan Beach has been one of the strongest home markets. And, that was no exception during the pandemic home appreciation surge.
That said, the exceptional price growth in this luxury city may officially be on pause and heading lower. See the latest quarterly results below:
- Manhattan Beach Q3 Median Prices: DOWN -19.2%
o Q3 of 2023: $2,805,000
o Q3 of 2022: $3,470,000
As many excuses can be made by professionals for falling prices (like lack of supply fueling just lower-priced homes), this is the fourth quarter in a row that quarterly median prices have been down year-over-year. The numbers do not lie.
- Manhattan Beach Rolling 12 Median Prices: DOWN -12.0%
o Ending Q3 2023: $2,787,500
o Ending Q3 2022: $3,166,500
The rolling-12-month numbers help to smooth out three-month variables. While the previous three quarters were fairly flat on a rolling-12, this quarter shows a big double-digit drop, confirming that prices are lower compared to last year with a much larger dataset.
- Manhattan Beach Q3 Closed Sales: UP +1.2%
o Q3 of 2023: 84 sales
o Q3 of 2022: 83 sales
And finally, sales are flat; however, sales in Manhattan Beach are at historically low levels. What’s more, if you take 12-month data on sales, the city remains at its lowest sales level ever.
Palos Verdes Peninsula
The Palos Verdes Hill is seeing a similar chill with both Palos Verdes Estates and Rancho Palos Verdes seeing four quarters of declines just like Manhattan Beach.
- Palos Verdes Estates Q3 Median Prices: DOWN -6.9%
o Q3 of 2023: $2,350,000
o Q3 of 2022: $2,525,000
- Rancho Palos Verdes Q3 Median Prices: DOWN -14.1%
o Q3 of 2023: $1,514,500
o Q3 of 2022: $1,763,188
- Rolling Hills Estates Q3 Estates Median Prices: UP +4.5%
o Q3 of 2023: $1,800,000
o Q3 of 2022: $1,723,000
Palos Verdes Estates and Rancho Palos Verdes are feeling the pressure of consistent, declining prices over the past four reports, but Rolling Hills Estates is the lone bright spot with back-to-back quarters of price growth.
That said, Rolling Hills Estates did hit its peak of a $2.7 million median price in Q1 of 2022, thanks to the massive demand in Rolling Hills Country Club and luxury properties with land. But, it seems that the city is now coming back down to earth from its record median pricing.
- Palos Verdes Estates Rolling 12 Median Prices: DOWN -9.2%
o Ending Q3 2023: $2,540,000
o Ending Q3 2022: $2,798,800
- Rancho Palos Verdes Rolling 12 Median Prices: DOWN -5.7%
o Ending Q3 2023: $1,650,000
o Ending Q3 2022: $1,750,000
- Rolling Hills Estates Rolling 12 Median Prices: DOWN -20.3%
o Ending Q3 2023: $1,395,000
o Ending Q3 2022: $1,750,000
The rolling-12 numbers seems to confirm weakness on The Hill and that includes the big price drop in Rolling Hills Estates.
Again, the numbers do not lie here. Prices are weak, especially in Palos Verdes Estates and Rancho Palos Verdes.
- Rolling Hills Rolling 12 Median Prices: UP +3.7%
o Ending Q3 2023: $4,425,000
o Ending Q3 2022: $4,267,500
After an incredible surge during the pandemic and then a big plunge lower post-pandemic, Rolling Hills seems to have found its footing and is flat on a rolling 12-month average. The spike in pricing really threw off numbers for a couple of years and it seems like the mid $4 million range is the sweet spot for the gated city.
- Palos Verdes Estates Q3 Closed Sales: DOWN -7.5%
o Q3 of 2023: 37 sales
o Q3 of 2022: 40 sales
- Rancho Palos Verdes Q3 Closed Sales: DOWN -25.9%
o Q3 of 2023: 80 sales
o Q3 of 2022: 108 sales
- Rolling Hills Estates Q3 Closed Sales: DOWN -34.2%
o Q3 of 2023: 25 sales
o Q3 of 2022: 38 sales
Just like Manhattan Beach, the Palos Verdes Peninsula saw significant drops in sales as well. In fact, many of these peninsula cities, on a rolling 12-month sales basis, are seeing their lowest closed sales numbers since the Great Recession.
The Hermosa Beach median price numbers are more positive. This is the second quarter in a row we have seen median prices increase for this small beach city.
- Hermosa Beach Q3 Median Prices: UP +2.7%
o Q3 of 2023: $2,165,000
o Q3 of 2022: $2,107,650
After seeing a nice 12.6% price bump last quarter, the city kept its momentum up over $100,000 for the quarter.
- Hermosa Beach Rolling 12 Median Prices: DOWN -1.1%
o Ending Q3 2023: $2,175,000
o Ending Q3 2022: $2,200,000
While the quarterly numbers are positive, the 12-month-rolling numbers do factor in Q4 of 2022 and Q1 of 2023, which were down after peaking above $2.3 million. Median prices are soundly below that $2.3 million number today, and we will see if Hermosa can continue to buck the trend or if this is just short-term movement.
- Hermosa Beach Closed Sales: DOWN -6.5%
o Q3 of 2023: 43 sales
o Q3 of 2022: 46 sales
Hermosa sales are down. And while a 6.5% drop does not seem significant, we saw 20% to 50% sales drops in previous quarters. Again, on a rolling-12 sales comparison, these are the lowest sales levels Hermosa Beach has seen since the Great Recession.
To conclude the Q3 numbers, we have the city of Redondo Beach.
Median prices here are essentially flat. It is tough to make a read on Redondo Beach since numbers have been up and down over the previous four quarters.
- Redondo Beach Q3 Median Prices: DOWN -0.3%
o Q3 of 2023: $1,435,000
o Q3 of 2022: $1,440,000
***Please note for simplicity purposes, these numbers do include parts of Hollywood Riviera (Torrance), but all comparable sales contain Hollywood Riviera numbers, so any movement is apples to apples comparisons***
- Redondo Beach Rolling 12 Median Prices: UP +0.9%
o Ending Q3 2023: $1,415,000
o Ending Q3 2022: $1,402,500
The rolling-12 numbers are up which is a nice supporting factor for the market with larger numbers.
- Redondo Beach Closed Sales: DOWN -7.8%
o Q3 of 2023: 154 sales
o Q3 of 2022: 167 sales
Like many of the other beach cities, sales are down in Redondo Beach. Again, while not a significant down number, it is worth noting these are about half the number of sales that occurred three years ago. What’s more, a rolling-12 number shows that this is the lowest sales pace in Redondo Beach history – far lower than even during the worst times of the Great Recession. Ouch!
There is a lot to digest here! As always, there are a load of numbers and commentary that might have made your eyes glaze over. So, I wanted to recap the main highlights:
- Manhattan Beach, Palos Verdes Estates, and Rancho Palos Verdes have seen their quarterly median prices decline four quarters in a row. There is no doubt a cooling trend in these cities.
- Sales in many, if not all South Bay cities are at historically low numbers – either at all-time lows or lows not seen since the Great Recession. While supply is scarce, slower sales ultimately can become a major drag on the market.
- Redondo Beach seems to be the only city hanging on to its prices, while Hermosa Beach has two positive quarters in a row.
It is evident that we are in a shifting marketplace that is tough to read and holds potential risks. The mood around South Bay home prices should certainly be a lot less positive as the proof is in the pudding aka the numbers.
As always, I will continue to monitor the quarterly results and continue to report weekly on the latest South Bay home market action.