Manhattan Beach -Beach Cities Real Estate: Prices...Up Up and Away!

An article in the Daily News touts the fact that the median home price in California has increased almost 32% and is the largest price increase in 3 decades.   What makes this article most interesting is the fact that no one seems to think this is a "bubble" issue because buyers have money and are more qualified then in 2006/2007.  As a side note the article says that the reason for the increase is the high number of "expensive" home sales and the low number of distressed home sales. 

It wasn't long ago that people were poking fun at the concept that the Manhattan Beach-Beach Cities real estate market was different from the Inland Empire and most national real estate markets.  

While we definitely saw prices go down, we have seen prices move back to 2006/2007 levels very quickly.   The upward swing in the market caught many buyers unaware.  Most buyers thought they would have more time to "make a deal" before the market recovered.... not the case.   The people who laughed at buyers who took the plunge  and bought in 2009, 2010, 2011 and 2012 aren't laughing anymore.

Not all the Beach Cities have reached the high point of 2006/2007.  While Hermosa is closing the gap,  Redondo still has room for upward movement as does El Segundo.  But they are all recovering as inventory levels continue to be low and demand remains high.

While prices are moving upward interest rates remain low which is a driving force for many buyers.  Rates have been bouncing around for a few weeks as people try to figure out what the Fed is going to do in the future. However even if rates rise a bit they are still at historic lows. Contrary to what many think,  a rise in rates usually spurs sales as buyers try to grab a low interest rate before they climb higher.  Personally I think the Fed is going to continue supporting the market until there is a clearer sign of improvement in all sectors of the market. 

As the Spring selling season winds down into summer we usually see the market gain inventory as sales slow  down.   While the market doesn't seems quite as frantic as it was earlier in the year multiple offers are still the norm not the exception.

This is a tough market for buyers who are looking for a "deal".... they are going to have to wait a few years until a new neighbor moves in and says in awe... I can't believe you only paid $$$$$$  for your home.

Manhattan Beach: Market Snapshot April 23, 2013

 

 

April 2013 at the Manhattan Beach Pier

 

If you are trying to buy or sell a home in Manhattan Beach then you know how crazy the market is now.  it is only April 23 and 36 properties have already closed escrow in Manhattan Beach.  There are seven days left so this could be a record month for closed escrows and median sale prices if the pace continues. 

As I noted in my post on first quarter sales in The Beach Cities; there are a number of opinions about  the stability of the current market.   The LA Times has an interesting take on the lack of foreclosures and they may be right about the temporary effect of new laws in CA dealing with foreclosures.   

As Manhattan Beach  really didn't see much short sale or foreclosure activity, even at the low point of the market.  While real estate values  in Manhattan Beach  certainly lost ground, our market was not hit as hard as others in Southern California.  In fact coastal communities in general have seen a strong  resurgences in property values in recent months.  Cash buyers are a strong force as well as buyers with larger than normal down payments and strong financial statements.  Low interest rates continue to keep things lively.

The biggest issue in Manhattan Beach, Hermosa and Redondo is lack of inventory.  What will push an increase in inventory is when sellers believe they can get a price that will justify selling their home.  Some sellers are thinking about cashing in on the current "hot" market and then waiting to buy a new when the market cools a bit in the fall.   Other sellers are willing to sell if they can find a new place to buy which is why off market sales are going strong.  Realtors are networking  with each other to meet their clients' needs.   In fact pocket listings are creating a lot of interest at the State and National level as inventory remains low and  multiple offers  are the norm.

I do think we are going to see the market calm down a bit in a few months as more inventory hits the market.  An increase in interest rates would bring a change to the market.  There is still a long way to go to reach the price levels of 2006-2007 but things are definitely on the upswing.

The current snapshot gives you a good idea of just how low inventory is and where prices are as of April 23, 2013.  There are  33 homes and 7 townhomes/condos currently for sale in all of Manhattan Beach.  It wasn't long ago when there were double that number for sale in just one area of Manhattan Beach... Times are definitely changing!

Manhattan Beach: Market Snapshot April 23, 2013:

Manhattan Beach-Beach Cities: First Quarter Sales January-March 2013

 

Manhattan Beach Pier April 2013

 

It started last year as buyers snapped up dwindling inventory in the hopes of getting a home while prices remained down and interest rates remained at historic lows.  REO's and short sales disappeared in the Beach Cities as buyers snapped up up some great bargains.  Inventory began to dry up as fewer homes came on the market.  Now a few months into 2013 we are seeing the effects of a lack of inventory coupled with a well qualified group of buyers.

Some folks are already crying bubble while others look at the current market as a function of supply and demand.   No matter what your personal opinion is about the current market,  it is a market on the upswing.  Off market sales are so prevalent that CAR has now gotten into the discussion about pocket listing.   Multiple offers are the norm not the exception... even for properties that couldn't find buyers a few months ago at lower prices.  Cash is king and a number of buyers in  Manhattan Beach and the Beach Cities have a lot of cash. 

A quick review of inventory over the last three months in Manhattan Beach and the Beach Cities is self explanatory... The following information is based on single family homes, townhomes and condos. 

January - March  2013 Beach Cities listings:

January-March 2013 Beach Cities Sale Volume:

January- March 2013 Beach Cities Median Price:

 

As of April 15, 2013 the upward trend in sale numbers is continuing.  There are more properties in escrow than are currently on the market for sale.  The FED's have indicated that they will continue to keep rates on the low side. Hopefully we will see an increase in inventory as homeowners  decide that now may indeed be the time to sell.