Why it's Harder to Buy a Home in the South Bay

If you are completely confused about the housing market in the South Bay you have lots of company. While prices seem to have dropped on some properties ( older townhomes in Redondo Beach without yards) others are maintaining prices and in some cases going up in value. Two on a lot new townhomes in North Redondo Beach with yards have maintained the same prices over the last year. Properties in the sand section of Manhattan Beach and Hermosa Beach have seen increases on prime location properties. Builders are not ready to drastically drop prices on new construction. New home sales in Manhattan Beach are slow but prices are about what they were last year.

The real estate market has slowed down yet only 24% of buyers in California can afford a home today compared to 28% a year ago. Los Angeles County is the third highest priced area in the United States. Sales volume dropped 25% from last year but prices rose 8.9% in Los Angeles County. Fewer people are buying but many of those buyers are purchasing upper level properties. Strand properties are selling very well and at record prices.

First time buyers appear to be more reluctant to purchase then people who have owned a home and are looking to buy another property. Trade-up buyers are usually also sellers so they see the market from both perspectives. They have found that prices on what they want to purchase haven't seen massive declines and therefore they are not willing to sell at hugely discounted prices.

Many first time buyers are still convinced that real estate prices in the Beach Cities will drop 25-30% next year. They believe foreclosures will be rampant. There will be some foreclosures but not on a huge scale unless the economy tanks as it did in the 1990's. If they are going to be employed to buy at the bargain prices then most others will also continue to be employed. Most people in the Beach Cities are fairly affluent with good educations and jobs.

Buyers should be paying more attention to interest rates. Smart buyers will take advantage of low rates. Remember: prices always fluctuate but a good interest rate will last for 30 years.