There’s a lot of talk about first-time buyers, from their impact on the housing market to advice to help them secure the home they want. Not as many people talk about first-time sellers. Of course, many first-time sellers already have some experience with the real estate process. They probably bought the house they’re trying to sell, though it’s possible they inherited it. But that doesn’t mean they have experience with selling, and they could still make mistakes.
First-time sellers are often thinking about how much money they can get, rather than whether or not they even can sell successfully. While getting too little money for the sale is a bad idea, you won’t get any money at all if your house doesn’t sell. Instead the primary focus should be on making sure you get offers, then you can enter negotiations. Don’t try to cut corners by selling without an agent. It is an extra expense, for sure, but most prospective buyers won’t even know your property exists without the help of an agent. The agent can also help you set a realistic listing price. If it’s too high, you won’t generate interest, and if it’s too low, people will assume there’s something wrong with the property. Even once you get offers, don’t just pick whichever offer is highest. Take a look at the terms of the offer. The buyer could be asking you to pay for certain costs, which could make a slightly lower offer actually a better deal. In addition, a slightly lower full cash offer avoids financing headaches and possibly some closing costs.
We’ve said for years that land on the Palos Verdes peninsula is undervalued. We may not be able to say that much longer. Last month property on the Hill took another big jump upward in median price. That’s the second time in six months. When that yellow line peaked in February we found several new construction homes closed escrow in the same month boosting the median price dramatically.
PV Median Up $364K while Beach falls by $80K
This time we found two homes, selling in the same month, at over $10,000,000. To put that in perspective, during the past 12 months only four properties on the Hill have reached the $10M mark. So what are these rarefied houses that bring in over-the-top median prices? Let’s take a closer look. (Photos at link.)
The listing agent described 2005 Paseo del Mar as a single level with 5 bedrooms, 4 1/2 baths, formal living and dining rooms, 2 family rooms, pool, 4 car garage with gated entry and circular driveway. So what makes it worth $12.4M instead of $2M?
It seems 4582 square feet of house sitting on over an acre of land on the bluffs above the Pacific Ocean is worth about $10M more than if it had an inland address.
Similarly, 1417 Lower Paseo la Cresta is a grand estate offering over 15,000 square feet of lavish living space spread over 3 levels, with 9 bedrooms,13 bathrooms and two full kitchens. Additional highlights include the custom 15-seat theater, Italian Fantini mosaic pool, elevator, generator and an extensive home automation system.
Beach Cities Sales Down -34% From 2021
The Inland cities clearly leap-frogged the other three areas in volume of sales for June. Sales in the Inland area out-paced the rest of South Bay, erasing a -17% decline from May of this year and adding a +13% increase for June .
The next closest monthly sales volume was a +2% at the Beach. Harbor area sales showed the poorest comparable performance, dropping by -4% for the month, continuing a three month slide. Monthly sales volume in the Harbor area has declined 135 units just since March.
Let’s focus on the Harbor and that red line on the chart for just a moment. Remember this is an entry level market, where a little rise in the mortgage interest rate can quickly price a new buyer out of the running. Notice that sales in the Harbor area were at about 300 homes per month in January. By February a few buyers had noticed the interest rates climbing and took the leap.
Then March became the proverbial “last chance” to buy in the fast moving current market. Sales volume shot through the ceiling with a 61% increase in homes sold. Since then we have watched a classic collapse with prospective buyers melting into the woodwork, waiting for another opportunity.
Annual statistics are still reflecting the impact of two plus years of pandemic. Compared to June of last year, sales were down dramatically. The Inland area fared the best, coming in with a drop 0f -6% from 2021. Sales in the Beach cities and the Harbor area fell the farthest with a -34% and a -29% respectively.
Total Dollars Sold Up 71% In Just Two Years
Back in 2020, the first six months of the year had netted slightly over $3.1B in South Bay home sales. Fast forward to the first six months of 2022 and total sales is slightly over $5.3B. Restated, that’s a 71% increase in dollars spent on real estate in just two years.
Much of that increase was the result of the phenomenally low interest rates created by the Federal Reserve Bank (Fed) to offset the financial impact of the pandemic. It was good for all those people who wanted homes and had down payment money. Investors did especially well, though we saw another big expansion of the inequality gap.
Coming out of the pandemic, we’re seeing the four areas moving erratically. The steep climbs of 2020 and 2021 seem to be leveling off, as the Fed tries desperately to slow what is viewed as a runaway real estate market.
Total sales dollars in 2019 were $7.9B, in 2020 up to $8.7B, and in 2021 up again to $12.1B. Since mortgage rates are still climbing, it’s a little early for forecasting, but we anticipate 2022 total sales to come in at about $11.3B.
Where Are We Going?
Comparing last year’s market to 2022 shows a continuing decline in sales, while simultaneously a continuing increase in median prices. That may still change before the end of the year.
In May we saw the quantity sold drop into the red numbers across the South Bay. For June the sales volume is only off in the Harbor area, but the Hill and the Beach are both marginal. We expect sales to gradually slow as the year closes. Indications are the Fed will ratchet up the mortgage interest rate another 2% which should bring transaction volume down substantially.
May also saw the median price drop at the Harbor. Then in June the median fell for the Beach cities and the Inland areas, while the Harbor bounced back. We expect both the median and the sales volume to fall back into the red zone by the end of the year.
Sales volume should move first. Then as sales slow and buyers become more selective, sellers will begin retrenching on price. We don’t anticipate major price reductions until 2023. However, there are a lot of moving parts to this years economy. Events on the other side of the world may still make big changes here.
If you’re in a situation in which you think you’ve settled on an area for your new home, but aren’t getting your offers accepted, you may need to think a bit creatively. Chances are you’re only looking at homes that are currently listed for sale. This may seem obvious, but it’s not the only possibility. Though it most commonly only happens between people who already know each other, it’s not illegal to make offers on off-market homes.
A good way to skirt the opposition is to look for recently expired listings rather than active listings. Your agent can easily set up this search for you. If a listing expired recently, it means the seller probably did want to sell, but wasn’t getting offers. It could also mean the seller wasn’t very serious about selling, but you won’t know which unless you contact them yourself. There’s also another option that’s less likely to work, but more likely to get you what you want if it does work. If you see what you think is your dream home, but it wasn’t on the market at all, you can still try contacting the owner. For the right price, they may be willing to sell even if they weren’t trying to. There are certainly some homeowners who aren’t listing their home only because they think they won’t get a buyer.
Project Barley’s is located in Lomita (south of Torrance/Redondo on PCH). They have great food,(Gourmet pizza, sandwiches, gluten free/vegan options and of course wine and beer! ! For more information check out their website https://projectbarley.com/
At about 7pm on the third Tuesday of every month, we indulge our taste for live music. Jodi Siegel created the Songwriter Showcase as a means to bring original songs, performed by the original songwriters, to local people. There isn’t a bad seat in the house, and by 7pm every seat is filled with music lovers. Come on down and check it out! Here’s this month’s program.
Tracy Newman : Tracy is founding member of The Groundlings Improv Theatre, which is one of the main farm companies for SNL. She was a TV writer/producer for 16 years, starting as a staff writer on Cheers. In 1997, she won an Emmy and Peabody Award for co-writing the groundbreaking “coming out” episode of Ellen. In 2001 she co-created the ABC comedy, According to Jim. Tracy has been playing guitar since she was 14 and is now a full-time singer/songwriter, doing shows for both adults and children. She has a new company called Run Along Home, focusing on age-appropriate lyrics for very young kids. Tracy’s CDs for adults: A Place in the Sun, I Just See You,and That’s What LoveCan Do to Your Heart. Her CDs for children: I Can Swing Forever, Shoebox Town, and Sing With Me. Websites: www.tracynewman.com and www.runalonghome.com.
David Plenn: Singer-songwriter-guitarist, Plenn has developed a career as a in demand sideman, a producer as well as a professional songwriter. His “Easy Driver” was a 1978 chart entry for Kenny Loggins, while “The Forecast (Calls for Pain)” — produced by another important musical mentor, writer-producer Dennis Walker — appeared on Robert Cray’s 1990 album “Midnight Stroll.” His tunes were heard on such hit TV shows as Beverly Hills 90210, Melrose Place and Touched By an Angel.
David’s new album, produced by Plenn and Lloyd Moffitt and comprising 10 beautifully crafted, emotionally affecting original songs, finds the veteran Southern California performer backed by a group of longtime colleagues who rank among the region’s best-known players: legendary singer-songwriter-arranger Van Dyke Parks (architect of the Beach Boys’ Smile), drummer Jay Bellarose (Elton John, Bonnie Raitt, Aimee Mann, etc.), bassists Jenny Condos (Bruce Springsteen, Jackson Browne, Stevie Nicks, etc.) and James “Hutch” Hutchinson (Willie Nelson, B.B King, Linda Ronstadt, etc.). Several other contributors — Moffitt, vocalists Tara Austin and Llory McDonald, bassist David Jenkins, drummer David Goodstein — backed the late singer- songwriter Jerry Riopelle during Plenn’s decades-long association with the musician. For more about David, go to his website https://davidplenn.com/
Michael McNevin: Michael’s songs read like short stories, full of heart, humor, and a keen eye for detail. Winner of the Kerrville New-Folk award in Texas, Performing Songwriter Magazine “DIY Artist Of The Year”, 7-time grand finals “Song Of The Year” winner for West Coast Songwriters. Accomplished guitar work and seasoned vocals underscore the characters and places he comes across in his travels. He grew up in the train town of Niles, CA, in the east bay hills the San Francisco Bay Area. He started out playing underage in East Bay bars, mixed in a six-month stint busking the streets and subways in New York and has has since logged 25 years on the U.S. songwriter circuit.
He’s shared hall stages with Johnny Cash & The Carter Family, Donovan, Shawn Colvin, Richie Havens, Iris Dement, Greg Brown, Christine Lavin, Robert Earl Keen, and many of others. He’s been a main-stager at Strawberry, High Sierra, Kerrville, Redwood Ramble, American River, SummerFolk in Canada, and the Philadelphia Folk Fest. He’s also been a 3rd place finalist at both the Rocky Mountain Folks and Telluride Troubadour Competitions in Colorado, and was nominated Artist Of The Year by the National Academy of Songwriters. He tours as a solo act in the US and parts of Europe, and occasionally gets a band together as McNevin & The Spokes. In addition, Michael is an Etch A Sketch artist of some renown, delighting and dumbfounding audiences. Not kidding, he illustrates his songs on the little red toy. Michael has been a guest on CBS “Evening Magazine”, plus segments on NBC, ABC, and dozens of cable music shows.
When he’s not on the road, Michael also owns and operates the Mudpuddle Shop, in downtown Niles, a former barber shop. Now in it’s 14th year, it is a 15’x15′ creative hive for showcases, workshops, song swaps and jams. His Etch A Sketch drawings hang on the walls, waiting for an earthquake.. https://michaelmcnevin.com/
Jodi Siegel: Jodi was born in Chicago, IL. The Home of the Blues! She eventually relocated to California and began playing and singing in countless blues, R & B, pop and original music bands throughout Orange County, San Diego and Los Angeles. 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 (“So Many Rivers To Cross,”-cowritten with Daniel Moore and “If I Were You”-cowritten with Danny Timms) Marcia Ball (“So Many Rivers To Cross.”) and Teresa James (“Come Up and See Me Sometime”-cowritten with Danny Timms)
MEET OUR NEW SONGWRITER’S SHOWCASE SPONSORS I adore these two wonderful folks! Everybody’s cheerleaders in the music community!
It’s rather common for neighbors to get curious about open houses and just pop in for a look. Most of the time, they aren’t planning to buy anything, let alone a house right next to where they already are. This has the potential to frustrate some sellers who are perceiving more interest than there actually is, but the neighbor is not necessarily simply being a nuisance. Open houses are an excellent opportunity for people planning to sell, as well.
Buyers usually don’t look in their own area, but as a seller, you can definitely use prices in your own area for a general assessment of the value of your own home. This is especially true if the homes are similar, but even a vague less than/greater than guess is better than nothing. Just keep in mind that it’s only a loose estimate. The price point isn’t the only information you can gather from an open house, though. Recently remodeled homes are great pointers for current trends, and can help you decide on how to remodel your own home. You can also pick up general decor tips. Even the things that you find wrong with the house can tell you what not to do.
Commercial real estate has been struggling in recent years, just as many other sectors of the economy have been struggling. However, one advantage that most commercial buyers have over residential buyers is that they’re more willing to take on debt because their living expenses are likely a lower percentage of their income. As a result, loan originations for commercial properties increased dramatically in the first quarter of 2022.
As can be expected, the effect is greatest in the areas either least affected or most in demand as a result of the 2020 recession. These include hotels, industrial, retail, and healthcare. Loan originations for hotels increased a whopping 359% from 2021. Mortgages for the industrial sector also increased over 100%, by 145%. Increases in retail and healthcare were also significant at 88% and 81% respectively. Lesser increases were noted for multi-family dwellings at 57% and offices at 30%, but these still increased, not decreased. However, one should note that the available data isn’t entirely up to date. Mortgage rates have increased significantly since Q1, so despite the fact that they’re starting to slip back down just now, there may have already been a downward trend in commercial loan originations that we haven’t noticed yet.
Primarily as a result of actions by the Federal Reserve, mortgage rates have been trending upward since January. The rates peaked in June, and have now begun their decline in July. ARM rates are currently more volatile than FRM rates, and may continue to flip-flop, but they are still lower than FRM rates.
The 30-year FRM rate peaked at around 5.7% in late June. It’s since dropped slightly to 5.3% as of the first week of July. The 15-year fixed rate followed a very similar trend line, albeit at a lower peak rate of just under 5%. This is normal; the 15-year rate has always trended lower than the 30-year rate. The ARM rate was 4.34% at its highest in June, and has now dipped below 4%.
It’s pretty typical for first-time homebuyers to purchase a starter home, one that is cheaper and smaller, but that they aren’t planning to live in for an extended period of time. First-time homebuyers expecting children soon, or even who already have children, will instead tend to purchase a larger home that their kids can grow up in. But kids aren’t the only reason to skip the starter home, if you are able to afford something better.
While it’s true that any home you live in will build equity, this is mostly proportional to the value of the home and time owned, barring dramatic shifts in neighborhood desirability. Therefore, a cheaper home that you live in for only a few years will build less equity than a more expensive home that you live in for decades. In fact, if your time spent there is unusually short, it may not even cover the costs of selling the property. There are also less tangible benefits to going straight for your forever home. Getting settled in a community can take a number of years, especially in high-density areas where there is typically a larger percentage of low-income housing than in medium-density areas. If you’re moving out in a few years, you may never feel established as part of the community or be able to form lasting connections.
It’s common for sellers to perform a few upgrades to their home just prior to selling, in the hopes of fetching a higher price. But there are some upgrades that simply aren’t worth it. Of course, if you’re planning to stay living there, you can go through with these upgrades for yourself. You shouldn’t expect them to help you get a profit, though.
Bathroom remodels are tricky. While remodeled bathrooms are appealing to buyers, they’re also rather expensive. The return on investment usually isn’t very high. Also, if any problems arise, it could result in a much larger amount of time and money spent than expected. This could delay the sale significantly and reduce your profit, even if the end result does bring in interested parties. Living room updates are neither in high demand nor quick. Moreover, if it’s not done in a way potential buyers would want, it could actually reduce interest. While many people nowadays want home offices, unless you need one for yourself, don’t break down walls to convert existing bedrooms. Bedrooms are far more versatile, as they can be used as offices without any structural renovations, or used for their intended purpose. A home with 3 bedrooms and no office is worth more than a home with 2 bedrooms and an office.
Wood floors are in high demand and significantly increase the value of your home. Unless buyers are specifically looking for the softness of carpeted flooring, even false wood is more appealing than carpet. Of course, hardwood is always going to bring the highest increase in value. Because of this, you may think that if you already have hardwood floors, you don’t need to change anything. But you should still consider replacing it, since new hardwood is even a significant improvement over old hardwood.
It’s fairly simple for buyers to tell if your flooring is old. Hardwood gets scratched and its color dulls. Heavy use and oversanding are easy to spot. Some of these issues can be fixed by simply refinishing it, but if the damage is more than simple wear and tear, such as nails sticking out or boards coming apart, you absolutely want to replace it. Your buyer is going to anyway, so you may as well get more value for your home while improving buyer interest. Even more importantly, old flooring can pose structural issues. This can be spotted anywhere the floor seems to move too much when walking on it.
A certain element of the homebuying process that sometimes crops up, especially in competitive markets, is the homebuyer love letter. This isn’t actually a declaration of love, except possibly for the home they’re trying to buy. A love letter is simply a personalized note included with an offer in an attempt to connect to the seller on an emotional level. Sellers respond to this variously, and may simply ignore them if they’re receiving them constantly.
But the major issue with love letters isn’t the question of their effectiveness. The problem is why they have the ability to be effective. If a seller has a reaction to a love letter — whether positive or negative — and uses this in their decision of which offer to select, it means they’re biased based on some personal detail of the buyer. Most of the information a buyer would provide doesn’t have protected status, but if it does, the seller could be sued for discrimination. Of course, it’s very difficult to prove exactly why the seller accepted one offer over another, so this rarely actually happens even if the buyer suspects discrimination. But this is exactly why some states have banned love letters, or, in the case of Oregon, are trying to ban them.
You may already be aware of the value of staging your home to attract buyers. Just knowing that you should consider it doesn’t actually tell you how to accomplish that, though. It’s important to note that people spend a lot of time in their bedroom, even when they aren’t sleeping. It’s a place for a multitude of forms of relaxation. So, you want it to look relaxing. If you’re having trouble making your bedrooms look appealing to buyers, maybe these tips will help.
Be careful not to make the place look too much like you, specifically, live there. While staging does involve decorations of some sort, otherwise the place will simply look bland, the decor needs to be somewhat more generic. This allows buyers to imagine themselves living there. On a related note, you should choose neutral colors. You don’t know what colors the buyers will like. They may repaint anyway, but you don’t want to turn them off from even trying. White bed coverings and curtains are best, as they amplify lighting. The position of the furniture is also important. As one would expect, the bed is generally the focal point of a bedroom. It should be situated such that it provides a sense of balance. If possible, put it across from windows or doors. Try to make sure there is space to move around the bed. If none of this is possible, at least place the bed against the room’s longest wall.
When renters are faced with rental price increases, as they are now, it’s typical for them to look for a cheaper place to rent. They don’t always find one, of course. But with the current inventory, it’s riskier to even look for one than to simply accept renewing their lease at a higher rent value.
Between April 2021 and April 2022, the share of renters renting at market value who chose to renew their lease increased from 53% to 57%. This is despite an 11% increase in rent prices during the same period. The problem is that there simply isn’t anywhere more suitable to go, partly because of low construction rates. Without renter movement, the number and type of vacant units doesn’t change very much, which further stagnates the market because what few vacancies exist are already deemed to be undesirable.
It is currently believed by experts that the US is heading towards another recession. It’s not a guarantee, and it won’t be for around six months if it does happen. So what exactly is a recession, and why is another being predicted? Many people are only aware of a recession as being a period of economic struggle. But it has a technical definition, which is two consecutive quarters of shrinking GDP. GDP is definitely not the entirety of the economic picture, but the conditions for a recession almost certainly indicate job loss and lower wages. What’s being predicted is simply a prolonged reduction in overall consumption, and this is mostly because interest rates are going up.
The Fed is purposefully raising interest rates in an attempt to reduce inflation. But a reduction in inflation doesn’t necessarily translate to no recession. If interest rates rise too quickly, it could actually cause a recession during a period of high inflation, which is called stagflation. This is what happened in 1981. Currently, experts believe the Fed is increasing interest rates too quickly. And it’s possible that they shouldn’t increase the rates at all; the prospect of increasing rates to reduce inflation is based on the outdated concept that high inflation is triggered by high wages. It’s true that businesses often like to take advantage of increased wages by raising prices without a significant decrease in demand, but this is calculated corporate greed, not an economic law. Perpetuating this idea only further lines the pockets of the already wealthy.
You’re likely aware that having a pool will probably increase the value of your property. But if that’s your only reason to get one, you may want to rethink your plans. It may or may not be a good idea, depending on the circumstances. Of course, if you want a pool anyway for your own use, you may be less inclined to care about the numbers. However, regardless of why you want a pool, there are several factors to consider.
A pool is expensive. It’s not like some small upgrades that can have a major impact over time for a low cost. Unlike energy upgrades, pools don’t generate more value as time goes on; their value changes only with buyer demand. In fact, a pool will actually cost you more money over time, in addition to the large up-front cost. Cleaning and filtering costs add up over time, and having a pool increases your insurance costs. If your plans don’t include using the pool, it may not be a good return on investment. In addition, depending on the area, you may not actually want to increase your home value. Pools are ultimately a luxury feature. If you live in a low-cost area, it’s unlikely that prospective buyers searching in that area have large amounts of money to spend. Conversely, if you live in a high-cost area but don’t have a pool, adding one could help bring your home some more appeal.
In order to figure out how best to organize your closet, there are two major questions that need to be answered: What can it store, and what do you want to store? The first question may seem obvious, but many people don’t actually properly measure their closet. You’ll want to know exact dimensions and also account for storage aids such as rods, dividers, and shelving. Figure out how to get the most out limited space. You can even hang hangers on other hangers, if you need to.
The second question is rarely considered at all. Any leftover space is generally occupied by anything that can be shoved in there with the clothes. This isn’t optimal, and you should really plan ahead what exactly you want to go in your closet. For example, snow clothes probably don’t need to be there. You’ll only wear them in winter, so you don’t need easy access to them most of the year. Think about what you use each item for, and group the items by function. Also, clothing doesn’t even have to be what it’s used for at all. Maybe all or most of your clothing can be put in a dresser, leaving room in the closet for things like sheets or towels.
Hard Rain, featuring Andy & Renee is a perennial favorite in the South Bay, taking the title of Best Original Music Band nearly every year. While Andy & Renee perform as a duo at several different venues each week, the whole band gets together about once a week for an outdoor performance. Below are the next few weeks of gigs for Hard Rain with Andy & Renee. For more information about the band or the duo, tickets when required, and the full calendar, go to https://andyandrenee.com/
South Bay Festival of the Arts, Torrance
Saturday, June 25, 1:00pm — 2:30pm Torino Plaza, Torrance Cultural Arts Center, 3330 Civic Center Drive, Torrance, CA 90503. Event runs 11a-5p. Our set time is 1-2:30pm.
The number of homes sold in the South Bay has declined from last month, and has declined from last year. The quantities are actually rather dramatic given that May is typically a time of increasing sales. The drops range from -7% to -17% lower than April sales of this year, and from -17% to -25% below May of last year.
With over half the year remaining, mortgage interest rates have doubled, currently sitting around 6%. The hike in interest rates has so far reduced the average buying power by about -25%. Coupled with home price increases estimated to have risen 38% since the start of the pandemic, the immediate future of real estate looks dismal.
Inflated consumer prices are also blocking potential home buyers as the Consumer Price Index (CPI) climbs toward a 10% annual hike. There’s little chance of saving for a down payment when the price of everything on the shopping list is going up..
Retirement accounts are often a source of down payment funds. As of this writing the major stock market indices are all down: Dow Jones Industrial Average, -16%; S&P 500, -22%; Nasdaq Composite, -31%. Forecasts are growing for a Fed-induced recession that may begin as soon as this fall. Some potential buyers may see borrowing from their retirement fund to purchase a property as a means to preserve the capital during a recession. Others may not be in a position to do that.
Median Price Sold
May prices delivered a mixed message. The Palos Verdes Peninsula, which had seen two months of decline from a temporarily high median price, headed back up again. The Beach cities continued a steady climb, and the Inland area showed a modest price increase after having dropped 1% in April.
However, the Harbor area, which is as large as the other three areas combined, took a -6% hit to prices. We anticipate the Harbor and Inland areas, which comprise the bulk of the traditional middle class family homes in South Bay, to be the first to react to the economic stress.
Typically, the recession cycle starts with a slowing of sales. As properties languish on the market, sellers begin to reduce prices. One after another, median sales prices will drop until the price reduction offsets the impact to buyers. At that point, buyers will begin to support the reduced purchase prices and we can see growth in the market.
Experts differ in their estimates of how long this cycle will take, and when we can expect the market bottom. There are some predicting a rapid fall based on the speed with which the Federal Reserve Bank (Fed) is reacting. The June meeting of the Fed ended with a .75% hike in the prime rate, and a promise to raise it at least another .75% before the end of the year. While that could slow the economy as early as the beginning of 2023, more conservative minds suggest the end of 2023 for a turn-around.
Area Sales Dollars
The total sales dollars tell the truest story. While sales are slowing and median prices are beginning to slow, the combination shows up here.
Everywhere except the Beach is showing reductions in total sales on a month to month basis, and on a year over year basis. The declines are small to date, with year over year ranging from -1% to -10% in May. Month to month changes ranged from +2% at the Beach to -19% in the Harbor area.
These early numbers follow the general pattern we’ve seen in recent recessions, whereby entry level homes are the first impacted and the last to recover. We anticipate the Harbor area to lead the charge down, followed by the Inland area. Recent years have shown the Beach to be the strongest growth area, so we expect the recession to hit there last, following declines on the Hill.
The nature of the impending recession is still uncertain. Some pundits are saying that at least initially we should expect “stagflation,” that odd environment we first encountered back in the 1990s when prices of everything continued to climb, along with job layoffs and massive unemployment. Other forecasters suggest that because the international economy is roiling with continuing high tariffs (courtesy of the last administration) and new monetary sanctions daily (courtesy of the current administration), this particular recession may last much longer than normal.
In Summary
As the table below shows, the majority of the negative impact for May happened in the quantity of housing units sold. With one exception, prices continued to escalate. We believe this is temporary and likely to change before the end of the year. The -6% drop in median price at the Harbor presages the direction of home pricing as inventory grows and listings stagnate.
Approximately 3 out of 4 listings coming across our desk recently have been either Price Reduction or Back On Market. That means property is staying on the market longer. The Average Days On Market (DOM) for May ranged from 10 days on the PV Hill to 14 days in the Harbor area. As recently as this winter we were still seeing multiple offers on the first day the property was available.
Another measure of the market condition is how far the average sales price declines in the first 30 days on market. We did a quick look for May and came up with these statistics. Thirty days after the original listing, the price had dropped from the original: at the Beach, -9%; the Harbor -6%; PV Hill -18%; Inland -5%. As of May, we’re also seeing property that has been on the market for several months, with several price reductions.
Notable Properties
The high and low sales for May were not terribly dramatic. A Manhattan Hill section home and a downtown Long Beach condominium. Thay are simply very big, and very small.
High Sale
Located at 812 5th St, this Manhattan Beach hill section home was originally listed at $10.5M and sold for $8,980,000 after 34 days active on the market. The home offers six bedrooms and seven full bathrooms in 5576 sq ft. Amenities included ocean view, pool, spa, custom waterfall & fire features, a full basement with recreation/media room, home theater, storage, a temperature-controlled wine cellar, and private guest quarters.
Low Sale
Measuring barely 381 sq ft, the studio condo at 819 E 4th St #25 sold for $215,000 in one day. Located in the vibrant East Village of Downtown Long Beach this tiny home offers a remodelled kitchen and bathroom. The unit sits on the second floor, overlooking the intersection of 4th and Alimitos and within walking distance of many downtown shops, clubs and eateries.
