I normally write this post on December 31... but this year a good friend was in the hospital and I just got back into town. Life is always full of surprises....
Looking back at last year I was right and wrong on my real estate predictions for 2013. Inventory did stay low but prices shot up to levels we last saw before the recession. While I expected to see a rise in home values, I didn't think we would see the significant increase we saw in Manhattan Beach and the rest of the Beach Cities in such a short time frame.
Homes that had been on and off the market for years suddenly found new owners at new price levels. Builders stepped back in the market with a lot of cash and entry level buyers found themselves facing tough competition for smaller homes in all the Beach Cities but especially in Manhattan Beach.
Off market sales soared as agents networked to buy and sell homes for clients who didn't want to play the multiple offer game. All cash buyers made sellers very happy in the Spring and early Summer. While the market cooled a bit in the fall from the early part of the year there were still some big prices paid for prime properties.. especially on The Strand in Manhattan and Hermosa.
Inventory is still low in all the Beach Cities and I'm not sure 2014 will see a major increase in homes for sale in Manhattan , Hermosa, Redondo or El Segundo. Sellers generally want to make a move upward either in location or size. The big issue for folks considering selling is what can they buy to replace their existing home. With inventory levels remaining low this can be a sticking point. I think we will see both buyers and sellers wanting to add contingencies to contracts.
I believe we will see prices continue to rise due to normal market supply and demand forces but perhaps not quite as much as last year. New loan guidelines and an uptick in interest rates will have an effect on the market for buyers, A 1% rise in the interest rate is equivalent to a 10% increase in the price. If rates and prices increase simultaneously over a short time span we could feel an impact.
As always there are many things to consider when deciding to purchase a home or investment property. Over the years I have seen numerous changes in prices and markets.. but two things remain constant...someone will always have to sell and someone will always need to buy.....
Happy 2014 !
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