Thursday, February 16, 2006

What's Happening to Prices in the Beach Cities

This is the question everyone is asking. Will prices be going up? Is the market getting ready to drop? How can people afford to buy? If I had the answers to one or all of these questions I would be richer then Bill Gates and far more famous!
I can tell you what I think is happening based on what appears to be reflected in our local South Bay/Beach Cities Real Estate market.

Each city in the South Bay is subdivided into many smaller areas…Sand section,
Hill section, East Hermosa, East Manhattan, South Redondo, The Avenues, Walk streets etc. Each of these sub areas has an economic pattern that is constantly changing. As an example, Ocean front lots are at a premium. There are very few on the market. Most people who live on The Strand (either in Manhattan or Hermosa) love it and don’t want to move at any price. Entry level property is still going strong everywhere in the South Bay. In Redondo Beach that translates to property priced under $800,000 for a single family home and under $650,000 for a townhome or condo.
In Manhattan Beach entry level for a single family home is $1,150,000 or less and $900,000 or less for a townhome or condo. Hermosa and El Segundo fall somewhere in between Redondo and Manhattan.
The market is simply returning to a " NORMAL market. For those of you who don't remember what that is means that price increases are much smaller and less dramatic then in previous years and that property will take longer to sell. What does this portend if you are thinking of selling? You have to be realistic. You can’t over price your property hoping someone is going to buy at any price. It is not going to happen. There are a lot of Buyers out there who want to buy, but are willing to wait until they find something they feel is appropriately priced. They are looking for value and are not willing to over pay for a property. If the house down the street sold for $1,000,000 two weeks ago and you home is very similar a Buyer is not going to pay you $200,000 more a few weeks later. The market is beginning to stabilize in many areas.

If you are a Buyer you also must be realistic. If you are looking for drastic price reductions you will be disappointed. You are not going to steal a property.
If the home is listed at the right price it may well sell at full price or above if it is considered a value compared to others in the same general area. Some homes have a “feel” about them that make the stand out and these homes will obtain a higher price. Buyers who have spent time researching the market understand value and are willing to pay to obtain what they want.

The South Bay is still a strong market whether you are selling or buying. There will be continual market adjustments in each sub area of the local markets. If an area zooms up in price for awhile it may show some signs of weakening later. This simply reflects the natural forces of the marketplace. When is the best time to buy or sell……….Today, of course!

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