We are wrapping up the final month of 2023.
Before you know it, we will be kissing goodbye to 2023 and starting 2024 anew.
The past few years in real estate have been a wild ride, and the result of my annual best and worst performing home submarkets in the South Bay confirm that we are still on a bit of a roller coaster.
As you read further, I will share the top five best performing submarkets in the South Bay, along with the five worst performers. To put a bow on everything, I will also share how each zip code performed and give my final thoughts.
Please note: Since we are currently in December of 2023 without this month’s full data, I am using a rolling 12-month average of median prices ending in November and comparing that year-over-year.
The full year’s numbers will be released next month.
Best Performing Submarkets of 2023
Let’s jump right into the list:
1. Manhattan Village – Up 16.6%
2. Rolling Hills – Up 14.2%
3. SoRo West of PCH – Up 11.2%
4. P.V. Drive South – Up 9.1%
5. West Palos Verdes – Up 5.4%
Manhattan Village makes a roaring comeback in 2023 after seeing lagging appreciation during the Coronavirus pandemic.
When I checked back on past blogs, Manhattan Village was the second worst performing submarket in 2020 and the fourth worst performing market in 2021. The Manhattan Beach PUD (what is PUD? cant we spell this out?) was not what buyers wanted the past few years.
Today, in a world where appreciation was tough to come-by, Manhattan Village exploded higher by 16.6%, likely due to its affordability with sky-high mortgage rates.
Rolling Hills saw its home market make the top five markets in both 2020 and 2021 thanks to it being the perfect neighborhood to shelter-in-place during the pandemic. And, after it made the bottom five performer in 2022, it is now back in the top five with a fabulous 14.2% appreciation.
South Redondo’s West of Pacific Coast Highway submarket saw fabulous growth in 2023. This pocket is a luxury coastal enclave, but at a significantly more affordable price point than Manhattan or Hermosa Beach. Due to soaring interest rates, beachside buyers look to have flocked to this community.
Both Palos Verdes (P.V.) Drive South and West Palos Verdes climbed higher, taking the fourth and fifth place spots respectively. It seems that the coastal Palos Verdes markets on the way to Terranea were in high demand.
Worst Performing Submarkets of 2023
Onto the list of worst performers:
1. Malaga Cove – Down 18.5%
2. Mira Costa – Down 17.3%
3. Hill Section – Down 15.9%
4. Valmonte – Down 13.7%
5. Manhattan Beach Tree Section & South Redondo’s South of Torrance Blvd. (Tied) – Down 12.9%
Malaga Cove finds itself in the bottom five for the second time in four years. It was the fifth worst performing submarket back in 2020 and now finds itself as the absolute worst performing submarket of 2023.
Last time around, its drop was only 3.99%, but a fall of 18.5% is a big, big ouch!
Manhattan Beach’s Mira Costa submarket east of Sepulveda had some amazing gains in 2020 and 2021, growing a whopping 24.5% and 30% respectively.
It has been a different story in 2022 and now in 2023 where the submarket fell by 18% last year and now 17.3% to close out 2023 – another big ouch.
The Manhattan Beach Hill Section finds itself in the bottom five for the first time, down 15.9%.
After a big year of growth in 2022 (up 27.1%), Valmonte has now come to a screeching halt and reversed course by 13.7%. The white-hot demand in this neighborhood looks to have gotten in over its skis and pulled back dramatically thanks to rising interest rates.
And finally, two submarkets tied for the fifth worst performance in the South Bay: The Tree Section in Manhattan Beach and South Redondo’s South of Torrance Blvd. down 12.9% each.
South Bay Home Zip Code Results in 2023
To round out the data dump, below is a list of how each zip code performed from a perspective with greater breadth:
• 90266 – Down 11.8% (Manhattan Beach)
• 90254 – Down 3.3% (Hermosa Beach)
• 90277 – Down 5.3% (South Redondo, some Hollywood Riviera)
• 90278 – Down 4.4% (North Redondo)
• 90274 – Down 5.9% (Mostly Palos Verdes Estates, Rolling Hills, Rolling Hills Estates, and Palos Verdes Peninsula)
• 90275 – Down 2.3% (Mostly Rancho Palos Verdes)
The zip code results in 2023 are in sharp compared to the 2022 numbers.
While last year, the six postal codes all saw appreciation (with some significant appreciation), the story was different this year with all markets declining.
That said, there were clues and if you read my post last year, I made sure to note that while appreciation was intact, the price growth was decelerating.
No other way to slice it other than the South Bay is looking like it is going to book a tough year in 2023. Let’s see what my year-end results bring in my early January 2024 posts.
Final Thoughts: Most Submarkets in the Red
I want to put a bow on the 2023 South Bay home market performance through November.
Of the 33 submarkets I cover from Manhattan Beach to Palos Verdes, 21 of those markets declined. Just 11 submarkets went higher (mostly just slightly) and one submarket was flat (Mira Catalina).
We have not seen a South Bay marketplace in the red for quite some time.
As you can see, the majority of submarkets declined, and that broad based underperformance was confirmed by the equally disappointing performance in each zip code.
Without question, the incredible home price run from 2020 to 2022 could not go on forever, and it looks like that time is now thanks to record low affordability and generationally high mortgage rates.
All that said, it could have been a lot worse. Thanks to record low supply, our home marketplace declined at a more muted pace.
It will be interesting to see what 2024 brings and I plan to bring you all the latest happenings in the new year.
See you next week.
Richard Haynes
DRE: 01779425
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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]