The original BeachChatter discusses the housing market in the coastal communities south of the city of Los Angeles. Some articles are peculiar to a single city. Some discuss the region as a whole. The focus is on privately owned housing.
The current housing market is in an interesting position. Mortgage interest rates are high, but home prices are starting to cool off. It raises the question of whether it’s a good time to buy. The advantage of buying now is that home prices, while expected to continue to drop, are the lowest they’ve been in quite a while. That means you may be able to get a home at a decent price without heavy competition, and start to build equity. The disadvantage is that you’re locking in a high interest rate.
That’s where refinancing comes in. While the price of a house can’t be renegotiated once the sale is finalized, your interest rate can. This is why buying with a high interest rate can be appealing if other conditions are favorable. But this is risky, because you never truly know how long rates will remain high. It could take a long time for interest rates to drop, and it’s even possible that by that time, home prices will also be lower. In this situation, not only did you essentially overpay for your home, but you’ve been stuck with a high interest rate for longer than anticipated. It’s also worth noting that if the current interest rates scare you enough to already be thinking of refinancing in the future before you’ve even bought the home, there’s a good chance it’s because you can’t truly comfortably afford the payments for any considerable length of time.
So should you consider buying now and refinancing later? What it ultimately comes down to is that it’s a risky time to buy, and it’s not entirely clear whether it’s worth the risk even if it pays off. What is clear is that if you can’t afford to task risks, you definitely shouldn’t. But if you can comfortably wait as long as you need to, it simply boils down to real estate as a long-term investment. In that case, it’s actually one of the lower risk types of investments, but that doesn’t negate the fact that the risk is higher than usual in the current climate. The actual answer will depend on the individual and on the future, but likely answers are either “no” or “probably not.” What are some alternatives, then? Waiting for mortgage rates to drop, or even just waiting for home prices to drop more, since that can’t be renegotiated. In the meantime, you can also consider upgrading your current home to increase its sale value for when you do buy.
The number of homes sold in the Los Angeles South Bay during the first six months of 2023 is the lowest sales volume for a first half in the past five years. Fewer homes have been sold since the new year than sold during the same period of the worst year of the pandemic.
The first half of 2023 has ended with 24% fewer sales than the same period in 2022, which was itself down 15% from 2021. The peak of the market was early 2021, when interest rates were among the lowest in history, exploding the number of potential buyers. The lowest sales volume was during 2020 when 3311 homes were sold, which was still greater than the 3221 sold the beginning of this year.
Median Price Begins Downturn
Coming right on the heels of the sales volume collapse is a drop in the median price. Prices today are down from where they were in 2022, which was the peak of the recent market. The chart below reflects the median price for the first and second quarters of the past five years. Typically, the first quarter is the slowest, with the number of sales increasing through the second quarter and then slowing again for the third and fourth quarters. Here the growth from Q1 to Q2 shows and we can see the change from year to year.
As always, bear in mind that the Palos Verdes Hill offers a comparatively small sample size, so a couple of significant sales can shift the plot lines dramatically on a chart. The chart above shows one such anomaly where PV the median price actually declines in the second quarter.
Looking across the years from 2019 all four areas show the same upward movement in median price until the second quarter of 2022. Then, comparing it to the second quarter of 2023, we can see the trend shifting downward. For example, the Beach Cities median fell from $1.82M in the second quarter of 2022 to $1.72M in the second quarter of 2023. The weakness in median prices is driven by increasingly steeper mortgage interest rates. Barring a change in market dynamics, anticipate this line turning into a steeper downslope for residential prices starting in winter of 2023/24.
When Is the Bottom?
The market is clearly taking a downward turn. Sales volume is off, median prices are turning down. Sellers are not putting properties on the market. Buyers aren’t buying. The few forecasters willing to make a guess this early are saying real estate won’t come back until 2025, possibly 2026. For those who are “waiting for the bottom of the market,” remember that by the time you read it in the headlines—you’re too late—the bottom is gone.
Beach Cities Sales Dropping Fast
Median prices at the Beach have fallen 5% from last June, coming in this year at $1.72M, an even $100,000 below June of 2022. Year to year sales for June are down 7% from last year, at 124 units compared to 133 in June of 2022.
Month over month statistics have been highly volatile since the beginnning of 2023. Interest rates and prices have changed erratically, making short term forecasts nearly impossible. Month to month sales volume has bounced in a range from 2% to 45%. In just six months, monthly median prices in the Beach Cities have ranged between -18% and 26%.
Year to date sales volume at the Beach is down 25% from last year and is off a full 35% from 2019.
The year to date median is down 3% compared to 2022, though it is still 32% above the median in 2019.
Despite market conditions, homes in the Beach Cities remain highly desirable. For June, 78% of sales transactions closed within 30 days of listing and sold for 2.61 % above asking price. Beach homes also offer a great deal of diversity. June sales showed a 19 million dollar range between the low sale at just over $500K and the high sale at $19.5M.
Harbor Area Home Sales and Prices Down
Year to year-same month sales in the Harbor area have been negative since the first of the year. Prices were still holding up in June of last year, but sales volume had been dropping through all of May and June. As a result, the number of homes sold dropped a mere 1% coming into June of 2023. That looks good until compared with the year to date decline of 24%.
Market conditions in the Harbor last year gradually changed from joy for rock bottom interest rates at the beginning of the year to caution as sales tapered off and sales figures stated taking a hit. Median prices for June of the current year have fallen 7% from the June 2022 median of $830K.
Until now, the Harbor area has shown mixed results in the month over month statistics. For June compared to May sales volume was up by 5% (353 versus 337), while median price was up 7% ($772K versus $720K). Like the Beach Cities, the Harbor Area is following a more normal upward swing from the winter doldrums into the spring selling season.
That upward swing is not expected to go very high or last very long. At 1710 homes sold, year to date sales volume from January through June is down 24% versus 2259 sold in 2022. Sales volume is likewise down 17% from 2071 during the same six months in 2019. The variance in monthly sales is expected to drop into the single digits starting in July.
Median prices are down 4% compared to 2022 though still up 33% versus 2019. (Note: Using The Federal Reserve’s “target inflation rate”of 2% annually would have put the Harbor area median price increase at a little over 8%. That implies an “excess growth” of about 25% in median price during the pandemic buying splurge. Much of that difference, if not all of it, is expected to disappear over the next 18 to 24 months.)
June sales detail shows 77% of sales closing escrow within 30 days. Buyers were still bidding up, with the sales price exceeding the list price by 2.61%. The highest sale recorded in June for the Harbor was $4.25M; while the lowest was $527.5K.
PV Peninsula Volume and Prices Mixed
Palos Verdes, contrasting May versus June of 2023 shows a 22% increase in the number of homes sold for a monthly total of 79. At the same time, the median price dropped by 13%, falling to $2M even. Expectations for month over month statistics include fewer sales and more aggressive price reductions as 2023 wears on. The summer and fall months are projected to have weaker home sales, both in volume and pricing, as interest rates increase and buyers and sellers who “must move” run out of options.
Year over year same month sales, showed a volume growth of 1% (one sale), accompanied by a 14% drop in median price from $2.3M. That 1% increase is the first time in 2023 that any of the areas has shown positive growth in the number of homes sold. As such, and knowing that the PV Hill is considerably smaller that the other areas we measure, readers are cautioned about the wide swings in PV statistics.
Sales volume for the first six months of 2023 is down 26% compared to 2022 (326 homes in 2023 versus 438 in 2022. Similarly, sales are down 9% from 2019 when sales of 358 homes were recorded. Median prices of $1.8M for the same period are down 13% from 2022 prices of $2.1M and up 36% from $1.3M in 2019.
Market time has remained good, with 75% of sales closing withing 30 days. Sellers have enjoyed selling prices 2.3% higher than asking prices, a trend expected to disappear before the end of summer. Once again showing the range of homes available in the South Bay, the high sale in PV was $10M while the low was $610K.
Inland Area Makes Strong Showing
Sales volume of 161 homes in the Inland Area for June was up 33% over sales of 121 in May. With 33% more activity came a 1% reduction in median price, which fell to $875K after reaching $880K in May.
Comparing June of this year to June of last year showed a volume decrease of 3% from 166 in 2022. Likewise, this June showed a median price decrease of 3% from last year’s $905K.
Year to date volume for the first six months was down 68%, for 669 units sold, versus 869 in 2022. Going back to 2019, the most recent “normal business year,” sales volume was down 21% from 799 sold in 2019.
Median price of Inland area homes for the same six month period showed at $863K, down 3% from $887K in 2022; and up 32% from $652K in 2019. Days on market remained under 30 for 82% of the Inland area homes sold in June. Buyers offered 2.6% above asking price. The high market sale was $2.2M while the low was $390K.
People get the recommendation to “go green” all the time. But how does one actually do that? Well, there are several ecologically friendly options that you can take advantage of when making home improvements. The benefits of natural light and recycling are well known, but some of there tips you may not be aware of.
Eco-friendly materials doesn’t necessarily mean recycled. Bamboo and cork are particularly sustainable, and cork can be re-used easily. Locally sourcing materials can also reduce environmental impact by reducing transportation emissions. Look within 500 miles of your home if possible. Unfortunately, neither bamboo nor cork oak grows natively in California, but you can still source the products from local businesses. If it’s an option, choose programmable thermostats, low-flow showerheads, faucets, and toilets, low-VOC (volatile organic compound) paints, and Energy Star rated appliances.
Obviously, when looking at a home appraisal, the appraiser is the expert. But appraisers are still human, and can make mistakes. Make sure to read over the appraisal report, especially if you feel the appraisal value is wrong. It’s possible the appraiser entered something incorrectly or there was a communication error.
If you review the report thoroughly, you may be able to find discrepancies even if you don’t know much about appraisals yourself. If you do, don’t be afraid to talk to the appraiser about it. Sometimes just pointing out a mistake can solve the problem. If you do need to argue your case, though, having thoroughly read the report can only benefit you. This lets you potentially gather enough evidence that the appraiser revises their appraisal.
If that doesn’t work, you may have to request a reappraisal from the lender. Though, you should note that not all lenders allow reappraisals, and even if they do, they won’t accept your request without sufficient evidence. If you can’t get a reappraisal — whether the lender doesn’t allow them or the request was denied — the next person to talk to is the other party in the transaction. Be open with them and discuss the situation so they understand why you want to renegotiate. If you’re the seller, you may need to adjust the purchase price, and if you’re the buyer, you may need to explore other financing options.
For a long time, a new homeowner’s first purchase has likely been a starter home. A starter home means that the homeowner expects to live there a short time, sell once it appreciates, then buy a larger home. People generally live in starter homes between three and seven years. That trend is going away, though, for a few different reasons.
The largest contingent of homebuyers, and also first-time homebuyers, is currently Millennials, who are between 27 and 42 years old right now. This roughly corresponds to the 25 to 44 age range homebuyer contingent used by the National Association of Realtors (NAR). NAR discovered that among those in this contingent who bought a home last year, 40% planned to live in the home at least 16 years. Not only is this more than triple the average length of ownership of a first home, it’s also double the average length of homeownership overall. This value is 48% for the lowest age bracket, between 18 and 24 years old. For reference, Generation Z is currently between 11 and 26 years old.
The major reasons for this are economic. Interest rates have skyrocketed so high this year that those who have managed to find a home last year likely locked in a low interest rate. They’ll want to ride that rate as long as they can. Even those who weren’t able to find a low interest rate aren’t going to want to go through the hassle of finding a new home to purchase, as there simply aren’t very many homes available. Supply is lower than demand, and construction is still failing to meet demand, even as the construction rate inches back upward and demand has somewhat dropped off. They’re more likely to refinance once rates drop than look for a new home. Home prices are also a factor. Rising prices means needing to save up for longer, both before you buy your first home and while living there. There’s also a bit of a psychological factor here; if you need to wait a while to buy, you want it to be something worth the wait. There’s also another potential reason that economists may not notice at all, since it’s more cultural. Millennials are less likely than older generations to marry young or have children. This means they are also less likely to need a larger home. Their first purchase could look like a starter home, but it may actually be perfectly well suited to their long-term needs.
Real estate is widely considered one of the most reliable forms of investment. But that doesn’t mean you can go into it completely blind and expect profits. It’s entirely possible that even a bad real estate investment could net profits eventually, but you shouldn’t count on it. If you’ve never done any real estate investing before, make sure to do your research first. Even if you have, you need to be aware of shifting market conditions.
For those just starting out, start by gathering information. This could take some time, so don’t expect to start investing immediately. Build networks with more established investors as well as agents, property managers, and contractors. Do your own research as well, particularly by learning about the various property types, relevant laws, and financing options.
Once you know about investing in general, you can move on to researching specific properties to invest. Determine the goals of your investment. How much profit do you want? When do you need the money? What sort of risks are you willing to take? Knowing the different property types is particularly important for this step, since it allows you to better pick the right investment as well as diversify your investments. Now you can examine the market trends and see what’s available that fits your plan. If there isn’t much around, you may need to adjust your plan. When identifying properties, take into account factors such as the location, expected appreciation, rent values, and property condition.
Home improvement doesn’t have to mean large projects. There are plenty of quick and inexpensive DIY options that provide additional value to your home with minimal cost and effort. Some of these are frequent suggestions already, but you may not be aware of how efficient they are at improving the value of your home.
Some very common suggestions are repainting, improving curb appeal, and upgrading lighting. Repainting yourself sounds like a lot of work, but it’s still one of the highest value-to-cost investments possible, and may not actually take as long as you expect depending on the size of your home. There are many ways to improve curb appeal, but one of the simplest ones, adding plants or maintaining existing ones, doesn’t cost much at all in terms of either time or money. Upgrading lighting is generally a longer term investment, but this is not because it takes time to achieve, since it actually takes very little time. However, the benefit comes in the form of savings from reduced energy costs over time.
Less common suggestions include replacing hardware and fixtures, adding mirrors, and decluttering. Fixtures can be expensive sometimes, but they’re a solid investment in terms of value when you go to sell. When you’re living in the home, you often don’t notice small things like old doorknobs and drawer handles, but buyers will take notice if these things have been upgraded recently. Mirrors are surprisingly effective at improving the atmosphere of a room. They reflect natural light, making the space appear brighter, and also create an illusion of more space. Decluttering may not seem like it would affect your home value at all, since those items aren’t really part of the home. But prospective buyers will still take note of it and have a negative reaction to a messy-looking home, even if there’s nothing wrong with the home once it’s cleaned up.
The space mission Huginn, planned for August 2023, will be a six-month long research stay at the International Space Station. One of the astronauts on the mission, Andreas Mogensen, wanted to bring some sort of snack from Earth to keep his energy up during long research hours. Mogensen decided to look to his friend Thorsten Schmidt, a Danish chef who had previously worked with him on another mission.
Schmidt’s solution was a new kind of chocolate bar. These bars, which he calls SPACECRAFTED, have a dark chocolate base and contain over 70 natural ingredients. Schmidt checked with a food chemist with over two decades of experience, Lisbeth Ankersen, as well as the European Food Safety Authority to make sure SPACECRAFTED is packed with nutrients. But you don’t need to be an astronaut to get these chocolate bars. They’ll be available on Earth starting mid-August, with three flavors to start and more to come.
Starting from the beginning of 2023, and going until 2032, the federal government has announced tax credits for improving the energy efficiency of one’s home. Some of the credits apply only to primary residences; others apply to both primary residences and second homes. In either case, a tax credit of 30% of the cost of improvements can be applied to federal income tax.
The energy improvements that apply to either type of residence are rooftop solar panels, wind energy improvements, geothermal heat bumps, and battery storage. The types of improvements that apply only to primary residences, as long as they are energy efficient varieties, are heat pumps, heat pump water heaters, insulation, doors, windows, and electrical panel upgrades. This tax credit also applies to home energy audits. The primary residence only tax credit has a limit of $3200 annually.
Real estate has long been considered one of the least risky investments. The market always has its ups and downs, but this is also true of any other investment, and real estate never disappears entirely. As with any investment, it’s best if you know what you’re doing. However, even if you don’t make the best investment possible, investing in real estate rarely becomes disastrous except in the event of economic conditions that reach multiple markets and negatively affect large segments of the population. A mediocre real estate purchase generally just means you may have to wait longer than anticipated to profit off your investment.
With some other investments, bottoming out may mean the product is all but dead and it’s pointless to invest, so it’s better to wait until the prices are increasing, but still low. Not the case with real estate, given its cyclical nature. This gives you a lot more leeway in term of when to invest in real estate. Part of the reason for this is that homes tend to appreciate over time, rather than depreciate as many other products do. If inflation is high, while it may not be the best time to invest in general, diversifying into real estate is a solid option. This is especially true if you purchase a rental property, as rent prices also go up with inflation.
The scientific consensus up until now has been that the universe has been in a constant state of expansion since the Big Bang. The reason for this belief was the phenomenon of redshift. Redshift is the stretching of light wavelengths as an object moves away from the viewer. Because more distant objects had higher redshift, scientists interpreted this as universal expansion. There have certainly been disagreements on the various details, but this general assumption has remained relatively constant. But one topic of disagreement — the cosmological constant — has led some scientists to look at the issue from a different perspective.
But what is the cosmological constant, and why is it so contentious? The cosmological constant is the term for the background energy of space. When originally conceived, Einstein thought this constant to be equal to zero. However, when scientists began to notice that the expansion of the universe — as measured by redshift — appeared to be accelerating, they needed an explanation. It turned out that their hypothesis could be explained by having a cosmological constant that is not zero, but a positive number. Unfortunately, while this solved one issue, it created others. More and more calculations started simply not lining up to observations.
Lucas Lombriser, a theoretical physicist at the University of Geneva, thinks Einstein was right about the cosmological constant being zero. Lombriser proposes an alternate explanation for changes in redshift. He suggests that the identity of the elusive dark matter is an axion field. An axion is a hypothetical particle that is already one of the strongest contenders for the true identity of dark matter. According to Lombriser, the specific properties of an axion field could account for both dark energy and changes in redshift, preventing the need for universal expansion as a cause of redshift changes, thereby solving the dark matter problem and the cosmological constant problem at the same time.
Homeowner’s insurance is not one-size-fits-all. Each insurance plan typically includes different coverage for different aspects of your home. It may include dwelling coverage, personal property coverage, liability coverage, or additional living expenses coverage. Not every plans covers each of this categories equally, so it’s important to know which plan best suits your situation, not just whichever is cheapest.
This means you should estimate the value of your personal belongings, evaluate your home’s risk factor for injury, and assess the likelihood of your home being temporarily unavailable. Doing this will help you figure out whether you need personal property coverage, liability coverage, or additional living expenses coverage, respectively. But don’t forget that the first step is actually determining the value of your home itself. That’s likely what’s going to be the most valuable, so you want to make sure you have suitable coverage for it. In order to do that, you also need to look at the insurance plan’s deductible. If the plan has relatively low insurance premiums, that could mean it has a high deductible, meaning you’d be paying quite a bit out of pocket before the insurance kicks in at all. If the cost of a total replacement is relatively low, though, a low premium plan could be right for you.
Plenty of people will tell you that curb appeal is important when making a first impression on buyers. Less commonly does anyone explain what you can do to achieve good curb appeal. Cleaning, yard maintenance, and repainting are still solid steps, but at this stage, everyone knows that — it’s not going to make your home stand out. You need to focus on the smaller details as well.
As already stated, repainting is great. But don’t just put on a fresh coat of the same color, unless it’s already a good color. Many homeowners save paint cans for just this purpose; however, it’s better to select colors strategically. Even on the exterior of the home, it should give an indication of the home’s character on the inside. If the exterior is painted a vibrant red or orange, for example, buyers will be expecting a colorful interior. If the exterior paint is a neutral shade, buyers will expect more subdued interior colors as well. You should also pay attention to the environment around the home, and pick colors that accentuate your home while not clashing with the environment.
One thing that makes this easier is that you do have some control over the home’s immediate environment. You can trim or remove trees on your property or transplant new ones. You can choose plants that can survive all year round, pick a variety of different plants, or replant as the seasons change. Even if you don’t have a yard, you can add window boxes. New, strategically placed lighting fixtures can also help with this by highlighting specific areas. Other elements that are technically not part of the structure of the home but can be updated or replaced are your house numbers and mailbox.
If you’ve ever bought a home, chances are you’ve heard of a property being “in escrow.” But what does this actually mean? Escrow is the term for a neutral third party holding funds and documents to be disbursed during a real estate transaction. This is typically either an escrow officer or a title company, and even if it’s a company, the entity will be referred to as the escrow officer. The reason for this is to safeguard funds to avoid misallocation or fraud, which is why it’s important that the escrow officer is trusted by all parties involved.
The escrow process is initiated when the buyer and seller open an escrow account and deposit the funds after agreeing on the terms of the transaction. This is also when the buyer deposits their earnest money and the escrow officer collects all necessary documents, such as the purchase agreement, title documents, and loan documents, among others. Once escrow is initiated, the buyer will then have a period to investigate the property and conduct inspections. If the buyer finds any issues during this period, that’s when they can request repairs or renegotiate the agreement. Once the buyer is satisfied, the next step is to remove contingencies, after which the transaction enters the closing process. During the closing process, the escrow officer prepares closing documents and coordinates signatures. Only after the documents are signed by all parties can the funds be disbursed and title transferred to the buyer.
It’s common nowadays, though not necessary, to use living trusts to hold real property. It’s also a common misconception that the trust owns the property. Trusts are complex, and contrary to what one may think, don’t actually get any simpler when there’s only one trustee. A trust is always an agreement between a trustor and a trustee. This doesn’t change even if they’re the same person, which is definitely possible, but you still need to know the difference.
The trustor is the person who creates and funds a trust, and sets the terms, beneficiaries, and trustees. The trustor is usually only one person, but could be a married couple. The trustor could also be a trustee, and often is when the trust is created, but may not be. Trustees, on the other hand, manage the trust and perform day-to-day tasks in accordance with the directions given in the trust. There could be any number of trustees. These are the actual owners of real property, not the trust itself. If at any point all trustees are deceased or unwilling to act, the trustor can appoint a new trustee, or the court can do so if the trustor is not able to or not allowed to by the trust’s provisions.
Trustees are also responsible for signing the certificate of trust that would be provided to the title insurance company. This document must have the date of the trust’s creation, identity of all trustors and trustees and whoever can revoke the trust, powers of the trustees, manner in which trust assets are taken, legal description of the property or whatever part is held by the trust, signatures of trustees, and a statement that the trust certification is still valid and correct. Normally, all trustees must sign, but there could be provisions in a trust that allow for less than all of them to sign. Trustees may give someone power of attorney only if the trust specifically allows for it.
SYNCOPATHS “BE LIKE THE SEA” CD RELEASE CONCERT Saturday, June 17 / 8PM at the Grand Annex Music Hall
Celebrate the Syncopaths release of their new CD! “Be Like the Sea” delivers a wide variety of songs and tunes from the Irish, Scottish, and American traditions, as well as original compositions. It’s sure to be a joyous night of contemporary folk music featuring vocalist Christa Burch, Ryan McKasson, Ashley Hoyer and Jeffrey Spero this Saturday night at the Annex.
Compared to last month, South Bay home sales look very positive, except for a little tarnish in the Beach cities prices. The sales volume was up by substantial margins in all areas. Prices were mixed with a remarkable median price increase on the Hill. The only exception: After showing positive growth for the past two months, prices at the Beach took a substantial tumble in May.
Year over year activity was an entirely different story. Sales volume was down significantly from last year in all areas. Prices took a hit everywhere except on the Palos Verdes peninsula. (More about that below.) Entry level homes in the Harbor and Inland areas were impacted the least, though even a 3% drop in a single month is significant in the world of real estate.
We report actual statistics rather than “seasonally adjusted”.numbers. May is traditionally the launch into buying season in the South Bay, so a May increase in volume from April is to be expected. On the other hand, a 10-20% decrease from May of last year indicates a heavily retrenching market. Every month since the beginning of this year, the number of homes sold in the South Bay has decreased in comparison to 2022.
Similarly, median prices across the South Bay have dropped from the highs of 2022. There have been scattered instances of positive change, like the 17% increase over May of last year for PV. Overall though, prices have been collapsing at an ever more steeply declining rate since January.
Much has been said about the steep rises and falls of sales volumes and median prices since the Covid pandemic hit in early 2020. That leaves 2019 as the last “normal” year of business. At the mid-year point we’ll give a more in depth comparison to 2023 to hopefully provide a more stable picture of the market. In the meantime, year to date statistics for the first five months reflect an overall decline of 23% in sales volume, and an increase of 33% in median price. The sales slowdown has most affected the Beach Cities with a drop of 39%, followed by the Inland area at 21%, the harbor at 19%, and finally the PV Hill with a 14% slip. A review of the changing median prices across that many years requires adjusting for desired inflation as opposed to uncontrolled inflation.
Beach Cities: More Sold at Lower Prices
Monthly, the Beach Cities have been on a roll. Even in April, when the other three areas took a nose-dive, the Beach climbed steadily higher in both sales volume and median price. The blue line on the monthly revenue chart below shows surprisingly strong growth.
A closer look at the sales data shows some of the detail. Two of the 121 Beach area sales were on the Strand, with one selling at $18.6M and the other at over $15M. Sales in that rarefied atmosphere tend to be few and far between. In fact, one of those properties sat on the Multiple Listing Service (MLS) for almost exactly three years before it sold. With the April median price at $1.6M, the impact to the aggregate statistics becomes apparent quickly.
Market time for the Beach Cities in May was actually quite prompt, with 79% of the homes sold having spent less that 30 days on the MLS. Pricing was equally strong, with sales prices coming in at two percent above asking price. While the high sale was $18.6M on the Strand, the low was $530K at Brookside Village in Redondo Beach.
Harbor Area: Sales Up – Prices Down
As the red line in the chart below reflects, Harbor area sales entered the spring selling period with a bang! Sales volume was up 27% over April—but, remember April sales were down by 12% in the Harbor and down 13% across the South Bay. Downward pressure on prices has been showing up since the beginning of the year. Out of the first five months of 2023, month to month median prices of Harbor area homes have dropped three times. May saw a 1% decline, which was a repeat of April’s price slip.
Annual statistics cast a recessionary shadow across the picture. Looking back at May of 2022 shows the same month this year with 9% fewer sales and a drop of 5% in median price. Year to date, 2023 has lost 29% in sales volume and 5% in median price.
Compared to the first five months of 2019, the last “normal” business year, Harbor area volume was off 19%. The median price remains positive at 33% above the 2019 median. So far this year the median at the Harbor has declined an average of 5% per month. Given that rate, it’s reasonable to expect a total loss of the price gains since 2019.
Like the rest of the South Bay, the time on market for May was short as 75% of sold properties went into escrow within 30 days of listing. The low sale for the month was $269,500 and the high was $4M, a relatively high price in what is generally considered an entry level market. Interestingly, the high sale was originally listed at $9M in March of 2021, sitting on the market for two years before an accepted offer.
Palos Verdes: Home Sales & Prices Hot On The Hill
On a month to month basis, homes on the Hill came in with a 22% increase in median price, that being on top of back to back 8% increases for March and April. We’ve long said that homes on the Hill are undervalued. It looks as though that will soon be changed.
Monthly sales volume also jumped 30% for PV, though it has slowed since February and March when it was up 50% and 48% respectively. This pattern of sales increases slowing holds true for most of the South Bay. During the first quarter of 2022 the local real estate market was on fire, and then came the interest rate increases.
When the interest rates were bouncing around 5% during April and May of last year, the PV sales volume had already begun a long, slow decline. Sales figures were off by 30%-40%. So far this year, sales have continued to fall and are, in aggregate, now 31% below 2022 volumes.
Again on a year to date basis, median prices in PV are down 11%. Because the PV Hill has a comparatively small amount of homes, statistics can be volatile. June was the peak of PV business in 2022. While the summer months are typically busier and more competitive, expect this June to be less “exuberant” than May, or last June.
Like the rest of the South Bay, about 75% of homes sold on the Palos Verdes peninsula were active on the market for 30 days or less. On average, the sales price was 2.6% above the asking price.
Inland Area: Seasonal Bump In Sales and Prices
In May, the Inland area kicked off the spring selling season by pushing month to month sales volume upward 20%. While the volume of sales increased on a month to month basis, the median price went up by 4%. This seasonal bump in sales and prices contrasts sharply with the longer look of a year over year view. Comparing May numbers from last year to this year gives a reverse result. The number of homes sold in the Inland area fell 18% from May of 2022, and the median price fell 3%, dropping back to $880K from $910K last year.. The longer perspective shows a clear decline in sales accompanied by a hint of decline in median prices.
Looking at the first five months of the year shows sales volume off in total by 68%, or an average monthly decline of nearly 15%, another indicator of the slow market. It’s joined by a 1% drop in the year to date median price. On the positive side, 87% of the Inland area sales for May closed within 30 days of being listed. With business slip-sliding away, everyone involved is making the transactions happen as quickly and smoothly as possible. The high and the low sales figures for the Month were $1.7M and $310K, respectively. Sellers rejoiced at, and willing buyers paid, an average sales price of 2.9% above the asking price.
Did you graduate from college recently, or do you know someone who has? Looking for a city with good employment opportunities? So are most other recent college graduates. In order to determine the ideal cities for this segment of the population, Zillow has analyzed many US cities looking at four factors: rent-to-income ratio, average salary for recent college graduates, job openings, and share of population in their 20s. They’ve found that the top ten cities for recent grads are Colorado Springs, CO; Spokane, WA; Des Moines, IA; Phoenix, AZ; Buffalo, AZ; Albuquerque, NM; Bakersfield, CA; Albany, NY; Portland, OR; and Little Rock, AR.
Of course, this analysis isn’t an exact science, so you should take it with a grain of salt. There are far more cities in the US than Zillow could ever hope to analyze, so they’re only looking at the largest metros. Their analysis also only looks at rentals, not purchases. While this may simply be a realistic approach, it actually doesn’t bode well for recent grads if renting is their best option — especially in a rather inexpensive place like Little Rock. Job openings also may not be the best statistic to look at, since the jobs may be open because they simply aren’t good jobs.
Purchasing a home is a tough decision. You’re probably going to live there around eight to ten years, on average, so you want to make sure it’s somewhere you want to live. The good thing about building new is that you can make sure the home itself is right for you. But it’s really not that simple. There are pros and cons to both buying and building.
The most obvious advantage to buying an existing home is the reduced hassle. You don’t need to oversee the design and construction, making sure everything is to your specifications. You don’t need to wait for construction to finish before moving in, and while delays are still possible, there are fewer opportunities for delays. Another is that purchasing a home may be less expensive. This depends on the area, but construction costs are still high. Moreover, existing homes have almost immediate resale value, which can mean greater equity when you go to sell it. A less apparent advantage of buying an existing home is location. You might imagine that when you’re building new, you can pick anywhere to build as well, but the fact of the matter is that there are far more existing homes than empty lots, so you don’t get as much choice of where to build unless you’re planning to bulldoze an existing home.
The primary benefit to building new is customization. Whether you’re buying or building, you should have a good idea of what you need or want in a home. By building new, you ensure that you get those things, as long as they’re within your budget and no complications occur. A new home also means fewer issues, at least once the construction is finished. Any major structural issues would be the fault of the builders and not age. The property will use the latest building technologies, which are generally safer and more energy efficient. Building new is also a safer investment, albeit not necessarily a highly profitable one. It may take longer for a newly constructed home to accrue equity, but it’s extremely unlikely to go negative by the time you sell.
