As this year is ending it seemed like a good idea to review my 2010 New Year post on our local real estate markets. I was happy(make that relieved) to see that I had been right more often then wrong about where I thought the 2010 market was headed. So with that in mind I'm gong to share my thoughts again...
After all the hoopla from the media and government all year, the reality is that not much changed. Unemployment is still high nationwide and in California. Consumer confidence goes up and down on a monthly basis. The FEDS and our state continue to run massive deficits and think the deficit fairy will somehow make it all go away with a wave of her wand and no pain for anyone.
Foreclosure issues continue because the government doesn't understand that most of the people in trouble can't be saved. You can modify loans and have foreclosure holidays but the chances of people in major financial trouble holding onto their homes without jobs is nil. It's hard to make a house payment if you don't have a job. At some point the process will have to reach the bitter end before things can get better.
Credit markets remain shaky. The interdependence of worldwide markets and our markets makes for some strange bedfellows. Lou Barnes has an interesting take on where we have been and where we might be going. The FEDS tossed billions at credit institutions with no requirement that they actually use the money to make loans. Consequently it is harder for consumers to get loans or refinance. Folks who own small businesses are struggling to obtain credit to keep their doors open.
Our local South Bay-Beach Cities real estate market was a bit of a mixed bag. Sales volume was down while prices bounced around.. up in some areas and down in others. The market was slow but relatively steady... Not an exciting or depressing market but rather a blah one.... which isn't necessarily bad in today's economic climate.
Closed sales January-December 2010 South Bay-Beach Cities*** Manhattan Beach had 309 single family homes and 78 townhomes close escrow in 2010. Hermosa Beach had 104 single family sales and 76 townhomes/condo sales. North Redondo had 174 single family homes close escrow and 260 townhomes. South Redondo had 95 homes and 154 townhomes/condos close escrow. El Segundo closed escrow on 58 homes and 45 townhomes.
I think overall unemployment in the nation and in California will dip a bit but remain high. This is going to be a tough one to change. We have to get deficit spending under control before we can hope to get the economy to improve. Unless we all agree to make some tough choices we are in for more of the same.
One of the reasons the Beach Cities have held up better then other areas of Los Angeles County is because most folks in these cities are employed. Step into almost any restaurant and they are crowded with people spending money. I was at Del Amo the week before Thanksgiving and during Christmas and folks were buying. Not as much as a few years ago but more so then last year.
I think the local real estate market in 2011 will be similar to the one in 2010. We may see a slight increase in sales volume but prices will remain on the flat side in most sub markets. Prime properties will always command a premium but not as much as in previous years.
Interest rates will bounce around... up for a few weeks then down as the markets try to determine how to price risk. If you see the word inflation in print for any length of time you can bet rates will move upward. Loans will remain difficult to obtain for those who don't have stellar credit or a steady income. Appraisals will be a source of problems for properties that are not in good shape. The appraisal process will be a little easier as the FEDS have finally set up some workable guidelines for lenders and appraisers.
Inventory is down in all the Beach Cities as many properties have sold in the last 2 months. Manhattan Beach has 101 homes and townhomes currently for sale. Hermosa has 64, North Redondo 106, South Redondo 97 and El Segundo 40. Watch the Spring market sales as an indication of where the market may be headed. If inventory bumps up dramatically we will be in for another slow year as consumers will feel no urgency about the market.
So that's it for my thoughts as we say farewell to 2010 and hello to 2011....
Wishing you all a Happy and Healthy 2011!
***There will be a few more sales posted after the first of January