South Bay-Beach Cities: Sold July 2007

Manhattan Beach Walkstreet

What a difference a week can make. Had I posted Beach Cities: Sold July 2007 figures the first week in August I would have said that rates were low and the market was chugging along although at a slow rate. That was before August 4 and the collapse of American Home Mortgage and a number of other lenders.

Who would have thought Countrywide would possibly be on the verge of bankruptcy or that the FED might seriously be considering bailing them out. While I think Angelo Mozilo is a bit smarmy I also realize it would be a disaster if they went into bankruptcy at this time. They make 1 out of every 6 loans in the country so you can see what their demise would do to the fragile credit market. Brian Brady wrote an excellent post on The Bloodhound Blog about the problems with Countrywide going down in this market. It's worth a read.

At this time jumbo loans are hovering around 7%-8% depending on the lender and the amount of points. Lenders are dropping like flies as they succumb to the woes of the subprime market. It will be a few weeks before the dust clears and rates settle down after much hand wringing and blame tossed around by the major players.

Buyers with FICO scores over 720 with money for a downpayment who have jobs where they can document their incomes will be in high demand. While I suspect there will still be stated income loans the regulations on them will be significantly tighter. Sellers will need to pay a lot more attention to a buyer's qualifications when choosing the best offer to accept for their property.

North and South Redondo did better then the other beach cities in sales. They were close to June numbers. Inventory is also holding steady in both cities. Manhattan Beach had a surge in sales and closings toward the end of the month....however most of the sales were in the under $2 million range. Pendings since August 4, 2007 are definitely down in all cities but especially in Manhattan Beach. There were 44 properties that went into escrow since August 1, 2007 in all of the beach cities... 22 homes and 22 townhomes. El Segundo ..3 Manhattan Beach...7 Hermosa Beach.....3 North Redondo...... 14 and South Redondo...17

Beach Cities: Sold July 2007 (click on graph to enlarge)

South Bay-Beach Cities: Sold July 2006

South Bay-Beach Cities: Sold June 2007

South Bay-Beach Cities: Sold May 2007

South Bay-Beach Cities: Sold April 2007

South Bay-Beach Cities: Sold March 2007

South Bay-Beach Cities: Sold February 2007

SouthBay-Beach Cities: Sold January 2007

Manhattan Beach-Beach Cities Real Estate: Foreclosures...Big Trouble?

The problems in the financial markets have spurred speculation on the prices of Manhattan Beach real estate and real estate prices in the other Beach Cities... Hermosa, Redondo and El Segundo. Many are predicitng (hoping) that the entire South Bay real estate market and the Beach Cities in particular will crash dive. I don't think our market will escape unscathed but I don't see it going back to 1990 levels either.

In last Sunday's ( August 12, 2007) LA Times there was an article titled Foreclosures May Spur Price Drop... that has a cool tool labled Foreclosures: How Does your Zipcode Fare next to the article. If you put in a zipcode it tells you how many foreclosues are in that zipcode. Naturally I put in the zipcodes from the Beach Cities and wasn't surprised at the results.. namely there are very few bank owned properties in Manhattan Beach, Hermosa Beach, Redondo Beach or El Segundo. There are a total of 8 bank owned ( reo) properties in the Beach Cities. However if you go to inland cities you will see a much higher number and they are going to have some problems.

Here's how the numbers break out..

Manhattan Beach: 1

Hermosa Beach: 3

North Redondo : 2

South Redondo: 1

El Segundo: 1

Yes.. there will be more in the future... that's life. There will be people who get divorced and run into problems. There will be those who can't refinance and will have to sell or lose everything. Some will have health problems and huge medical bills. There will be people who lose their jobs and can't make their house payment. But these are problems that happen in all markets. We just got used to the fact that you could sell fairly quickly if you got in trouble and that option is not as viable.

Most homeowners in our area are in fairly decent financial shape and should weather this market relatively intact. Many who don't have to sell will simply take their homes off the market. Prime location property will likely continue to see big dollars as these properties are getting scarce. Marginal location property and homes in poor condition will not bring top dollar and will see discounted prices. Those who have to sell will need to be sure their property is in excellent condition in order to beat the competition. The will also need to be aware that prices may be fairly stagnate for a period of time as the market adjusts.

Buyers with cash and a good FICO (above 720) will be Kings in this market. Morgan Brown has a great three part series on credit.. Part III deals with improving credit scores. Whether you are a buyer or seller take the time to read this post. You might also want to check what Brian Brady has to say about the current financial market.

Are the Beach Cities Home Prices Going Down?

In today's Daily Breeze there is an article on the front page of the Business section: Area Real Estate Loses Ground that must have made the Bubble Bloggers dance for joy. Headlines point to a 14.8% drop for Manhattan Beach. and a 9.5% drop for Redondo. It's not till you get to page 3 that you find out that Manahttan Beach is still #2 on the list of most expensive cities in the state.

In the interest of fairness I must note that we know 2006 was not a great year for real estate in CA. It sure wasn't for Manhattan or Redondo. Until the end of October inventory was running very high in both cities and sales were at a standstill. But inventory has gone down by 50% since November 1, 2006 in both cities mainly because property has sold. So it will be of interest to see how the numbers shake out for the next few months. I can tell you that what is selling is very clean and well priced. Anything else is just sitting. I expect to see more price reductions in the next month on new homes and some hopefully priced homes... that is those where the owner was hoping they would sell at a high price.

The question then becomes what has sold. Pretty consistently across the board it appears to be the low to mid priced homes and the really prime expensive stuff. In Manhattan this means homes priced at $2,100,000 or less. or at $5,000,000 or more. New homes are sitting once again after a brief flurry of sales at the end of the year.

So... are prices coming down in the South Bay... of course they are.. but still overall it is less then 10%..
FYI: 2006 sales in MB compared to 2005 sales... prices are median prices..

February: The state didn't post numbers for MB
March: $1,625,000 +13%
April: $1 ,685,000 +22.5%
May: $1,241,000 -8.9%
June: $1, 570,000 -.03%
July: $1,457,750 +1.3%
August: $1850,000 +26.76%
September: $1,465,000 -8.4%
October: State has no numbers for MB
November: $1,400,000 -22%
December: $1,275,000 -9.9%


So there you have it... a pretty much mixed bag of prices with some big numbers and some small numbers. So are prices going down.. of course when compared to 2005 which saw more sales at higher prices then any year since housing information has been kept. Will they drop another 25-35% .. it's not looking that way.. but then they won't be going up drastically again either.

My October Challenge... January Results.. MB Home Sales

On October 27 in a post on Making Housing Decisions from Headline News..
I posed the following challenge:


So here's a thought... In Manhattan Beach there are currently 215 single family homes on the market. 70 have been listed since October 1; 23 have gone into escrow since October 1; and 18 have closed escrow in the same period. So let's say that by next week perhaps another 10 homes are in escrow and 5 new ones have been added so we are 5 down in inventory to 210 as of Nov 1. As we get closer to the holidays about 15% (30) of the homes now available will be taken off the market each month. There will be a few new listings maybe 8 added per month. So... 30-8= 22 x 2 months 44 homes off the market in November and December. Perhaps another 15 a month go into escrow.. that's 30 gone. Not a lot of sales but the inventory level would go from 210 as of Nov 1 to 136 in January. That's about a 35% change in inventory. Would a 35% change and low interest rates bring out buyers? Let's compare notes in January.

Well it's a little past mid January so what happened in Manhattan Beach since November 1, 2006?
There are 103 homes currently listed. 42 are in escrow and 60 have closed escrow since November 1, 2006. 51 homes were withdrawn from the market and have not returned active. Let assume that 30% (16)of those withdrawn return to the market by the end of this month. That would make make a total of 119 available listings which is about 55% of the number that were available October 27,2006.

In two months almost 50% of the inventory in Manhattan Beach has disappeared..... and most of the decline is due to sales not withdrawn/expired properties. Rates were very low from Mid November through the end of December. It looks as if if many people took advantage of sellers who were willing to negotiate and low rates.

I wrote this in the same article in October:
Trying to time a housing market is almost impossible and usually depends on luck more then skill. Often by the time the general public realizes a market has changed it is too late to get in at the right time.

Just something to think about over the next few months for those of you who are still waiting for prices to drop to 2000 levels.

*** These numbers are for single family homes.. but numbers are similar for townhomes.. inventory is very low and a lot of property has closed escrow.