In just a few hours 2008 will be gone. I don't think many will be sad to see it go. No one has escaped unscathed from the financial and economic turmoil of 2008. Our local Manhattan Beach-Beach Cities real estate market has certainly been adversely affected by the disruption to the economy. While we have fared better then other communities in Southern California we have not escaped the problems that affect California real estate.
In our little slice of Paradise prices are down in all the Beach Cities and sales volume is lower then last year at this time. Interest rates have dropped, but jumbo loans( $625,000+), with few exceptions, are still at high interest rates when compared to overall rates. This is a real problem in our Manhattan Beach-Beach Cities real estate market with median prices in most of the Beach Cities over the $625,000 hybrid conforming level.
While conforming rates are lower then at any time since 1971, the requirements to obtain a mortgage are probably stricter then they have been in the last 25 years. It is a bit ironic that lenders who gave loans to anyone who could fog a mirror are currently refusing loans to people who are are well qualified for sometimes inane reasons. As with all things in the financial community... this too will change.
There is a lot of speculation about what will happen in the Manhattan Beach-Beach Cities real estate markets in 2009. While there are those who are predicting a complete collapse in housing with markets returning to 1990 levels, most of us who have lived here for a long time are not quite so pessimistic. We have seen these market dives before and will no doubt see more in the future. If the recession gets worse then we could see more problems but so far we seem to be holding up fairly well. Could that change... of course it could. The market may be slow but it hasn't died.
Thoughts on the housing market of 2009 in the South Bay- Beach Cities.....
Consumers will exercise more discretion in spending. Buying a home will once again be about shelter rather then a short term investment where you expect the value of your home to double in 2 years. 25 years ago an entry level home was not a new 4000 sq ft home in the tree section of Manhattan Beach. People bought small older homes and worked their way up to big new homes over years. I think we will see a return to consumers buying below their means rather then above.
Foreclosures continue to be on the low side in the Beach Cities. Interest rates are at their lowest level since 1971 which means that many of the loans that will be resetting may do so at rates that will not be a problem for owners. Inventory continues to be much less then many had anticipated. As of today there are 507(total) homes and townhomes for sale on the MLS in the Beach Cities.... Manhattan Beach((178), Hermosa(78), N. Redondo (85), S. Redondo (124)and El Segundo(42). While you can expect the number of homes on the market to increase in the spring, we would need to see the economic crisis worsen considerably in the South Bay to create a scenario that dumped vast numbers of homes on the market. This doesn't mean we won't continue to see prices moving downward... we will. It just means we probably won't see massive numbers of foreclosures and the devastating loss in value that happened in the '90's as long as the employment situation in the South Bay remains fairly stable.
The new Administration seems committed to stabilizing the housing market. The question is whether or not they will be able to do what the old one couldn't... namely bring stability back to the financial sector by buying up toxic assets and creating jobs with programs like the old WPA? If they can accomplish these goals without inflation rearing it's ugly head then the South Bay-Beach Cities real estate market may just squeek by with a minimal amount of problems. Once again only time will tell what awaits us in the future...
HAPPY NEW YEAR