2023 Home Sales Volume Below Pre-Covid Levels!

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.

Photo by Sebastien Gabriel on Unsplash

Andy and Renée Music

Livestream #211

Fri, Jun 16 @ 6:00PM (PDT, UTC-07). Home of Andy Hill, 17411 Delia Ave., Torrance, CA 90277. Watch live or anytime at https://youtube.com/live/hH_BK8uMJpA?feature=share. Come watch the show in person! LIMITED SEATING, so RSVP to reneesafier@hotmail.com ASAP.

Sister’s Barn

SAT, JUN 17 @ 6:30PM — 9:30PM Sister’s Barn , 1408 S Pacific Coast Hwy, Redondo Beach, CA 90277 424-452-6070

THU, JUN 29 @ 6:30PM — 9:30PM Sister’s Barn , 1408 S Pacific Coast Hwy, Redondo Beach, CA 90277 424-452-6070

Canada Day Celebration

SAT, JUL 1 @ 6:00PM Home of Athena Paquette and Tom Cormier, 5627 Via Del Collado, Torrance, CA 90505

Canada Day Celebration. Canadian Foods, Chocolate Tasting, Drinks, and Music included! $40. Get Tickets at https://andyandrenee.com/tickets-tips-merch

Terrenea Lobby Bar

MON, JUL 3 @ 7:00PM — 11:00PM Terranea Lobby Bar, 100 Terranea Way, Rancho Palos Verdes, CA 90275

Malaga Cove Library Park

WED, JUL 12 @ 7:00PM Malaga Cove Library Park, 2400 Via Campesina, Palos Verdes Estates, CA

Syncopaths Concert and CD Release Party

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.

Link for more info and tickets: https://grandvision.org/event/syncopaths/

Pro Songwriters’ Showcase – June 20

This is a once a month (every third Tuesday) show that is designed as a listening room for world class songwriters, to play their original music in an intimate setting. The music starts promptly at 7PM. No cover charge, but donations to the performers is encouraged. This month the performers include: JODI SIEGEL, T BEAR, BECCA BYRAM, ALFRED JOHNSON.

JODI SIEGEL

Jodi Siegel, originally from Chicago, IL, is a singer, songwriter and guitarist. Over the years Jodi has opened for and or shared the stage with many respected musicians including: Albert King, Robben Ford, Robert Cray, J.D. Souther, David Lindley, Fred Tacket and Paul Barrere (Little Feat) and countless others. Her songs have been recorded by Maria Muldaur, Marcia Ball, Tommy Ridgley and Teresa James. Her latest CD, “Wild Hearts,” produced by Steve Postell, is filled with great songs, cool grooves, intimate, smart lyrics and some of the best of the best musicians in Los Angeles today. Each song has a soulful delivery with an undeniable down-home elegance. It has received great reviews by Patrick Simmons (Doobie Brothers), Maria Muldaur, Walter Trout, David Mansfield (T Bone Burnett), Leland Sklar, Mike Finnigan and Doug Macleod to name a few.

ALFRED JOHNSON

The highly regarded singer/songwriter and funk piano player, Alfred Johnson is considered by some one of this century’s most animated and original songwriters. His energetic style of playing the keys brings a wonderful compliment to his music. Alfred co-wrote 3 songs with RICKIE LEE JONES, including the musical masterpiece “COMPANY,” which are all featured on her 1979 Platinum Grammy Award winning premiere album containing the hit single “Chuck E’s In Love”. Recognized as a true craftsman of his art, Alfred has written over 900 tunes, and at least 70 of them are published. He is best known for his lyric-driven tunes that will keep you captivated till the end. Alfred’s diverse musical style encompasses Funk, New Orleans, Pop, Rock ‘n’ Soul, Gospel, “Rhythm & Bluegrass” – as he calls it, and music that will have you wanting to dance and sing along. He enjoys sharing his work with good listeners.

T BEAR

T Bear, aka Richard T. Bear, is no stranger to musicians and fans all over the world. He has been a long time touring and recording session man and artist, and considered to be one of the best singer/songwriter/keyboard players in Los Angeles. He has returned to the stage with a striking new release, Fresh Bear Tracks, his first studio album in 25+ years. He’s re-emerged, feeling newly inspired, creatively recharged, and making some of the most engaging music of his career. A distinctive singer and talented keyboard player who made his mark as a solo performer and collaborator with many iconic artists — Crosby Stills and Nash, The Blues Brothers, Billy Squier, Cher, as well as Gene Simmons and Peter Criss of Kiss, to name a few — he’s now taking center stage and ready to share his newest music with the world. Fresh Bear Tracks features a host of special guests, including Stephen Stills, Robby Krieger, Edgar Winter, Tom Scott, Walter Trout, and Hutch Hutchinson,

BECCA BYRAM

Originally from England, Becca moved to the US early in her career, securing work as a session musician and songwriter in New York, developing a reputation as a highly regarded analog keyboard player and vocalist, and became a resident player at the world renowned Hit Factory after catching the ear of Eddie Germano. She signed with Caroline Records after Bill Laswell was swept away by her talent and her debut album, “Becca’s Smoke and Candy Store” was released. On the heels of that, she published a healthy catalogue of further recordings including “Nice to Be There, “ Childhood’s End,” “A Fair Forgery” and two live albums, “Live from CBGB’s” and “Live from the Living Room.”

Project Barley serves excellent Food (Gourmet Pizza, gluten free/vegan options, wings, sandwiches, salads), wine, and award winning beer. Food served till 8:30pm. No reservations so arrive early to get a table. 2308 E Pacific Coast Hwy, Lomita, CA 90717 https://projectbarley.com/

Spring Season Boosts Home Sales

The Snapshot: May 2023

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.

Photo by Lisha Riabinina on Unsplash

Jumping Jack Flash!

Come together for the Gathering for the Grand 2023! This year the grand event will be a live concert held at the Warner Grand Theatre, featuring premier Rolling Stones tribute band, JUMPING JACK FLASH! Jumping Jack Flash delivers that same raw, high-energy, larger-than-life rock show that you remember from the Rolling Stones. The honoree this year is the Warner Grand “herself”, right before the Theatre closes for its big renovation. Dress as your favorite rock star and celebrate the Theatre’s past, present and future!

Proceeds benefit Grand Vision Foundation’s performing arts & music education programs.

For details and tickets see https://grandvision.org/event/the-gathering-for-the-grand-with-jumping-jack-flash/

Home Sales Plummet 40%

April of 2023 ended with a 40% drop in the number of homes sold across the South Bay compared to 2022. The median price was down 20% from last year in Palos Verdes and is up by a mere 1% at the Beach. Year to year median prices across the South Bay are down approximately 5%. Cumulative sales revenue for the first four months across the South Bay has dropped 39% from 2022 numbers.

Year to date, 2023 has been one of the slowest markets we’ve seen in recent years. Sales are off by 43% in the Beach Cities and are down by 22% across the South Bay compared to last year. Median prices escalated dramatically in 2021-2022, and are still above those of 2019 by 30-35%. However, the median has fallen in all four areas since late last year. We anticipate the median price continuing to drop until interest rates seriously decline again.

Business in the years between 2019 and 2023 was seriously impacted by the pandemic, and the massive government funds released to counter the effect of the pandemic. Looking back at 2019 and comparing it to 2023 offers a perspective on where the market is and where we can expect it to go during the balance of the year. Today we see a huge decline in the number of homes being sold. That has yet to translate into a significant decline in median prices, although 75% of year over year sales show prices falling.

At the same time the Average Days On Market (ADOM) has increased from about 7 days during the sales boom of 2021-2022 to about 30 days now. That’s a four-fold increase in the amount of time it takes to sell a home. For a seller who needs to move, that will feel like an eternity. It’s that sense of urgency that drives prices down and ultimately results in a shift of the market.

At the Beach “Sticky Prices”

Sellers in the Beach Cities had a good month in April—at least compared to March of this year. Compared to April of last year, the picture is far worse.

The number of homes sold in April was up 8% compared to March. That sounds positive, until the realization that sales volume was down 36% compared to April of 2022. At the same time, the median price was up 2% versus last month, and down 2% compared to the same month last year.

There’s a lot of talk among brokers these days about “sticky prices.” Recent sales at the Beach offer a good example of what that means. The statistics show that sales are down 36% from last year, however prices have only dropped 2%. Sales are falling because the number of viable buyers is down.

Interest rate increases have pushed the most tenuous group of prospective buyers out of the market. At the same time, sellers are still revelling in the boost to median prices that came with record low interest rates during the pandemic. Beach area sellers have yet to adjust to the reality of a re-trenching economy. That adjustment is “sticky prices.”

Harbor Sales and Prices Off

The neighborhood can affect how long it takes the median price to respond to changes in the economic environment. While sales volume and pricing has remained strong at the Beach, sellers and buyers in entry level communities are impacted more immediately by shifts in the economy.

Thus we see the give and take of the market bring median prices into a stable range early in the year in the Harbor area. The red line in the median price chart below shows four months of reasonably steady prices. While month over month prices have shown only a 1% drop, the monthly sales volume has taken a 12% dive from March, as shown in the Sales Volume chart, above.

The monthly decline in sales was multiplied in the year over year statistics. April sales volume was down 39% from April of 2022. For the same period, the declining sales volume was coupled with a 9% drop in median price. So the entry level communities demonstrate a much quicker and deeper response to changes in the financial picture.

Part of that response is the time on market, which has risen from 15 ADOM in mid-2021 to 26 ADOM in April of this year. The increasing time required to sell homes contributes to the number of homes available on the market. Both factors contribute to falling purchase prices.

Palos Verdes In Extremes

Through 2021 and 2022 home prices on the Palos Verdes peninsula benefitted from the Covid pandemic more than any area in the South Bay. In the median price by quarter chart, shown below, the yellow line is seen jumping up and away from the blue line of the Beach Cities. Unfortunately for home owners on the Hill, that price boost has already pulled back into line with prices of Beach area homes.

Comparing the first four months of the 2023 to 2022 median prices on the Hill have dropped 16%. It’s a steep decline in view of decreases at 3% and 6% in the Inland and Harbor areas, respectively. Even more so when looking at the 1% increase at the Beach.

The statistics look much better when comparing Palos Verdes sales from 2023 to statistics from 2019, the last “normal” year of real estate business. Sales volume on the Hill is down a modest 13%–modest by comparison to the Beach, which is down 43%. In contrast, median prices in 2023, compared to 2019, are still showing positive growth of 30%.

So, if one were to take the Federal Reserve System position that 2% annual growth is a desirable target, where would prices be today? The median price in Palos Verdes in May of 2019 was $1.5M. Jump forward to 2023 and that becomes about $1.6M. The median on the Hill last month was $1.9M, which suggests further price reductions.

Inland – The Steepest Fall

From an investment perspective, homes in the Inland area of the Los Angeles South Bay are “bread and butter.” These are the homes, much like those in the Harbor area, which reliably increase in value over long periods of time at a slow and steady rate. Most importantly, they house the bulk of our community.

In the short term, Inland home sales volume is down 25% from March to April of this year. Median prices are up 2% for the same period. This is the steepest fall in number of homes sold in the four areas charted.

Year over year, sales volume is off even more at 43% below April of 2022, and prices similarly down by 4%. We expect a seasonal boost to sales for the second quarter, when families most frequently schedule moves. Beyond that, most predictions are for continued softening in the real estate market as the Fed struggles with inflation. (The April Consumer Price Index, [CPI-U] for Los Angeles metro was 5.2% for Housing.)

Photo by Bradley Pisney on Unsplash

The Short & the Long of South Bay Home Sales

A glance at the table below confirms that year over year statistics are overwhelming the monthly numbers. Buyers were out there buying in March, and they were buying more than they did in February, which was up from January. That’s to be expected. We report actual numbers, as opposed to “seasonally adjusted,” so coming from the depths of winter into spring always increases real estate activity.

Because of that simple fact, the year over year statistics are far more important as an indicator of where the market may be headed. The big increase in March sales doesn’t offset how far down sales volume has gone since last year. Nor does it hint at the level to which median prices are taking a hit.

Compared to last year, sales volume is off by a third in nearly all areas of the Los Angeles South Bay. Median prices haven’t dropped nearly as large a percentage, but we can clearly see the direction. The Federal Reserve System (Fed) comment in the April “Beige Book” said it all: “Residential and commercial real estate activity fell, and lending activity declined substantially.”

Beach Cities Median Still Rising

As the over-all real estate market begins a dive into the depths of a Fed-induced recession, we find the Beach Cities as the only remaining local market with year-over-year positive median price growth. It’s not much. A mere 1% growth over March of 2022 is hardly an investment recommendation, especially with inflation running around 6%. And, the rest of the Los Angeles South Bay is already negative compared to this time last year.

This is the second time in 2023 buyers at the Beach have nudged the median price up while the rest of the residential market fell. January showed a 6% increase which collapsed February in a 17% free fall. February’s dismal numbers contributed to what looks like a good March in the month to month measurement.

Staying positive in March appears to be predominately the result of a single sale in Hermosa Beach. At nearly 5000 sq ft, with stunning ocean views, the property was bid up from its $5M dollar list price to just over $6M, closing with a cash offer in only 12 days. Without that transaction the Beach Cities marketplace would have stood at 0% growth.

The big story at the Beach is the sales volume versus the most recent “normal” year of real estate business. The chart below shows the number of homes sold in each of the South Bay areas, with seasonal shifts.

Notice that 2019, the last normal year, begins low, with few sales in the winter months. Sales peak in quarter three, in the heat of summer, then decline back down to about where they started.

Compare that to what happened in 2022, when everything seemed to head down.

Only 83 homes were sold in March of this year, and only 181 homes sold across the first quarter of 2023. In 2019 the area averaged monthly sales of over 100 units; approximately 425 homes per quarter. That amounts to a 43% decline in the number of sales compared to pre-pandemic levels.

As this is written there are 152 homes available in the Beach Cities with an average of 62 days on market. Both, the level of inventory and the time on market are increasing daily. Those factors, especially working together, will cause price decreases. With a constantly increasing mortgage interest rate, there’s little doubt the valuation gains of the pandemic era will not hold up to the recession in the world of real estate.

Harbor Area Sales Volume Plummets 39%

The Sales Volume, by Quarter chart above shows relatively synchronous movement across time by three of the four areas. The fourth area, the Harbor, floats at the top of the sales volume chart. Similarly, the Harbor area sinks to the bottom of the median price chart.

Homes in the Harbor area are typically what’s known as “entry level.” They are small homes, often condominiums, and are priced at the bottom of the scale. These are the homes newly wed couples buy, and the homes that house growing families. They are the type of properties occupied by most Angelenos, whether they be homeowners or tenants.

None of that explains the huge swings, though. What does is family economics—cash flow. When both prices and interest rates are low, the entry level market sings. When the cost of home ownership rises, this is the first area to fall and it usually falls the deepest. March sales across the Harbor dropped by 39% from March of 2022. At the same time median pricing at the Harbor dropped 2%–not nearly enough to offset interest rates that are running in the 6%-7% range. Until the mortgage interest rate goes down, or the asking price drops, or both, this market is going to be slow.

Inventory is currently 336 homes on the market, with time on the market averaging 60 days.

Median Down 20% for Homes on the PV Hill

Even more volatile than the Beach, homes on the Palos Verdes Peninsula dropped over a half million dollars in median price from the first quarter of 2022 to the first quarter of 2023. That steep yellow line on the chart below shows the downward direction of home prices in the area. Interestingly, the Beach Cities and the PV Hill declines have been almost exactly the same for the past 90 days.

As noted above, the Peninsula, with its large lots and relatively few homes, invariably shows a lot of volatility. The 20% drop in year over year median price is matched by a 33% drop in sales volume since March of 2022. Much of the median price increase seen last year resulted from a series of new construction sales. Those newly built homes came in at top dollar and helped elevate the median price nicely.

Builders are now anticipating a long, slow recession/recovery, so the PV market is not likely to see that benefit come back for a few years.

This newsletter focuses on residential, but it should be noted the Palos Verdes commercial marketplace has also taken a significant hit since the pandemic. Retail lease prices are at rock bottom and lots of space is available. It would not be surprising to see some of the older commercial space re-configured to meet residential needs. Such a transition could help the cities on the Hill meet their obligation to the State for additional residential construction to alleviate the housing shortage.

Inventory today shows 83 homes available, with an average time of 80 days on the market.

Stability Marks the Inland Area

The “family friendly” Inland Area is surrounded on three sides by the Beach Cities, PV Hill and the Harbor Area. It’s a quiet environment, usually without the drama and speculation found in the more upscale Beach and Hill areas. Anchored by Torrance, the market direction is normally the same as the rest of the South Bay, without the more radical ups and downs. March real estate activity reflected that nature in price and sales volume compared to March of last year.

The “Median Price by Quarter” chart above shows a year over year decrease of 6%, in keeping with annual results from the Hill and Harbor areas. The chart also shows a long, steady green line that doesn’t offer surprises, or dramatic movements in any direction. The current recession is expected to bring prices down somewhat, making the Inland area an excellent target for home buyers, or investors during the coming months.

Available as of this writing, are 130 homes. In keeping with the Inland image of slow and steady, the statistics still show only an average of 47 days on the market. Compare that to 80 on the Hill and 62 at the Beach. Buyers are more abundant here, as long as mortgage interest rates are affordable.

Footnotes

The areas are:
Beach: includes the cities of El Segundo, Manhattan Beach, Hermosa Beach and Redondo Beach;
PV Hill: includes the cities of Palos Verdes Estates, Rancho Palos Verdes, Rolling Hills and Rolling Hills Estates;
Harbor: includes the cities of San Pedro, Long Beach, Wilmington, Harbor City and Carson;
Inland: includes the cities of Torrance, Gardena and Lomita.

Photo by Rich Brents on Unsplash

Get Ready for Dylanfest #33

Dylanfest is an 8-hour celebration of the music of Bob Dylan. Local favorites, Andy Hill and Renee Safier started it in 1991 and have been holding the event ever since. The show started with their band and a few friends doing an evening of songs by Bob Dylan, and it has grown to an 8-hour event with over 40 musicians performing over 60 Dylan songs. This year the festival will be held on Saturday, May 27th, from roughly noon until 8pm.

Food and drinks (including beer and wine) will be available on site during the event. Music is continuous with breaks only as entertainers move on and off the stage.

The band, Hard Rain, is the “house band”, and is joined by solo artists, full bands, and instrumentalists throughout the course of the day. The show is held at the Torrance Cultural Arts Center in the Torino Plaza. Bring a jacket for later. In case of rain, the event will go on, and we will move inside.

General Admission Tickets ($35-4/2-5/26; $40 at the Door). VIP tickets are $110 and come with some extra goodies (Entry fee, Event T-Shirt, Dylanfest Tote Bag, Dylanfest Mug, Post-Dylanfest VIP Party, VIP Hanging Tag). Kids ages 7-14 years are $10. Tickets at https://andyandrenee.com/tickets-tips-merch

Torino Plaza, Torrance Cultural Arts Center, 3300 Civic Center Drive, Torrance, CA 90503

The Grand Annex – May Concerts

The Grand Annex Music Hall is a rare neighborhood gem, a 150-seat cabaret venue run by Grand Vision in the heart of San Pedro’s thriving arts district. This May they are presenting three fabulous concerts of original music.

Small Glories – Saturday, May 13 / 8PM

Multi-award-winners Cara Luft and JD Edwards are taking the North American folk scene by storm. Cara Luft is an original member of the Canadian folk trio, The Wailin’ Jennys.

Wine Tasting 7PM led by sommelier JP Molinari.

Bella & Rudy – Friday, May 19 / 8PM

Born and raised in San Pedro, this incredibly talented duo is rapidly gaining attention for their acoustic and indie-inspired music. Hear their insightful originals and beloved covers.

Patrick Landeza & Sons – Saturday, May 20 / 8:30PM

A night of guitar, Hawaiian style featuring Two-time Nā Hōkū Hanohano Hawaiian Grammy Award winner and master slack key guitarist Patrick Landeza with PJ Landeza (bass guitar) and Justin Firmeza (steel guitar).

“Slack Key & Steel” Workshop at 7PM led by Patrick Landeza and Justin Firmeza.

The Grand Annex Music Hall is located at 434 W 6th Street, San Pedro Ca 90731.For more information about the performances and the venue go to their website https://grandvision.org/grand-annex/.

Grand Vision Foundation
The Grand Annex Music Hall | Meet the Music | Friend’s Group to the Warner Grand Theatre
434 W. 6th St., San Pedro, CA 90731310.833.4813 | www.GrandVision.org

Songwriter’s Showcase

This coming Tuesday night will feature some of LA’s best songwriters! Ted Russell Kamp, Abby Posner, Mary Scholz and me~

With guest host with the most John Antich….

It’s gonna be a great night and we are expecting a pretty big crowd, so arrive early enough to get a table…for more information on the performers:

Ted Russell Kamp: https://tedrussellkamp.com/

Abby Posner: https://www.abbyposner.com/

Mary Scholz: https://www.maryscholz.com/

Jodi Siegel: https://jodisiegel.com/

Andy & Renee Gigs!

Andy & Renee- Terranea Lobby Bar, 3/20

Andy & Renee- Tuesdays- The Lighthouse

Andy-Fairmont Century City- Wednesdays

CELEBRATE ANDY’S BIRTHDAY-

FRIDAY, MAR. 24TH AT OUR LIVESTREAM SHOW THIS FRIDAY!!!!

DYLANFEST SUPER EARLY BIRD TICKETS ON SALE NOW-TIL APRIL 1st!

Hello everyone!

Hope all is well!

Lots of other Great gigs coming up….Hope to see you!

Celebrate Andy’s Birthday at our Livestream, Friday, March 24th. Just RSVP to this email to reserve your spot!

We will also be up in Auburn, CA the last weekend of March and Dallas, TX in April…Go to www.andyandrenee.com for more info.

Exciting news….Super Early Bird Dylanfest 33 tickets are ON SALE NOW! Save $10 off the price at the door til April 1st! Go to https://andyandrenee.com/tickets-tips-merch to get yours now!

We’ll see you guys soon!

Love,

Andy & Renee

Andy & Renee-Terranea Lobby Bar

MON, MAR 20 @ 7:00PM — 11:00PM Terranea Lobby Bar, 100 Terranea Way, Rancho Palos Verdes, CA 90275

Andy & Renee-The Lighthouse–

TUESDAYS @ 5:30PM — 7:30PM The Lighthouse Cafe, 30 Pier Avenue Hermosa Beach, CA 90254 310 376-9833, Hermosa Beach, CA 90254

Andy Hill

Every WED @ 8:30PM — 11:30PM Fairmont Century Plaza, 2025 Avenue of the Stars, Los Angeles, CA

Andy & Renee-Livestream #206

Celebrate Andy’s Birthday a day early!!

Friday, Mar. 24th 6pm PST

Home of Andy Hill 17411 Delia Ave., Torrance, CA 90277

Watch live, or anytime at https://youtube.com/live/BpWWfg1d_Hc?feature=share. Come watch the show in person! LIMITED SEATING, so RSVP to reneesafier@hotmail.com ASAP. The Livestream shows are free to watch, but the option to contribute is there for those who are in a position to do so. You can see our song list to make requests and contribute at https://andyandrenee.com/tickets-tips-merch, PayPal (paypal.me/andyandrenee) or Venmo, (www.venmo.com/Renee-Safier). A portion of the proceeds will go to the Los Angeles Midnight Mission. We are sustained by the generosity and support of the fans who love the music, and who donate as they are able. If you use funds from your bank vs. your credit card, we aren’t charged a service fee, but either way, we appreciate your support!

Andy & Renee-Station Public House, Auburn, CA

THU-SAT MAR 30, 31 and April 1 @ 6:00PM — 9:00PM Station Public House, 750 Lincoln Way St.100, Auburn, CA 95603

Mark your calendars!

DYLANFEST33-SATURDAY, MAY 27th! Tickets on sale NOW!

Thanks so much….See you soon!

Andy & Renee

Recession Drives Price Reductions

Median Price Tumbles

Last year ended with sales volume off, median prices coming down and revenue dropping fast. January showed little change. February of this year shows sales volume up from January by as much as 50%. The reason why is obvious–the median price is simultaneously dropping by percentages as high as 18%.

Comparing February activity to February a year ago shows significant declines in both sales volume and in median price. At that point in 2022 the market was just beginning to dip a toe in the recessionary waters. Now we’re wading into it.

The first week of March Fed Chairman Jerome Powell told Congress, “…the ultimate level of interest rates is likely to be higher than previously anticipated.” Powell’s pointed remark clearly tells us the most recent pause in interest rate hikes is momentary. The lowest local mortgage rates we could find at the time was 6.75%. As such, we anticipate rates in excess of 7% by summer.

February Sales Volume Climbs

About the second week of January mortgage lenders began loosening the interest rates in anticipation of a relaxation by the Federal Reserve. For the most part, local rates stayed below 6% until late in February when the Fed began dropping hints that inflation was still raging.

After a “soft” January, sellers in the market were dropping prices and buyers responding positively by making offers. Now that mortgage rates have resumed climbing, sellers will have to drop prices some more to remain attractive to buyers.

With only two months behind us this year, there are indications lenders will “see-saw” the rates throughout the year. Already this year we have seen retail mortgage rates moving up and moving down without influence from the Fed. It seems to be an effort to induce buyers to accept high interest rates based on the theory they were higher last week so this temporary reduction is a good deal.

Revenue Climbs From January Depth

On a month-to-month basis, revenue across the South Bay is up 21% from January of this year. Don’t get excited—it’s only one month. January was one of the lowest performing months we’ve seen recently.

On a year-over-year basis, revenue is down 34% from last February! January was 38% lower than January of 2022. Year to date through February, revenue in the South Bay is down 36% and is expected to continue falling.

One of the more important statistics to note is how 2023 activity compares to 2019, which was the most recent “normal” year of real estate business. Across the South Bay real estate revenue for the first two months of 2023 is 7% below the same period in 2019. Restated, the South Bay has already lost over four years of gain in real estate revenue.

Median Price Slips, Volume Rises

More units of housing were sold in February than January, and the median price was lower in February. The Beach Cities saw a drop of 18% from January while the PV Hill held the decline to 3%. The Harbor area fell 4% and the Inland area dropped 14%.

Comparing February of this year to February of 2022 brought a harsher focus to the picture. All four areas have fallen from last years median price. The Beach is down 17%, the Harbor down 11%, the Hill is off 29% and the Inland cities down just 3%.

2023 Versus 2019 Shows a Sinking Market

The summary numbers comparing the first two months of 2023 to the most recent “normal” year of 2019 are not encouraging. Overall, sales revenue has fallen 7% below revenue figures for the same period in 2019. The Harbor area has fared the best, showing a 9% increase in revenue over January and February activity in 2019. Of course, that was four years ago and classic inflation would give that type of gain. It’s clear the “inflation on steriods” we’ve been experiencing is gone from the real estate industry.

The Beach cities provide an excellent indication of where the real estate economy is going. The first two months of revenue for 2023 is down 32%. Palos Verdes is down 2%, while the Inland area is up be a mere 1%. After four years of pandemic, recession, inflation and Federal Reserve manipulation the real estate market is tanking.

Disclosures:

Photo by Ussama Azam on Unsplash

2022 South Bay Real Estate Wrap

We’re taking a little different approach with this post. Because it’s not only the end of the month, but the end of the year, we’re doing a quick summary of the monthly data, followed by some more detailed discussion of how the individual areas have fared over the past year. We’ll even try some crystal gazing while we walk through the annual data for each neighborhood.

This is a great place to bring in our At A Glance table. It displays in just a few numbers how all the areas of the LA South Bay are doing compared to last month, and compared to this same month last year.

Looking at December vs November, once again the percentage of unsold homes has increased and the number of homes sold below last month’s median price has also marginally increased. More importantly, on a year over year basis the amount of red ink is even greater. Losses in number of sales and in the value of those sales is clearly growing.

Despite all the negative numbers, there may be a light in the future. For the past couple weeks we have observed a softening in the mortgage interest rates. If that turns out to be more than a mid-winter teaser rate, this spring may shine a bit brighter than previously anticipated. We’re not holding our breath though. Recent speeches from Federal Reserve Bank leaders have stated a clear intent to “hold the line” on driving down inflation with mortgage interest rate increases.

Beach Cities Home Sales Down 47%

Compared to 2021, fewer homes have been sold in the Beach Cities every month of 2022 than the same month the previous year. January started the trend with a decline of 28% versus the number of homes sold in 2021. That difference continued to increase all year. By December sales were 47% lower than the previous December.

As the interest rates climbed, the number of home sales dropped. Looking at the total sales volume for the year, 35% fewer homes were sold in the Beach area during 2022, than were sold in 2021. Of course, 2020 and 2021 were the highly erratic pandemic years. So, looking into sales at the Beach for the last few years we find the number of homes sold has already dropped 21% below the number sold during 2019, our last normal economic year. Effectively, the Covid-19 pandemic created. Then erased any gains of the past three years at the Beach.

Homes sold in: 2019 – 1572 (market normal)
2020 – 1572 (market direction down six months, up six months)
2021 – 1910 (market direction down two months, up ten months)
2022 – 1242 (market direction down twelve months)

While the Beach Cities suffered the largest drop in sales volume for 2022, the South Bay as a whole has also dropped below the sales figures for 2019.

Sales Volume Down Across the Board

All areas started the 2022 year down from the prior month and down from the same month in the prior year. February results were mixed with the Harbor and Palos Verdes areas showing stronger results. March sales jumped up as buyers realized the rising interest rates were about to price them out of the market. From April on, sales volume across the South Bay was trending down on a year over year basis.

In sheer number of sales, the Harbor area fell the farthest. In 2021 annual sales 5292 homes were sold in the Harbor cities, while in 2022 the number dropped to 4017. That amounted to only a 24% decrease compared to the 35% annual collapse in the Beach areas.

On a month to prior month measure, sales declined six months out of nine across the South Bay. Occasionally one or two areas would post a positive sales month, but in the end, 2022 showed a 26% drop in sales volume from 2021 across the South Bay.

Sales Dollars Diving

With the number of sales dropping in a range of 25% to 50% it’s not a surprise to discover the total dollar value of those sales has taken a dive. As the chart below shows, the first quarter of the year was generally positive, then reality set in and the buyers started walking away. The rest of the year was little more than a measure of the recession.

Monthly revenue in the Harbor area alone dropped $200 million between March and December. The Beach cities and the Palos Verdes area lost about $150 million a month in sales value. Inland area sales for the same period are off approximately $75 million.

One should consider these declines in the context of the pandemic. Early on, while much of the world was in lockdown, the government flooded the citizenry with easy money, hoping to keep the economy afloat. Mortgage interest rates were already at the bottom because the economy was just recovering from the last recession. The result was a real estate boom starting in summer of 2021, which continued until March of 2022.

The housing market is now in the “bust” part of the cycle and we anticipate it to last through 2023. Gross sales across the South Bay jumped up from $8 billion in 2019 to $12 billion in 2021. That’s clearly unsustainable, especially from the perspective of a Federal Reserve System which is looking for 2% growth. So far the market decline has taken back about 23% of that $4 billion bubble.

Median Price Is Slipping

There is a lull between when buyers stop buying and prices start dropping. Most sellers need to see headlines about the market change before they make a price reduction. Median prices started to slide in August at the Beach and on PV Hill. The year ended with most areas having experienced multiple monthly declines in the median price. Despite that, median prices still exceeded those of 2021 by roughly 7%.

Comparing 2022 to 2019 better shows the inflation factor. Generally speaking the South Bay ended the year with median prices 30%-35% higher than they were in 2019.

The Palos Verdes market is comparatively small, thus is typically volatile on a monthly basis. The yellow line on the chart above shows the range of high and low median prices. Since mid-year the median price has drifted down and merged into the downward trend.

Year End Versus 2019

We’ve been comparing 2022 to 2019 all year because real estate sales during the height of the pandemic were so out of the ordinary, regular year over year comparisons yielded untenable results. The chart below depicts the current year total sales for the South Bay compared to sales from 2019.

Tracking the blue line, one can see where sales dropped below 2019 values in August, recovered in September, then slipped below again for the fourth quarter of the year. December sales didn’t fall quite as far as projected, but still came in about $200 million less than December of 2019.

The end of the year reflected accumulated sales of approximately $9.3 billion. That would mean 2022 total dollar sales come in at $1.3 billion above the $8 billion total dollar value sold in 2019. Across the South Bay that was an 18% increase.

Broken out by community, we found total dollars sold in the Beach cities to be 4% above 2019, followed by the Inland area with a 20% increase. Harbor came in next with a 21% increase and the PV Hill with a 35% increase.

We expect both sales volume and median price to continue declining through most, if not all, of 2023. By mid-year of 2024 there should be evidence of the beginnings of a recovery.

Disclosures:

Photo by T Narr on Unsplash

More Great Holiday Music Options

Andy & Renee-The Lighthouse–

Every Tuesday (Except 12/27)

TUESDAYS @ 5:30PM — 7:30PM The Lighthouse Cafe, 30 Pier Avenue Hermosa Beach, CA 90254 310 376-9833, Hermosa Beach, CA 90254

Andy Hill

EVERY WEDNESDAY (except 12/28) @ 8:30PM — 11:30PM. Fairmont Century Plaza, 2025 Avenue of the Stars, Los Angeles, CA

Andy & Renee-Sister’s Barn

THU, DEC 15 @ 6:30PM — 9:30 PM Sister’s Barn , 1408 S Pacific Coast Hwy, Redondo Beach, CA 90277 424-452-6070

Andy & Renee Livestream #198

FRI, DEC 16th @ 6:00PM (PST, UTC-08) Home of Andy Hill, 17411 Delia Ave., Torrance, CA 90277

Watch the show live or anytime at https://youtu.be/MFYgLzHe0Eo. Come watch the show in person! RSVP to reneesafier@hotmail.com. To watch in person, RSVP to reneesafier@hotmail.com. The Livestream shows are free to watch, but the option to contribute is there for those who are in a position to do so. You can see our song list to make requests and contribute at https://andyandrenee.com/tickets-tips-merch, PayPal (paypal.me/andyandrenee) or Venmo, (www.venmo.com/Renee-Safier). A portion of the proceeds will go to the Los Angeles Midnight Mission. We are sustained by the generosity and support of the fans who love the music, and who donate as they are able. If you use funds from your bank vs. your credit card, we aren’t charged a service fee, but either way, we appreciate your support!

Livestream with Karen Nash & Bob Malone, Sunday Dec. 18th! 5pm

Home of Andy Hill, 17411 Delia Ave., Torrance, CA 90277

Come watch the show in person! $30. LIMITED SEATING, so get tickets at https://andyandrenee.com/tickets-tips-merch, ASAP.

Watch the show live or anytime at https://youtu.be/WTRU9jeFjoI. Online viewers can contribute at https://andyandrenee.com/tickets-tips-merch, PayPal (paypal.me/andyandrenee) or Venmo, (www.venmo.com/Renee-Safier). A portion of the proceeds will go to the Los Angeles Midnight Mission. We are sustained by the generosity and support of the fans who love the music, and who donate as they are able. If you use funds from your bank vs. your credit card, we aren’t charged a service fee, but either way, we appreciate your support!

Andy & Renee & Hard Rain-New Year’s Eve Party

SAT, DEC 31 @ 8:30PM-12:15AM

The Grand Annex, 434 W. 6th St., San Pedro, CA 90731

Celebrate the New Year on the dance floor while the band delivers hits from across the decades. Your ticket includes late-night pizza, party favors, and a champagne toast to welcome in 2023! Get tickets at info at https://grandvision.org/event/andy-renee-hard-rainnew-years-party-concert-2/

Festivus Celebration and Concert

Saturday, Jan. 14th, Doors 6pm, Show 7pm. $25

BYOB and a Seinfeld-themed dish. We’ll erect The Festivus Pole, have a Feats of Strength contest, Airing of the Grievances, and a special “Elaine Benes” Dance class…All your favorite Seinfeld gags! Get Tickets at https://andyandrenee.com/tickets-tips-merch

All Pro Songwriters’ Showcase

It’s gonna be another diverse night of original music this month at the All Pro Songwriter’s night!

The owner of Project Barley, Brent Reger, is a fine musician, songwriter, trumpet player and a member of the popular South Bay 8 piece band Barley; folk rock with a beach vibe twist! They will do an acoustic set with a few of their members. Barley plays many festivals and gigs throughout Southern California, and are known for their great harmonies, three lead singers and loyal fans!

For more information on them go to https://secretagentent.com/barley

Americana/roots musician Michael Ubaldini, often called the “Rock and Roll Poet, is an Outlaw folk & rock n roll singer songwriter with a cause. His fan base included & includes legendary artists such The Late Joe Strummer of Punk legends & rock n roll hall of famers ‘The Clash’ & ‘Brian Setzer’, both who would turn up at his live shows. He has done recent shows with artists diverse as Judy Collins & The Kingston Trio to Dwight Yoakam, The Cramps, Don Mclean & Lucinda Williams-Jerry Lee Lewis & Brian Setzer

For more information on Michael visit https://www.rocknrollpoet.com/

Ayline Artine (Blues/Rock/soul) is a dynamic performer and musician. As a talented multi-instrumentalist, Ayline’s music will draw you in and steal your heart. For this night, Aylineʼs band will feature percussionist Oliver C. Brown, (Mick Fleetwood Blues Band, Fleetwood Mac, KC and the Sunshine Band), and bass player Derrick Elliott. Aylineʼs blues and soul-infused rock nʼroll aesthetic are brilliantly showcased on her new record “Heaven In Hell”.

For more information on Ayline visit her website: https://aylineartin.com/

Jodi will also be playing a set….for more information on her visit the website https://jodisiegel.com/

The Recession Continues – November Home Sales

Home Sales Plunge

November saw the number of homes sold in the South Bay fall 12% from October totals. Sales volume has declined in seven of the eleven months on a month to month basis since the beginning of the year. Sales tipped up a modest 2% on Palos Verdes peninsula, while volume dropped 7% at the Harbor, 18% at the Beach and 24% in the Inland area.

Year over year sales look even more depressed with a 45% drop from 2021 sales across the South Bay. The Beach Cities led the plunge with a 50% fall, followed by the Harbor area at 46%. Palos Verdes and the Inland area brought up the rear with 35% and 41% respectively. The falloff in sales began with a 17% drop in January and has been increasingly negative since.

Because 2020 and 2021 were both significantly impacted by the coronavirus pandemic and the governmental response to it, 2019 is the most recent year with a normal business pattern. Comparing 2022 sales volume with 2019 provides the truest measure of the current recession. Overall, for the first 11 months of the year, the South Bay has experienced a 9% decline in sales compared to 2019.

Through the month of November, sales on the PV Hill have fared the best, showing a modest drop of 3% compared to the same time period in 2019. The Harbor and Inland areas which generally are entry level for the South Bay both fell back 8% for the same period. So far this year the Beach Area has suffered the largest declines with an 18% drop in number of sales versus 2019.

Annual Sales Dollars Off By $3.2 Billion

Comparing year-to-date sales of homes in the Los Angeles South Bay shows a drop in dollar value from 2021 to 2022 of over $3.2 billion. That represents an over-all decline of 22% in total dollars sold from the same 11-month period last year.

The Beach area has been the hardest hit so far with a drop of 34%. The PV Hill has dropped 29%, while the Harbor area has fallen 22%. The Inland area fared the best, only down 19% for the same 11 months.

On a month to month basis, the decline in sales accelerated from 7% in October to 18% in November. The Inland area which had flipped to a positive gain in October plummeted by 30% in November. Similarly the Beach which had been up 7% in October fell 25% in November. The Harbor and Hill areas were off by 8% and 11% respectively.

At this point year to date South Bay sales dollars for 2022 still exceed the total for 2019 by 22%. We expect the end of year numbers to be positive. However, with monthly sales figures shrinking by 30%-40%, we project 2023 to fall below 2019.

Median Price Shows Mixed Results

Statistically speaking, the Beach cities median price fell 8% from October to November. The reality is that the median in October was unusually high. Multiple sales of Strand property drove the median up 14% that month. The blue line on the chart below shows the one month blip and median prices dropping back to a steeper downward pace in November.

Palos Verdes was flat compared to the previous month. This is a rare event as one can see by the erratic yellow line on the chart. Because the physical area is smaller than the other geographical areas, the number of sales is smaller, and mathematically the sample size is smaller. Thus one or two outlier sales can create wide swings in the chart.

Similar to the Beach area, the median price dropped 7% in the Inland area. This decline follows two months of no change, preceded by three months of month over month negative median prices.

At the same time the Harbor area experienced a month to month increase of 2% in the median price. Researching this anomaly we discovered 11 new construction sales in Carson had been accumulated and posted simultaneously by the developer. It’s worth noting that Harbor area median prices have also been elevated to some extent by the new construction on Western Avenue in San Pedro.

From a year over year perspective, November median prices continued to fall in comparison to those of November 2021. The Harbor and PV Hill areas were down 5% and 2%, respectively. Median price in the Inland area dropped from positive 6% in October to negative .05% in November. The Beach cities remained positive with growth of 1% in November. That being in contrast to an unexpected growth of 20% last month caused by the sale of multiple Strand properties in Manhattan Beach.

Despite increasingly deep reductions in sales volume and in median price throughout this year, the median is still higher than it was in 2019. Palos Verdes home owners have fared the best with the current median price 40% above the November 2019 median. The Harbor area is still 34% higher and the Beach cities still maintain a 31% advantage. The Inland area has proven to be relatively stable throughout the pandemic and currently the median price is 27% above that of 2019 for the same 11 month period.

Year End Projection Updated

Tracking the blue line, one can see where sales dropped below 2019 values in August, recovered in September, then slipped below again in October and November. Assuming the decline continues at the same rate, we are forecasting the December sales to drop another $75 million, or so.

The end of the year would then reflect accumulated sales of approximately $9.4 billion. That would mean 2022 total dollar sales come in at $1.4 billion above the $8 billion total dollar value sold in 2019. Across the South Bay that would be approximately an 18% increase.

Broken out by community, we forecast total dollars sold in the Beach cities to be 6% above 2019, followed by the Inland area with a 20% increase. Harbor comes in next with a 21% increase and the PV Hill with a 35% increase.

At a Glance

As 2022 draws to a close we find the final numbers for both sales volume and median price show the year to be rapidly declining from the final figures for 2021. However, the totals all remain positive. We expect December to continue the trend downward, though the year should end on a positive note.

With the number of units sold decreasing every month by 35% to 50%, and the median price now falling, 2023 should be firmly in the grip of the recession by mid-year.

Disclosures:

The areas are:
Beach: comprises the cities of El Segundo, Manhattan Beach, Hermosa Beach and Redondo Beach;
PV Hill: comprises the cities of Palos Verdes Estates, Rancho Palos Verdes, Rolling Hills and Rolling Hills Estates;
Harbor: comprises the cities of San Pedro, Long Beach, Wilmington, Harbor City and Carson;
Inland: comprises the cities of Torrance, Gardena and Lomita.

Photo by Elias Shankaji on https://unsplash.com/

October Home Sales Down 40%

Compared to October of last year, home sales in the Los Angeles South Bay have dropped by 40%. Hardest hit was the Harbor area which fell 47% from last year’s October numbers. The Beach Cities were down 40%, while the PV Hill and the Inland area fell 32% and 25% respectively.

Month to month sales across the South Bay were down another 12% compared to a 9% drop in September. Looking at the different communities found mixed results. The Beach and Inland areas improved sales over September statistics, while the Harbor area and PV Hill continued downward. Harbor area sales plummeted another 20%, falling from -5% last month to -25% in October.

The pandemic created a wild roller-coaster ride for Harbor area real estate. Being the least expensive of the four areas, Harbor area homes are the most affordable and attracted the most attention when interest rates were ultra-low and entry level buyers were able to qualify for purchase loans. Now, with the interest rate already double the 3.5% of 2021, many potential buyers no longer have the cash flow to purchase.

Note that 476 Harbor area homes sold last October versus 252 this October. Looking back to 2019, the most recent “normal” year we find there were 397 homes sold in the Harbor area. This demonstrates how artificially inflated sales figures were in 2021 and how far sales have already fallen in just seven months from the peak.

In mid-November, following another .75% increase by the Federal Reserve System, the Mortgage Bankers Association is reporting a drop of 46% in mortgage applications to purchase a home compared to last year. That decline is accompanied by an 88% decline in applications to refinance a home loan. That amounts to a lot of money out of circulation in the economy.

Total Dollars in Sales Declines $1.8 Billion

As of the end of October South Bay home sales for 2022 total $8.3 billion. That compares to $10.1 billion for the same time frame in 2021. Already this year the gross sales revenue has fallen by $1.8 billion, or 5%. As the market slips deeper into recession, we expect the monthly sales revenue will continue to decline, shrinking the total even more.

The graph above shows the downturn starting in March and generally trending down for the balance of the year. It’s important to remember that home sales are a major driver in the economy. Every home sold results in a miniature boost to the economy as new homeowners relocate, acquire new furniture & appliances, repair and update their new home. Most experts estimate an additional 15%-20% for ancillary economic activity stimulated by real estate sales.

Using 2019 as a baseline, we can trace the rise and fall of the South Bay real estate market through the pandemic. In 2019 the total cumuilative sales was $7.9 billion. In 2020, when the pandemic hit and the government began piling on financial assistance and incentives, the annual sales reached $8.7 billion. When 2021 rolled around the ultra low interest rate alone was enough to drive annual sales to $12.1 billion, an increase of 53% over the 2019 sales figures. Looking now at 2022, we are forecasting a year end total of approximately $9.5 billion, a decline of 22% from 2021.

An additional concern this year is the reduction in local and state tax revenues. The pandemic forced significant governmental expenditures to mitigate harm to citizens. A recession, coming on the heels of Covid-19, threatens to up-end the economy. California’s budget reserves haven’t yet recovered from the pandemic and state revenues are already slipping.

Median Price Shifting Down

Wealth is often measured by the value of owned real estate. For most families their real estate is the home they live in, which is valued per the median price of comparable homes. Thus, nearly everyone is interested in the median price for the area.

Year over year, comparing 2021 to 2022 for the same month, the median price continued to rise until August of this year. Since then results have been “choppy” with median prices down August, September and October for PV Hill sales, down two months out of three at the Beach, down one month in the Harbor area and up all three months in the Inland area. (How the areas are defined may be found at the end.)

Looking month over month, comparing each month to the one prior, shows a clearer picture. January started the year with declines compared to December, both at the Beach and in the Inland area. By July and August all four areas were showing declines compared to the prior month. The repeated monthly decreases in the median prices built up to the annual decreases which began showing up in August and have continued through October.

When Is It a Recession?

Since June of this year the total dollar value of South Bay sales has been declining. Combined, the precipitous drop in number of homes sold and the gradual decline in median price are driving the revenue below that of 2019 on a monthly basis. The chart below shows August as the first occasion where the total dollar value of homes sold in 2022 fell below the monthly sales in 2019. October sales for this year ended just shy of the same month sales in 2019.

Our projections (shown below) for the 2022 year end indicate the total sales for the year will fall below the 2019 total sales dollars. While this isn’t an official definition, or designation, it matches our understanding of a recession. Any time our financial situation is headed backwards in time we think of it as a recession.

The challenge now is to consider how this recession will play out in time. The Federal Reserve System (Fed) has changed the game rules since the Great Recession. A prominent change has been the speed with which the Fed raised the prime rates for member banks. In response to the Great Recession, the Fed gradually raised rates over a period of years. This gradually slowed home sales. This time, the Fed has raised rates much faster, resulting in much more immediate impact on the real estate market.

At the moment, all expectations are for another rate increase in December, despite indications the economy is crashing. A seriously disappointing Black Friday might convince the Fed to ease up, but we’re anticipating that relief. If history and the immediate data proceed along the current path we should see a lot of price reductions in 2023.

For those who must sell, it’s an unfortunate time. There are ways to ameliorate the negatives, but it will probably still be negative. Those who are in a postion to purchase have the benefit of reduced prices, combined with the negative impact of higher interest rates. Generally speaking, very few are happy with a recession, though we have talking to a group of buyers who think pooling cash and buying as a consortium/collective is a masterful idea right now.

At a Glance

In addition to being relatively self explanatory, our At-a-Glance table is discussed throughout the above paragraphs. We won’t bore you with any more chatter about it, but we find it immensely useful as a quick reference. Some of our readers have even said they immediately go to the bottom of the article to see how much red ink there is. (Sorry. It is getting redder, but there are some delightful opportunities out there.)

Disclosures:

The areas are:
Beach: comprises the cities of El Segundo, Manhattan Beach, Hermosa Beach and Redondo Beach;
PV Hill: comprises the cities of Palos Verdes Estates, Rancho Palos Verdes, Rolling Hills and Rolling Hills Estates;
Harbor: comprises the cities of San Pedro, Long Beach, Wilmington, Harbor City and Carson;
Inland: comprises the cities of Torrance, Gardena and Lomita.

Photo by jordis small on Unsplash

More Live Local Music !

Andy & Renee-The Lighthouse-EVERY TUESDAY

TUESDAYS- 5:30-7:30PM (Every Tuesday!)
The Lighthouse Cafe,
30 Pier Avenue Hermosa Beach, CA

Andy Hill – EVERY WEDNESDAY

WEDS- 8:30PM — 11:30PM
Fairmont Century Plaza,
2025 Avenue of the Stars, Los Angeles, CA

Andy & Renee

THURS- Oct 20th 6:30PM — 9:30PM
Sister’s Barn
1408 S Pacific Coast Hwy, Redondo Beach, CA
424-452-6070

Songwriter Showcase – October

This month brings blues singer songwriter Teresa James, songwriter, producer, bass player, Terry Wilson (Teresa James and the Rhythm Tramps),guitarist, singer, songwriter Shawn Jones and our hostess, Jodi Siegel!

Teresa James – https://teresajames.com/home
Terry Wilson – https://en.wikipedia.org/wiki/Terry_Wilson_(musician)
Shawn Jones – https://shawnjonesmusic.com/home
Jodi Siegel – https://jodisiegel.com/home

Every third Tuesday of the month, 3-4 singer songwriters of all genres, come and play their tunes in front of an intimate audience. Admission has been free but donations are strongly encouraged to help pay the musicians. It has become more than a local showcase, but a concert in an intimate setting and a great hang of like minded music lovers!

The venue has the down home feel of a neighborhood bar, with the ambiance of a small concert hall, an excellent sound system and every seat is VIP. The Showcase has gained a very loyal following of not only fans who attend every month, but it has also drawn some amazing music makers and hit songwriters too. Many have toured the world with legends.

Project Barley’s is located at 2308 Pacific Coast Highway, Lomita, CA 90717 They have award winning crafted beer, wine, sandwiches and their amazing pizza. For more information about the venue go to their website https://projectbarley.com/