A promissory note is a legal document that will be created if there is a loan being obtained as part of the purchase of real property. The written note is designed to enforce a borrower’s promise to pay back a lender. The payor agrees to pay a certain amount of money to a payee in the future on a specified date. The note must spell out the name of the payor and the payee, and it must be signed by the payor.
It does not have to be notarized, but to be enforceable, a promissory note must contain an unconditional promise to pay a sum of money under specified terms and conditions of repayment. The note must also include an absolute date for payment. A concise promissory note will also include an interest rate and describe the collateral being used to secure the note.
March was not a good month for sellers of South Bay realty. Median prices for residential property collapsed into red territory for nearly all areas. Sales volume was right behind it with falling numbers everywhere except the Beach cities. Even at the Beach, where the number of homes sold rose, the median price went negative.
So to what should this market slow down be attributed? Is it the elevated interest rates? Probably not, since mortgage rates have actually come down, albeit only slightly. Perhaps it’s a lack of inventory? Not likely, as there are more homes on the market in most neighborhoods. Tariffs? There are none on real estate. Has inflation driven off the buyers? Possibly. Median home prices are up in a range from 40% to 74% across the South Bay, though most of that price jump occurred when mortgage interest was toying around the 3% area.
Economic chaos is probably a more accurate answer than any other. Investors like stability, which is not in evidence today. Right now, investors can’t tell from one day to the next, whether to expect recession or inflation. In order to buy low, or to sell high, it’s necessary to know which direction the economy is going. When they can’t tell, investors park their money in the least volatile place they can find.
It’s often called the “investor flight to safety.” So, when the IMF warns of “major negative shock” to the international economy, investments shift to gold and bonds. Right now, both are doing quite well. At some point the investment community will decide real estate has fallen as far as it’s going to, and then we’ll return to—inflation.
Beach:
Monthly home sales in the Beach cities climbed 11% above February, while the median price plummeted by 8%. The number investor flight to safety.of homes sold increased from 109 in the prior month to 121 units in March. The median price dropped $180,000, ending the month at $2,000,000.
On a year over year basis, the sales volume was even more insane, with 59% growth over March of 2024. The last time the local market saw sales numbers this high was during the pandemic, when interest rates were at rock bottom. The craziest part of the story—is seeing that with all those sales, the median price for March actually dropped $10,000. The decline was small enough to register as a 0% change.
Year to date comparisons to the first three months of last year showed similarly divergent percentages, though not quite as radical. Sales volume for the first quarter of 2025 exceeded 2024 by 43%. For the same period of time, the median price at the Beach rose an astonishing 22%. This compared to low and negative numbers across the rest of the South Bay for both sales volume and median price.
Harbor:
Talk about diverse—the Harbor area did a complete 180º turn on the Beach area. Monthly, the Beach was: volume – up, median – down; the Harbor was volume – down, median – up. The Harbor came in with a 7% drop in number of homes sold, falling to 253 units from 273 last month. The median sale was $803,000, a 6% increase over last month’s $760,000.
The same diversity, or is it perversity, kicked in on the yearly statistics. Compared to March of 2024, this year the Harbor area dropped 9% in the number of homes sold, while the median price of those homes climbed 4%.
First quarter home sales at the Harbor continued to climb, though not as aggressively as the Beach area. The sales volume rose 4%, which is more in line with business on the Hill and for the Inland area. For the same time frame, the median price fell 1%.
Hill:
Month to month sales in Palos Verdes showed a 9% increase, climbing from 46 units in February to 50 in March. While the number of homes sold climbed, March saw a 4% drop in the median price.
Comparing March of 2024 to this March brought 0% change for both the number of homes sold and the median price. Exactly 50 homes sold in both years. The median price actually declined by $10,000, though the change was statistically insignificant.
There was also no change to the sales volume for the first three months of this year. Median price on the Hill rose 11% for the first quarter of 2025.
Inland:
While March brought 11% growth in the number of homes sold compared to February, the Inland area challenged market pressure and registered a 1% increase in the median price. With 114 sales for the month, compared to 103 for last month, the Inland area maintained positive volume. At the same time, the median price improved by $12,500, up from the February median of $900,000.
Annually, March flipped the statistics, with both the sales volume and the median price dropping. Home sales fell by 9%, the same decline the Harbor area experienced. The median price was off 1%, which doesn’t seem like much until compared with the 40% growth since 2019.
Year to date the Inland area showed 6% growth in the number of homes sold compared to the first quarter of 2024. Like the Harbor area, the Inland area delivered a significant drop in the median price, coming in with 0% change.
Beach=Manhattan Beach, Hermosa Beach, Redondo Beach, El Segundo Harbor=Carson, Long Beach, San Pedro, Wilmington, Harbor City PV Hill=Palos Verdes Estates, Rancho Palos Verdes, Rolling Hills, Rolling Hills Estates Inland=Torrance, Lomita, Gardena
A covenant is a binding contractual agreement between two parties to do or not to do a specified act. Covenants are usually enforceable by the courts if they are reasonable, clear, definite and lawful.
A breach of covenant is the failure to obey a previously agreed-upon legal arrangement that was created honestly and in good faith. When one party to a contract refuses to uphold their obligation as spelled out in that covenant, that party is in breach.
In real estate, a breach of covenant most often occurs when a buyer or seller backs out of a contract to buy or sell a home. A breach can also occur when either individual fails to perform any of the terms of a purchase contract. Breaching a contract should be taken seriously. The party who has suffered from the breach usually has recourse in a court of law, where the legal remedy could result in monetary damages being awarded.
On the heels of an encouraging October real estate market, November saw the South Bay market plummet into the red. Compared to last month the number of homes sold fell by nearly 30%, while the median price collapsed at the Beach and on the Hill. At the same time, the Inland and Harbor areas showed modest growth in median price, posting a 2% gain in both areas.
This was a surprising downturn following across the board sales growth in the October market, accompanied by generally positive price appreciation.
Looking at year over year, same month sales provides a slightly more positive result. Both the Beach and the Hill show the number of homes sold down by 3% and 13% respectively. The Harbor area maintained sales growth of 2% while the Inland area increased by 4%. Both areas were off substantially from the 20-30% increases of October.
Year over year median prices were equally depressed. The Beach and the Hill, the high end of the South Bay market, both lost ground in the single digits. The Harbor and Inland areas, which make up the bulk of sales in the South Bay, grew at 4% and 5% respectively.
It’s too early to attribute this shift to the election results because most of the transactions closing escrow in November would have been negotiated in October. If anything, the decline reflects nervous anticipation leading up to the election. December sales will provide a much more definitive indication of how the public has reacted to the election results.
For right now we know that current sales volumes are running about 10% below December of 2023. And, we know that December last year was lower than December 2019 by 30%. Back at the end of October conditions seemed to be improving, but today it would seem we are still trying to climb out of the Covid trough.
Beach: Sales Off 35% for November
The number of homes sold in the Beach Cities dropped from 127 in October to 83 in November showing a 35% decline for the month. At the same time the median sales price dropped from $1.9M in October to $1.65M in November for a loss of 13%.
On an annual basis sales volume was off by 3% compared to last November, while the median price was flat.
Year to date, 1,059 Beach homes have been sold compared to 1007 during the first 11 months of 2023. This is a 5% increase in the number of homes sold. The median price rose 7% from $1,675,000 last year to $1,787,500 year to date.
Harbor: Sales Fall 26% in November
Harbor area home sales plunged 26% from October, dropping to 256 units from 345 sold last month. At the same time the median price climbed 2%, to $787,500 from $775,000.
On the flip side, same month, last year sales moved the opposite direction, rising 2% this year compared to 252 homes sold in November of 2023. The median price this November was up 4% over the $760,500 recorded in November of last year.
With only one month remaining in the year, the Harbor area displays modest increases in both the number of homes sold so far this year and the median price of those homes. Annual sales have reached 3,160 to date, 3% higher than last year’s 3,076. Median prices for the year have climbed from $740,000 last year to $780,000 this year.
Hill: Market Drops 39% for the Month
Home sales on the Palos Verde Peninsula dove down 39% from October to November, wiping out all but 1% of last month’s gain. As mentioned in the October issue, during the last quarter of 2023 mortgage interest rates were hitting around 8%, which drove the South Bay market to a standstill. The fact 2024 sales volume is falling below 2023 is a concerning matter. Interest rates are once again pushing up against 8%, which has been an impenetrable barrier in recent years. While the number of homes sold dropped precipitously, the median price came in with only a 6% decline, falling from $1,914,500,in October to $1,805,000 in November.
Comparing November of 2023 to November this year turned up a steep fall again. This year brought a sales volume decrease of 13% accompanied by another 7% drop in the median price.
As 2024 heads for closure, the dramatic swings of earlier in the year are mellowing out. Through November, the 597 sales on the Hill have settled in at just 1% above last year. Similarly, the median price, which has ranged from an increase of 26% to a decrease of 15% throughout the year, is coming in at 3%, or $1,927,500.
Inland: Home Sales Collapse by 22%
November sales of 111 homes in the Inland area totaled a 22% drop from the 143 sold in October, rounding out a total decline of 28% for South Bay real estate this month versus last month. Despite the fall in month to month sales volume, the Inland area enjoyed a 2% increase in median price over October.
Same month last year sales increased by 4%, moving up from 107 units in 2023. At $895,000, the median price for November Inland area homes was up by 5% over the $851,000 of last year.
Looking at year to date sales volume of 1,313 shows a mere 1% increase over January-November of 2023 when 1,302 homes sold. Median price fared higher, with a 3% jump from $867,500 to $895,000 this year.
Beach=Manhattan Beach, Hermosa Beach, Redondo Beach, El Segundo Harbor=Carson, Long Beach, San Pedro, Wilmington, Harbor City PV Hill=Palos Verdes Estates, Rancho Palos Verdes, Rolling Hills, Rolling Hills Estates Inland=Torrance, Lomita, Gardena
It looks like the real estate market is finally climbing out of the Covid trough. Each passing month this year has shown red ink, mostly on sales volume, and a lot on median price as well. October brought some relief in that the number of homes sold is up in every area, and median prices are only down in half the South Bay.
The number of South Bay homes changing hands has varied considerably since 2019. Sales staggered briefly after the spring shutdown in 2020, then recovered mid-year as the interest rate continued down. Rock bottom interest rates pulled in buyers and homes flew off the market with bidding wars. In the final quarter of 2022 sales plummeted and the buying spree ended.
Year
Homes Sold
2019
7,100
2020
8,581
2021
10,279
2022
7,616
2023
6,481
2024proj
6,636
If this is indeed the beginning of a normal real estate market again, it’s possible to see reaching the pre-pandemic sales volume in 2025, but more likely in 2026.
The median price is another story. Interest rates were hovering around 3.5% in spring of 2020. The Federal Reserve opened the money spigot to keep the economy flowing while everyone was locked down. For about 15 months mortgage interest rates were below 3%. Historical data sourced from Freddie Mac shows that rates dropped below 4% starting in June of 2019 and lasting until March of 2022. Nearly three years of sub 4% rates makes the current +/-7% a significant deterrent to buying a new home or trading up.
During that period, buyers took advantage of the low rates to boost their offering prices for homes, creating a sellers’ market and bidding wars. The median price sky-rocketed in 2021 and continued through the first of the next year. In summer of 2022, median prices started falling and dropped until late in 2023. Across the board, median prices have been modestly positive since the beginning of 2024.
Certainly it’s all relative, and the market is adjusting, both on the side of higher prices and higher interest rates. But, with today’s median prices roughly 40% above 2019, the number of buyers who can qualify for the necessary loan is way down. A 2024 Q3 estimate from the California Association of Realtors shows only 15% of households in Los Angeles County can afford the median priced home. That compares to 56% in 2012, which leaves a lot of buyers on the sidelines.
The election is over and the incoming administration is clearly pro-corporate. Over the next couple months the dynamics of the shifting markets will become clearer. By the new year we should have a better understanding of the impact to our local real estate. As of October, declines are leveling off and sales are starting to pick up.
Beach: YTD Sales Up 6%, Prices Up 7%
The number of homes sold in the Beach cities increased by 11% in October, rising from 114 in September to 127. The median price of Beach properties went up from $1,790,000 to $1,900,000, a 6% jump in monthly figures.
Annually, October this year showed a whopping 61% increase in sales over October of 2023, climbing to 127 homes this year versus 79 last year. Over the same one year span, the median price rose 19%.
In view of the huge increase, it’s important to note that October of 2023 is the month mortgage interest rates started toying with 8%, which the buying public simply wasn’t accepting. While lenders and the Fed worked to lower rates, real estate was “in the tank” for last quarter of the year. After the beginning of 2025 the year over year percentages should level out.
January through October, the number of homes sold this year hit 976, 6% more than were sold in the same time period of 2023. Median price at the Beach climbed to $1,788,750 for a 7% increase over last year.
Harbor: YTD Sales Up 3%, Prices Up 4%
October sales in the Harbor area came in at 345 homes for a 9% increase over September. The median price was $775,000, up 2% from the prior month.
Looking at year over year for the same month, this October showed a 29% improvement over the 267 homes sold last year. As noted earlier, home sales took a significant drop in the last quarter of 2023 due to mortgage interest rate hikes. The year over year median price was a much more reasonable 3% increase.
For the first ten months of the year, sales volume has gone up by 3%, to a total of 2,904 homes sold. Over the same period, the median price has jumped up 5% to $778,500.
Hill: YTD Sales Up 2%, Prices Up 5%
On the PV Peninsula, October sales outpaced September by 40%, coming in with 66 homes sold versus 47 the preceding month. It’s important to remember that the Palos Verdes market is the smallest of the South Bay, so a handful of transactions can make a huge difference in either, the sales volume or the median price. The steep increase in sales was accompanied by a more modest increase of 13% in median price, ending the month at $1,914,000.
Comparing October to the same month last year reveals a 5% boost to the number of homes sold. On the other hand, the median price took a fall, dropping by 2%.
Year to date, home sales on the Hill have increased 2%, from 544 in 2023 to 557 this year. For the same ten months, the median price went up 5% to $1,938,750.
Inland: YTD Sales Up 1%, Prices Up 2%
Home sales in the Inland area have been stable, with an increase of 12% in the number of transactions, from 128 properties sold in September to 143 in October. A 1% drop in the median price from last month to this brought the median down from $882,500 to $875,000.
Annual sales in October of this year ended 23% higher than October of 2023. The median price, going the opposite direction, fell 5% from $917,000 last year.
Continuing the relatively modest numbers, the Inland area has risen 1% in the number of homes sold year to date, The 1202 sales reported so far, compare to 1195 sold in 2023. Similarly, the median price is up 2%, having risen from $871,250 last year to $891,245 this year.
Beach=Manhattan Beach, Hermosa Beach, Redondo Beach, El Segundo Harbor=Carson, Long Beach, San Pedro, Wilmington, Harbor City PV Hill=Palos Verdes Estates, Rancho Palos Verdes, Rolling Hills, Rolling Hills Estates Inland=Torrance, Lomita, Gardena
When viewing a potential new home, it’s important to look past the surface and spot any hidden issues to make an informed decision. Here are six key things to keep an eye on.
Prioritize the things you can’t change easily. It’s easy to be distracted by the current residents’ taste in decor, but focus on the layout, light and space instead. Remember, you can change paint colors and furniture, but structural elements are much harder to fix.
Check for water damage. Look closely at ceilings and walls and under sinks for any signs of water damage, such as stains, peeling paint or black mold. These can indicate leaks, plumbing issues or damp problems that could lead to costly repairs later.
Inspect for cracks.Small hairline cracks can be harmless, but larger or zigzagging cracks could signal serious structural problems. Check around windows, doors and the foundation for any significant damage.
Test the windows.Make sure windows open and close smoothly and check for drafts, condensation or fog between double panes. Poor window conditions can lead to energy inefficiency and higher heating bills.
Sniff out strange smells. Unusual smells, such as mustiness or sewage, can indicate hidden problems such as mold or drainage issues. Be sure to ask about any odors that seem off.
Assess storage space.Don’t forget to evaluate the storage available. Open closets, check for attic or basement access, and ensure there’s enough space for your belongings.
If you’re looking to buy a new home, open houses can provide you with many opportunities to make your new-home hunt more fruitful. You can learn about the sellers, the neighborhood and the details of the home. If you’re able to, try to time your visit for when there are very few lookers roaming through the house. In a hot market, an open house may be the only time to see a property.
Any time you’re going to an open house, you’re looking at the home. You should also be learning, though, not just looking. Walking through a home will help determine what amenities you can afford at a certain price. You can make market comparisons by visiting several open houses.
Don’t just pay attention to the home itself. Be tuned in to the conversations of other visitors, and you will benefit from the insight of others about the home and the neighborhood. If you can get one-on-one time with the listing agent, find out all you can about the seller and the motivation behind selling the house.
The home’s surroundings are also important. Get to know a prospective neighborhood by taking a walk through it. You will be able to see the pride of ownership, learn the traffic patterns and find out more from meeting some of the neighbors.
The most important part of purchasing a home is closing day, when the official transfer of ownership takes place. If you are prepared, it should go smoothly. However, one missing document means a failed or postponed closing, so review your closing documents ahead of time. Closing day will involve executing the paperwork, paying any required fees, and ultimately getting the keys to your new home. Plan on having your ID, evidence of homeowner’s insurance and your closing cost funds. If you are not sure about anything, ask your agent or make a call to the closing office.
There are also a few things you should make sure to do ahead of time that don’t involve bringing a physical object. Confirm the closing fees before you arrive, and have any questions for your lender answered. Prior to the closing meeting, review the seller’s responsibilities and make sure they have been satisfied. Your agent can provide you with the final completion documentation for any seller obligations. If you pay attention to these details and all is in order, you should be able to walk away with keys in hand.
California has always been an expensive place to live, and it’s only getting more and more expensive. The median home price is about 2.5 times higher than the national average, and 11 times the median income. Of course, prices are trending upwards across the nation. Appreciation over time is normal, and has accelerated in the wake of the 2020 pandemic. But these things affect everyone — so why is California specifically so much more expensive?
It’s not just as simple as having higher desirability, although that is certainly the case. The primary issue is a lack of affordable housing. There are multiple reasons for this. California may be the third largest state by area, but it also has the highest population of any state. It’s not among the densest, but it is rather sprawling. There’s just not a lot of open land to build on, particularly land that fits all the various zoning restrictions that are in dire need of updating. However, updating zoning laws is getting pushback from residents. Construction costs are also up. While construction companies typically would rather build multifamily residences, they have to build what’s in demand — which is mainly single-family residences.
In addition, because purchasing a home is so expensive, landlords are better served continuing to rent out their homes and units rather than attempting to sell, even though selling would decrease home prices. This is exacerbated by property tax laws in California. Prop 13 limits the rate at which property taxes can increase until a property exchanges ownership. Therefore, people who have owned a home for a long time can pay very little in property taxes, reducing the likelihood of any sort of market activity.
Prospective homebuyers are prone to backing out immediately if the home inspection uncovers mold. This is usually a hasty response. Some level of mold is, in fact, quite common in homes. Of course, that doesn’t mean you should simply ignore it, but there’s also no need to panic.
Feel free to ask the inspector questions about the mold they found. You’ll want to know how severe the issue is and what the root cause of it is. If the issue is minor, you may even be able to fix it yourself — however, you’ll want to make sure of that beforehand, since mold can hide in places that aren’t visible.
Also, keep in mind that the inspector is neither a mold testing service nor a mold removal service. And yes, these are different things — while a mold removal service often will test for mold, there’s a potential conflict of interest if the same company is both testing for and removing it. If you think you’ll need professionals to deal with the problem, do your research. You’ll also want to know whether your homeowner’s insurance covers mold removal and associated repairs, as policies can differ.
Improving your home can be an exciting yet daunting task. To help you navigate your home improvements smoothly, here are six things not to do when giving your house a makeover.
Don’t plant trees too close to your home. It might seem like a great idea to add some greenery, but planting trees too close to your home can lead to root damage to your foundations and plumbing. Plant trees at a safe distance to avoid future headaches. A good landscaper or garden center employee should be able to help you find the best plants for your lot.
Don’t clean windows on a sunny day. Cleaning windows when the sun is shining directly on them can cause the cleaner to dry too quickly, leaving streaks. Choose a cloudy day to get a spotless, streak-free finish.
Don’t ignore regulations. Skipping the necessary permits might save time initially but can lead to major issues down the road, including fines and even the nightmare of having to undo your work. Always check local regulations, get the proper permits, and keep them for your records.
Don’t use the wrong tools. Although not investing in fancy tools might save money, using the wrong tools for a job can lead to poor results and potential injury. Make sure you have the right tools or hire a professional if needed.
Don’t forget to protect your furniture. There’s nothing worse than eyeing up a beautifully renovated room only to find your couch ruined by dust, debris, and flying paint. Cover your furniture with sheeting or move it to another room to keep it safe. Resist the urge to move your drop cloths and sheets before everything has dried, as you could smudge and track paint around by mistake once you think you have the job done!
There isn’t necessarily an ideal time to sell your home, but there are definitely seasonal trends. Home sales are generally highest in spring and lowest in winter. There are several reasons for this, but there are also two seasons that are neither spring nor winter — summer and fall — and they also have advantages and disadvantages. So, why might you choose fall?
From a pragmatic standpoint, there isn’t a lot of competition in the fall, but there’s still some demand. Many sellers wait until spring, assuming that because that’s when most people buy, it’s the ideal time to sell. However, this results in an abundance of available properties, making it harder for any single home to stand out. In contrast, fall’s quieter marketplace means your home has a better chance of catching buyers’ attention. At the same time, it’s not winter, when many buyers aren’t looking to buy at all. Of course, there’s less of a difference in California where much of the state doesn’t have freezing temperatures. This isn’t limited to buyers and sellers, either — the entire industry runs at a more comfortable pace. Lenders, real estate agents, lawyers, surveyors and appraisers all tend to have less work during the fall, meaning the process can happen much quicker and more smoothly than in the busy spring and summer months.
Secondly, the cozy ambiance of fall can really enhance your home’s appeal. First impressions are important, and many people perceive fall to have a natural beauty, with its colorful leaves. Typical fall decorations, such as pumpkins and scented candles, can also feel warm and inviting. Moreover, cooler temperatures make house hunting more pleasant, encouraging potential buyers to attend open houses and viewings — though in California, this is more typical of the latter half of fall, as heat waves are not uncommon in September. All of these elements can create a strong emotional connection for potential buyers.
Median prices for real estate around the Los Angeles South Bay have risen over 40% since 2019, the year before the corona-virus pandemic. Comparing the median prices and sales activity for the first half of 2024 shows increases approaching 50% for the five year period in all areas across the South Bay.
Over the same time period, sales volume has plummeted by 22%, falling from 4,022 in 2019 to 3,149 in 2024. The Beach cities have been particularly hard hit with a 34% drop in the number of homes sold during the first six months of the year.
Looking at 2024 versus 2023 shows a similar pattern with median prices up nearly 10% from the first half of last year. The Beach area showed the lowest increases, coming in at 5% above the 2023 median.
Sales volume was off by 2% across the area with the only positive being the Beach at a mere 1% above 2023 numbers. As the 2024 year has progressed, the number of sales has declined in total. Simultaneously, more and more parts of the South Bay have fallen into negative growth.
As of the end of June, 2024 sales figures for all areas were negative in comparison to June of 2023. While the number of homes sold has consistently declined through the first half of the year, median prices have been equally persistent at increasing over last year. Most experts are attributing the increasing prices and decreasing sales to the shift from an ultra-low mortgage interest rate during the pandemic, to a comparatively high rate currently.
When rates were at the lowest, many homeowners took advantage of the opportunity to refinance at the incredible rates. Those folks are now in a position where they would incur a painful increase in monthly living costs if they were to move. That has resulted in about a 40% reduction in the number of homes typically available on the Multiple Listing Services (MLSs).
At the same time, the increased mortgage interest rates have pushed a significant number of potential sellers out of the market because they no longer qualify for the loan they would need to trade up to a larger or newer home. That reduced the available inventory of resale homes even further and became another contributing factor to the bidding wars among the few buyers still in the market.
Beach: Down 18% in Sales May to June
Monthly sales volume fell from 110 units in May to 90 homes in June, for an 18% drop. Median price jumped 10% in one month to end at $1,917,500.
Year over year, the number of homes sold declined from 124 in June of last year to 90 this year for a loss of 27%. Median price for the Beach climbed 11% over the year.
Year to date for the first half of 2024 versus the first six months of 2023 shows a modest increase of 1% in sales volume along with a increase of 5% in median price.
Harbor: June Median Price Off by 6%
The Harbor area was the outlier for June. While month over month sales collapsed and pricing jumped for the other three areas, Harbor sales of 342 homes boosted sales by 19%, coming in well above the 288 homes sold in May. Meanwhile, median price went the other direction, dropping from $848K in May to $799,900 in June, for a decline of 6%.
Year over year statistics went the opposite direction, following the rest of the South Bay. Sales volume fell by 3%, dropping from 124 in 2023 to 90 in June of this year. Meanwhile the median price was up 4% for the year, rising from $772,000 last June to nearly $800,000 this year.
The first six months of 2024 brought a year to date sales drop of 4%. The median price in the same period climbed 9%.
Short term changes, as from month to month, have been unpredictable since the pandemic. Looking at the longer term, there is consistency in the declining sales volume and increasing median price. With 2024 a presidential election year, it will be interesting to see how long this direction holds.
Hill: Year Over Year Sales Fell 24%
With a reputation for wildly shifting statistics, the Palos Verdes Peninsula came in with relatively modest decline of 9% from May sales. Similarly, the increase in median price was very tempered at only 3%.
The sales volume for same month last year was anything but mild. June of 2023 reported 79 homes sold versus 60 homes in June of 2024. That’s a 24% drop in volume from last year. While a fourth of the 2023 sales disappeared, the median price eked out a 1% increase, going from $2,000,000 last June to $2,912,500 in June of 2024.
In what is becoming a familiar trend, the year to date sales volume is down 2%, and the median price for the first six months of the year is up 7%.
Inland: June 2024 Sales Drop 24% From 2023
The Inland area showed the smallest month to month change of the South Bay. The 4% drop in sales volume from 128 homes sold in May to 123 in June was minor. Likewise the 1% increase in median price from $945,000 to $955,000.
Like the Hill, the Inland area had a radical drop in sales from June of 2023 to June of 2024. Falling from 161 homes sold last June to 123 sold this June resulted in a 24% drop in transactions. Median price in the same period rose 9%, from $875,000 to $955,000.
Interestingly, there has been no statistically significant change in the sales volume for the first six months of the 2023 and 2024 years. It actually increased by three units from 669 homes sold in 2023 to 672 homes sold in the first half of 2024. For the same time periods, the median price climbed by 6%.
Beach=Manhattan Beach, Hermosa Beach, Redondo Beach, El Segundo Harbor=Carson, Long Beach, San Pedro, Wilmington, Harbor City PV Hill=Palos Verdes Estates, Rancho Palos Verdes, Rolling Hills, Rolling Hills Estates Inland=Torrance, Lomita, Gardena
There are a significant number of factors that could potentially affect what your home is worth. It can sometimes be hard to pinpoint exactly how much buyers are likely to be willing to pay, even for experts. This is especially true in a changing economic climate. However, there are a few factors that can give a pretty good idea of a home’s value.
The first thing an agent will look at to determine a home’s value is recent sales of similar properties in the same or a similar area. This is called a comparative market analysis (CMA), and is the primary method of predicting home values. Unless the economy is particularly unstable, a home similar to yours in a similar area that sold recently probably sold for approximately as much as your home is worth. Looking at currently listed properties can help, but it’s looking at actual sales that is more valuable, because you know at least one buyer definitely was willing to pay that much, otherwise the sale would not have happened.
The reason CMAs look at specifically the same or similar areas is that prices vary extremely widely by neighborhood. Schools, shopping centers, public transportation and recreational facilities can significantly enhance a home’s desirability. On the other hand, high crime rates or noise pollution may detract from a property’s appeal. And it’s important to note that a similar area doesn’t necessarily mean a nearby area. Neighboring communities could be vastly different from one another, but there could be another neighborhood a bit farther away that has more features in common.
But the research isn’t done as soon as a CMA is complete. It may be difficult to find exact matches for your property, particularly when the market is slow. Granted, if you live in tract housing, this can be slightly easier — but only if other properties in the same tract have been sold recently. To combat this, agents adjust the value to account for differences between the comparative properties and your own property. This can include age of the property, condition, and upgrades, as well as property size, lot size, and features.
Much of the consideration for renting over buying comes from the lower initial cost. However, with quickly rising rents and increasing access to financial assistance especially for first-time homebuyers, that gap is closing somewhat. AB 12, which went into effect at the beginning of July, seeks to lessen the upfront cost burden on renters.
Under AB 12, no landlord can charge a security deposit greater than two months’ rent, and in some cases, it’s limited to one month’s rent. The one month limit applies to landlords who own either more than two rental properties or more than four units, as well as when the tenant is a military service member. In all other cases, the limit is two months. Unlike prior law, whether the unit is furnished or not is not taken into account.
What remains to be seen is how easily this law can be enforced, particularly whether landlords adhere to the one month or two month limit. Previously, the difference was whether the unit was furnished or not, something that could be easily confirmed or denied. However, landlords are under no obligation to reveal to tenants how many properties or units they own in total. Moreover, since a landlord can refer to either a person or a limited liability corporation, it’s possible to put properties managed by the same landlord under different names. There may be protections in place for tenants who discover a landlord attempting to sneak by this rule, but they may have a hard time proving it.
The short answer is yes, you can. This would be called a backup offer. However, it may not be worth your time, unless you’re very invested in the property. To understand why, let’s take a look at what a pending sale actually means, and what making an offer on a pending sale looks like.
When a property has the “sale pending” status, what it means is that the seller has accepted an offer, but the sale hasn’t yet been finalized. There are potentially several steps before a sale can be finalized, which can include contingencies, inspections, appraisals, and negotiations. Inspections and appraisals always take time, but may not be required. Not all sales have contingencies, but they come in multiple forms, some of which could take a long time — such as waiting for the sale of another property to close.
So while you could submit an offer on a pending property, not even the seller can know whether they will be able to accept it for a potentially extended period of time. If the pending sale falls through, they may accept or reject it, or want to negotiate further. Even if all of that works out, the property will then be pending with your offer. If you’re on any sort of time constraint, it’s probably not worth it. Furthermore, most pending sales don’t fall through, and half the potential reasons it could may reveal major issues with the property that might result in you not wanting it anymore.
Could it be that after several years of insanely steep ups and downs in the real estate market, we’re finally starting to see normal sales levels and prices? One could draw that conclusion after looking at the year to date statistics for the first four months of 2024 compared to last year. Instead of crazy double digit increases and decreases the rate of change has slowed to single digits almost everywhere.
The Beach cities have been the exception with a 19% growth in the number of homes sold through April compared to 2023. That compares to an average across the South Bay of 4% growth. That’s a good sign, but sales are still off by about 20% compared to the same period in 2019, the last year of “normal business” prior to the economic turmoil of the pandemic.
Median pricing continues to escalate also, though at a much reduced pace. For the first four months of 2024, year to date median prices increased in the 5%-9% range. This is a considerable drop from price jumps of as much as 29% seen just a few months ago.
Looking back at the historical data shows that when the pandemic first hit median prices were operating on a relatively normal upward path. Monthly gains were modest fractions of a percent. Then the Federal Reserve slashed the interest rates to keep the economy moving, and the median price shot through the ceiling with monthly increases frequently topping 30%.
August of 2022 saw a price peak and median prices have been falling since. There’s a lot of resistance on the part of sellers, of course. But the sales volume remains low by historical standards, and buyers are demanding price cuts to compensate for the higher mortgage interest rates, if nothing else.
Expect to see mixed results over the coming months as prices and interest rates ebb and flow around a fluctuating political scene, both nationally and internationally.
Beach:
Monthly sales volume took an insane 55% leap at the Beach in April, after having fallen 1% in March. Seeing the median price plummet by 13% for the same period helps to explain the shift. It’s an isolated example of the push and pull of prices and interest rates. Buyers will remain constrained in their ability to purchase, either by rates, or by artificially inflated prices, until sellers reach a “need to move” point where they are willing to reduce asking prices.
Year over year sales show a similar response in the comparison to last April—a 31% growth in number of homes sold against a 1% decline in the median price.
Trends are better demonstrated in the year to date statistics. Looking at the first four months of 2024 and comparing to the same period in 2023 shows the sales volume increased by 19% while the median price increased 5%
Making the same comparison between 2019 and 2024 shows a 32% decline in the number of homes sold this year. Median price is sharply higher by 43%.
Harbor:
The Harbor area appears to be stabilizing ahead of the other South Bay areas. April sales volume declined at the Harbor by 4% versus sales in March, while median prices increased 1%. Smaller monthly movement, especially in price, is essential to reduce inflation and put the real estate economy back on a solid footing. It’s hard to argue that inflation is near 2% annually, while real estate prices are escalating at several times that goal.
Clearly there’s still a ways to go considering the April 2024 volume had zero growth compared to last April, and is still 24% below April of 2019. The median price has a similar issue being up 7% over April 2023, while holding at 44% above April of 2019.
Year to date, 2024 versus 2023, the number of home sales is off by 1% and the median price is up 8%. The elephant in the room is the constantly increasing median price, which is pushing up hard against the Fed’s inflation battle. The price keeps going up because the inventory is exceptionally limited. There were 18% fewer homes sold year to date in 2024 than in 2019. The limited selection compared to the pent up demand pushed the median up some more.
Anecdotally, many pundits point to the extremely low interest rates of the pandemic years as a big driver for the low inventory and bidding wars. Home owners who refinanced to rates well below 5% are reluctant to sell those properties and take up new loans at often double the interest rate. Consequently, homes that would have gone on the market are now artificially being held off the market.
Hill:
As usual, home sales on the Palos Verdes peninsula have been all over the map in recent months. The number of homes sold in April climbed 28% compared to March, when it jumped 39% versus February, when sales dropped 14%. The median price started with 0% change in January and has yo-yoed it’s way through the first four months, ending down 3% in April from March.
While monthly sales statistics are often sporadic on the Hill, comparing April this year to the same month last year, shows a 28% increase in the number of sales and a corresponding 3% increase in the median price.
Year to date numbers for Palos Verdes were more mundane, with the number of sales for the first four months up 5%. In the same time frame, median prices were up by 9%.
Compared to year to date 2019, PV sales volume was down 9% while prices were up 42%.
Inland:
Business in the Inland cities looks very much like business on the Peninsula right now. Month over month sales volume is growing at 8%—that’s positive because the market needs more inventory! At the same time monthly median prices are dropping by 5%—also positive because interest rates are not going back down to the record-breaking levels of the pandemic! Many of the transactions in the Inland area are entry level buyers embarking on their first home purchase. High prices and steep interest rates work against success for both sellers and buyers in that market.
Year over year sales volume increased at 34%, the kind of activity needed to stabilize the local market. Even with that increase in business, the median price pushed upward by 4%, double the Fed target.
Year to date sales volume is up 9% and median price is up 6%.
Wrapping it Up
It’s going to take some juggling to get more sellers onto the marketplace. And it’s going to require coordination with having able buyers there at the same time. Pundits are betting the Fed will engage in “brake-tapping” until after the Federal election. In the months just before the election interest rates will drop enough to encourage sellers to trade up, and allow buyers to qualify for financing. Those steps would enhance the increasing inventory being seen now. Then in the new year the brakes will be applied again to prevent inflation in the spring buying season. Of course, the outcome of the election promises to influence the market under any circumstance.
Beach=Manhattan Beach, Hermosa Beach, Redondo Beach, El Segundo Harbor=Carson, Long Beach, San Pedro, Wilmington, Harbor City PV Hill=Palos Verdes Estates, Rancho Palos Verdes, Rolling Hills, Rolling Hills Estates Inland=Torrance, Lomita, Gardena
When a buyer and an agent enter into an agreement for the agent to represent the buyer in the purchase of a home, that agreement is called a buyer agency agreement. If the agent is not performing per the agreement, the buyer may cancel the agreement by providing written notice to the agent. It is important for the buyer to make sure the right conditions are outlined in the agreement. A buyer agency agreement usually spells out the duties the agent has towards the buyer in finding and closing on a home. The buyer can participate in negotiating the terms of the agreement.
Buyer agency agreements have typical term lengths of 90 days but can be negotiated for any length. A buyer can specify the kind of property being sought so the agent keeps on track during their search. The terms of the agent responsibilities should also include negotiating on behalf of the buyer and making sure the sales transaction successfully closes.
Most buyers never consider purchasing a property that isn’t in a livable condition. And in many cases, there wouldn’t be much benefit to it, since they are planning to live there. But if you think of the purchase as an investment in your future, there could be advantages — that’s why most people who do purchase fixer-uppers are investors.
It should come as no surprise that fixer-uppers tend to cost less than move-in ready homes of a similar size, lot area, and location. But this isn’t the correct way to look at the investment. What it also means is that you can find properties in need of fixing with a larger lot or better location than a move-in ready home for the same price. Furthermore, the property continues to yield a return on investment as you upgrade, repair, and remodel. You end up with a property that has equal or potentially higher value than similar properties, while paying a fraction of the cost and building equity the entire time. It also might drive up the area’s desirability, further increasing property values overall, including your own.
Financial benefits aren’t the only reason to buy a fixer-upper. Though you won’t get as much freedom as with buying an empty plot of land, fixer-uppers still have a lot of flexibility in what sort of changes you can make. Even major additions and remodels can be done without needing to worry about building an entirely new foundation. If you have the means and the imagination, it’s not too far off from being a newly designed and built home with a much lower initial investment cost. Even if you don’t make too many or too significant of changes, it can be a learning experience if it’s not something you’ve done before — particularly if you choose to do some DIY repairs.
It’s not uncommon to think of gated community homes as mere status statements. They’re more expensive and more exclusive, both of which sound like they’re tailored toward rich people who want to flaunt their wealth. But there are actually valid reasons that gated communities tend to be more expensive. You don’t have to want to flaunt it to want to live there.
Obviously, you do need to have the money. But if you do, their high price also makes them sound investments in the future. Moreover, the extra money you spend isn’t wasted if you don’t end up selling. Gated communities automatically come with enhanced security measures, amenities, and routine maintenance. Security and amenities are high-value features that you’d need to pay extra for anyway to get elsewhere, while routine maintenance can both save money on repairs and ensure that property values don’t decline due to deferred maintenance. Another thing gated communities offer that doesn’t necessarily have a price tag, but tends to be something people value, is a sense of community while simultaneously retaining privacy.
