We have officially concluded the third quarter of 2021 and I am excited to share the latest numbers driving the South Bay home market on this week’s blog.
If you remember the previous quarterly update (Q2 of 2021), I talked about how Q1 and Q2 of 2021 were expected to be extremely strong due to “easy comps” from 2020 during the start of the Coronavirus pandemic.
For reference, take a look at last quarter’s blog here: “Second Quarter South Bay Home Data Illustrate Pandemic Buying Frenzy”
Reading last quarter’s blog, you will see that I thought Q3 and Q4 will be the key data to tell us where this market is going. I have been eagerly awaiting these numbers and am excited to share them with you today.
Without further ado, let’s dive into the quarter!
Manhattan Beach
We have finally cleared the ugly numbers of March 2020 and April 2020 which affected both Q1 and Q2. Those rough quarters made for easy comps, but now we can really see what is going on in Q3.
Below are median prices for the Manhattan Beach home market of Q3 of 2021 versus Q3 of 2020:
- Manhattan Beach Median Prices: UP +16.77%
- Q3 of 2021: $3,125,000
- Q3 of 2020: $2,676,000
The 16% pop in median prices year-over-year is still holding a strong pace for the toney beach city.
No slow down for the Manhattan Beach market as its clear price growth is here to stay for longer. If you were to look at prices from Q2 of 2021 to Q3 of 2021, prices grew by $200,000 to get back to around record highs.
- Manhattan Beach Closed Sales: DOWN -8.17%
- Q3 of 2021: 146 sales
- Q3 of 2020: 159 sales
This is where we see the numbers shift from what we have been used to seeing over the past 12 months…sales are down. Last quarterly report, closed sales in Manhattan Beach were up 45%, and now it has officially reversed course.
The sales pace is still strong in Q3 but it looks like sales may plateau and if home demand begins to slow down, then we will definitely see it in a closed sales decrease.
For now, not much to make of the sales number except for that the pace is holding firm rather than a surging recovery from easy comps.
Palos Verdes Peninsula
The large Palos Verdes marketplace posted another strong quarter with its median price.
For the most part, “The Hill” saw its prices up double digits. Below are Q3 of 2021 numbers versus Q3 of 2020:
- Palos Verdes Estates Median Prices: UP +13.84%
- Q3 of 2021: $2,402,000
- Q3 of 2020: $2,110,000
- Rancho Palos Verdes Median Prices: UP +26.07%
- Q3 of 2021: $1,652,150
- Q3 of 2020: $1,310,500
- Rolling Hills Estates Median Prices: UP +7.95%
- Q3 of 2021: $1,750,000
- Q3 of 2020: $1,621,000
- Rolling Hills Median Prices: UP +16.62%
- Q3 of 2021: $3,914,000
- Q3 of 2020: $3,850,000
The Palos Verdes Estates market continued its hot run up almost 14% and on a rolling 12-month basis, hitting an all-time high. Much the same story in Rancho Palos Verdes which was up over 26% and hit its rolling 12-month record as well.
Interestingly, both Q3 median prices were slightly below last quarter’s number, but by a very small amount, perhaps signaling a market plateau. Still too early to tell, but something to watch.
Behind the Gates in Rolling Hills hit a 17% price increase, which is nice growth, but far from the almost 40% growth just last quarter. Again, the median price was below its high seen last quarter.
Finally, Rolling Hills Estates saw prices rise by about 8% year-over-year for the quarter. This was the one city that had a higher median price from the past annual quarter, but still showed deceleration in growth from the previous Q2 number.
Now onto closed sale in Palos Verdes:
- Palos Verdes Estates Closed Sales: UP +16.41%
- Q3 of 2021: 78 sales
- Q3 of 2020: 67 sales
- Rancho Palos Verdes Closed Sales: UP +18.92%
- Q3 of 2021: 176 sales
- Q3 of 2020: 148 sales
- Rolling Hills Estates Closed Sales: DOWN -9.25%
- Q3 of 2021: 49 sales
- Q3 of 2020: 54 sales
- Rolling Hills Closed Sales: FLAT 0%
- Q3 of 2021: 12 sales
- Q3 of 2020: 12 sales
All four cities were a mixed bag with two showing sales increases, one seeing decreases, and one completely flat.
If you compared it to last quarter almost across the board, you saw triple digit sales increases. Above is what sales look like as you get past the easy comps and finally start to look at some “normalized” numbers.
Once we have Q4 numbers, we can compare sales data to see if we can come to a conclusion on where the trend might be headed.
Hermosa Beach
The smallest city covered on the blog, Hermosa Beach, has kept its strong pace.
- Hermosa Beach Median Prices: UP +7.54%
- Q3 of 2021: $2,050,000
- Q3 of 2020: $1,906,250
Hermosa Beach showed off incredible resilience during the pandemic and just won’t quit its strong run. Prices are up nicely by 7.5% and squeaked out higher median prices by $10,000 when compared to Q2.
Like most cities seeing sales normalize, Hermosa was no different.
- Hermosa Beach Closed Sales: UP +2.85%
- Q3 of 2021: 72 sales
- Q3 of 2020: 70 sales
You can see how the small city is trending flat year-over-year on the quarter, whereas just last quarter sales were up 100% thanks to those easy pandemic comps. The key here is for Hermosa to hold that sales pace and avoid deceleration, although that would still not be a huge worry headed into the slower holiday season.
Redondo Beach
The vast real estate market of Redondo Beach is the final city to cover this week.
As always there are numbers for the entire city, and then I divide sales data between North and South Redondo, for further context.
- Redondo Beach Median Prices: UP +20.93%
- Q3 of 2021: $1,300,000
- Q3 of 2020: $1,075,000
Redondo price increases, unlike the above cities, are beginning to accelerate. Q1 saw a 13% rise, Q2 saw a 17.7% increase, and this quarter exploded above 20%. This is easily the strongest trending city in terms of price.
Below are closed sales for Redondo:
- Redondo Beach Closed Sales: DOWN -13.10%
- Q3 of 2021: 232 sales
- Q3 of 2020: 267 sales
This decrease is not surprising, considering decelerating sales throughout most of the South Bay as we get back to neutral. There is likely not much to be made about this unless we see a downtrend over the next couple of quarters.
Now, onto splitting up the city between northern and southern portions.
- 90277 Redondo Beach Median Prices: UP +19.29%
- Q3 of 2021: $1,330,187
- Q3 of 2020: $1,115,000
South Redondo accelerated its price increases yet again which is a great sign.
- 90278 Redondo Beach Median Prices: UP +22.93%
- Q3 of 2021: $1,300,000
- Q3 of 2020: $1,057,500
The exact same can be said of North Redondo showing a price increase with vast breadth throughout this affordable beach city.
Conclusion
The South Bay home market continues to demonstrate strength in its prices. While some increases may be decelerating, prices are still rising at a strong clip.
As expected, with “tougher comps” we saw sales flatten out and even fall in some markets. While not an indicator of worry just yet, these numbers will be important to watch to see what trends develop over the next few quarters.
Additionally, Q4 will shed even more light if we go back to traditional seasonality and see slowing in price increases and sales…or if we continue to keep up the torrid pace brought on by the change in buying habits from the pandemic and historically low rates.
There are still tests to pass in Q4 and beyond, however, the Q3 numbers were a “pop quiz” that the market aced for the most part.
The South Bay market continues to be in great shape with light signs of slowing. Any sort of plateau would be a relief for buyers, and sellers will still fetch all-time highs.
I’ll be watching closely to give you notice if the market begins to shift.
Stay tuned for Q4 numbers in January.
Have a great weekend!
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]