2009 was a year of changes as home prices in most California communities, including the Beach Cities, hit the skids. Builders and homeowners found themselves trying to decide if they should take a huge loss now or rent their unsold properties and pray for a better market in a few years. For some there was no choice as banks made the decision for them by foreclosing on the properties in question.
Things seemed to turn around in late Spring as lenders once again began funding Jumbo conforming loans while the FED helped keep interest ratts down. Low prices and low interest rates boosted home sales. After months of too much inventory it seemed as if there was no inventory. Whispers of multiple offers on well priced properties proved true and buyers and sellers were suddenly asking themselves if we had finally reached the bottom of the market.
They say that perception is reality and this may be the case for 2009. Our perception of the market just might be steering us toward a reality that isn't quite what it appears to be. There is no question that inventory has declined since January 2009, not only in the South Bay-Beach Cities, but in most of California and the nation as well. The question we should be thinking about is why.
The immediate response is that sales have skyrocketed in the last year. While this is true in part... sales did increase over the last 6 months... when you look at the number of sales in 2008 vs the number in 2009, sales volume didn't really go up that much. There were only 125 more sales in 2009 then 2008 in all the Beach Cities. That works out to 10 more sales a month in Manhattan, Hermosa, Redondo and El Segundo combined. That's good but maybe not enough to account for the decline in inventory we have seen in recent months.
Inventory has decreased for a lot of reasons. Some homes were taken off the market and rented which means they will be off market for at least 12 months. Many owners who tried to negotiate a short sale with their lender gave up and are now moving toward foreclosure. Other properties were taken off the market because they didn't find buyers. Since the first of the year some homes have returned to the market with lower prices and found buyers fairly quickly. I expect we will see more of these homes returning to the market as sellers realize that prices are not moving upward anytime soon.
Manhattan Beach saw the largest drop in inventory, 55 fewer homes were for sale in January 2010 then in January 2009. Hermosa, Redondo and El Segundo saw a much smaller shift in inventory. If you view the Beach Cities as a whole there are only 93 fewer homes for sale in January 2010 then in January 2009...
The December 2009 survey by The Public Policy Institute of California indicates that most Californians are a pessimistic bunch about where the economy of the state is headed. Until we see the entire economic picture brighten a lot both statewide and nationally, I don't think we are going to see an end to the housing issue... even for those with deep pockets.
South Bay-Beach Cities: Sold December 2009
In coming weeks I'll be posting year over year sales data for Manhattan Beach, Hermosa Beach, Redondo Beach and El Segundo.