The Best (and Worst) Performing South Bay Home Markets of 2022

We are right around the corner from saying adios to 2022. It has been an up-and-down year with the first quarter of this year seeing prices scream higher, and then slowly peter out in the second-half thanks to surging interest rates.

I have written a post of the best and worst markets for the last two years and one in 2019 covering the entire decade. You can find those posts here if you would like to compare the results.

Below you will see the top five best performing submarkets in the South Bay, along with the five worst performing and how each zip code performed over the year. I hope this information on the 33 MLS submarkets will serve as good perspective for our readers as we head into 2023.

Reminder: Since we are in December without the complete data, this is a rolling 12-month average of median price compared year-over-year ending in November.

Best Performing Submarkets of 2022

1. Monte Malaga – Up 31.5%
2. Valmonte – Up 27.1%
3. Eastview – Up 21.8%
4. Lunada Bay – Up 20.0%
5. Tree Section – Up 18.7%

Palos Verdes Estates Markets Up Huge

The Palos Verdes Estates’ home market was on a tear in 2022. Not only did the city have the top spot in Monte Malaga up an insane 31.5% year over year, but it also held three of the five spots on the list!

Valmonte came in second place up 27.1% and Lunada Bay up by 20% on the year.

What’s interesting is that last year three of the top five spots went to Rancho Palos Verdes submarkets and Rolling Hills. It has now flipped to the northwest side of the Hill.

All in all, Valmonte and Lunada Bay are the affordable PVE markets that attract buyers from the beach, and Monte Malaga’s show stopping views and oversized lots were en vogue this year.

Affordable Rancho Palos Verdes Surges

While Rancho Palos Verdes dominated the top five list last year, Eastview was not on the list.

This year, the most affordable market on the Palos Verdes Peninsula took third place up 21.8% due to its affordability amid skyrocketing prices to begin the year and showed off its resilience as rates made home buying more difficult.

This market is not only affordable and in the Palos Verdes school district, but it is a commuter’s dream from the 110 freeway along with easy access to restaurants and entertainment in San Pedro and Long Beach. It remains an in-demand area as rates push into the six percent range.

Manhattan Beach Tree Section is Hot

The Tree Section has been on fire in 2022. Plagued by low inventory and short days on market, the Trees were up 18.7%.

This is a massive reversal from last year where it was the second worst performing market of 2021. That said, take the 2021 worst performers with a grain of salt as that was an insane year of appreciation – Tree Section prices were still up 5.4% in 2021, but incredibly, that was considered an underperformance.

Best of luck landing a Tree Section home if the market continues at its current torrid pace in 2023, thanks to its great single-family homes options west of Sepulveda.

Worst Performing Submarkets of 2022

1. Mira Costa – Down 18.0%
2. Rolling Hills – Down 5.0%
3. East Hermosa – Down 3.1%
4. P.V. Drive South – Down 2.9%
5. SoRo West of PCH – Up 0.6%

Mira Costa Comes Crashing Down

Another reversal from last year, East Manhattan Beach’s Mira Costa submarket makes it to the top of the list as the worst performing submarket of 2022, down a whopping 18%.

This submarket had a heck of a run in 2021 where it was up 30%, however, it seems that was a banner year likely thanks to some incredible spec home sales that the market is not benefiting from in 2022.

Is the Mira Costa market crashing? Nope. But it is certainly taking a breather after an amazing run previously.

Rolling Hills Losing its Luster

The city “Behind the Gates” is taking a step back after an incredible price run in 2020 and 2021.

Thanks to the Coronavirus, this submarket performed better than anywhere else in the previous two years, up 30.3% last year and up 21.3% in 2020…simply amazing.

That run is finally taking a step back with this year’s performance being underwhelming and seeing prices depreciate by 5%.

This market had a lot of price increases to make up after being one of the worst performing home markets of the decade in the South Bay, growing a measly 8% from January 2010 to November of 2019.

With over a 50% simple appreciation increase the past two years, will this 5% decrease just be a bump in the road? Or will Rolling Hills return to its underperformance?

Three Down and Outs

Wrapping up the final three in the worst performing submarkets are East Hermosa (down 3.1%), P.V. Drive South (down 2.9%), and South Redondo’s West of PCH (up 0.6%).

This is a wide sampling of a variety in submarkets. Does this variety mean the market might be weak across the macro market? Or really much ado about nothing?

How Each Zip Code Performed in 2022

Last year, of the 33 submarkets, 31 of them had double digit price growth, while this year is beginning to level off. Below you can see how prices performed in 2021 by zip code:

90266 – Up 3.3% (Manhattan Beach)

90254 – Up 12.5% (Hermosa Beach)

90277 – Up 9.9% (South Redondo, some Hollywood Riviera)

90278 – Up 12.2% (North Redondo)

90274 – Up 16.2% (Mostly PVE, RH, and RHE)

90275 – Up 6.9% (Mostly RPV)

All six zip codes are decelerating with appreciation except for dependable Hermosa Beach which is accelerating ever so slightly compared to last year.

The coming 2023 year is going to be one of the biggest tests for our local South Bay real estate markets.

Is the South Bay truly a resilient market that can sustain growth, even after record appreciation the past two years? Or will it have to succumb to rising interest rates and affordability issues like much of the country?

It will be fun to watch and as always I’ll be here sharing the latest information with you first.

Cheers.

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