Oh this crazy market……how home prices are getting out of control

Chart-UpwardI often tell my statistically driven friends and clients that although “trendlines” and statistical data can help explain what is happening and what may happen in real estate, it often overlooks a very key piece of the puzzle. Unlike other products people buy and sell, home sales are often driven by both emotion and perception. It was only a few months back when the perception was that prices would continue to be flat, or even go down slightly, and the biggest challenge I faced was convincing buyers that now was a good time to buy.

Oh how things have changed in such a short time. Very quickly the market shifted to favor sellers and as soon as buyers decided that they may miss their opportunity, things have quickly gotten out of control. Low inventory, low interest rates, short sale and REO “deals” drying up, and pressure from large investors buying and flipping everything they could find has made it almost impossible to buy a home. How quickly we forget all that created the bubble in the first place and buyers are now chasing homes, overbidding, paying too much, waiving the appraisal and just about everything else that once again appears unsustainable.

In my own personal experience the last 4 offers I have put in for homes in Manhattan Beach and Redondo Beach have required that my buyers waive their appraisal contingency….the sellers knowing full well that the home wouldn’t appraise. No doubt this is great for sellers, but again it appears unsustainable and will likely cause problems in the near future.   We’ll likely continue to see this incredible turnaround until inventory and interest rates move away from near record lows.  I’m looking forward to the days of a balanced market, in which well priced homes sell quickly and buyers have a chance of paying market value.   In the mean time, if I were a  South Bay home seller who had given some thought to list my home…..it doesn’t get much better than this.

Is the Hermosa Beach Market Calming Down?

Hermosa Beach has seen prices rise as demand has boiled over due to several months of very low home inventory but perhaps we’re starting to see that even out just a bit. The number of homes for sale has stayed relatively flat for 3 months now despite significant pressures due to pent up demand.  Click to view the active homes for sale in Hermosa Beach.

In addition we’ve seen an increase in months of inventory due to a higher number of new listings as of late. Inventory had been slowly declining for the past 12 months with December reaching a low point of only 1.2 months of inventory on the market. January saw a jump up to 4 months but as Hermosa is a very small community numbers do tend to fluctuate on occassion.

 

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(all data current as of 10/16/2021)

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The Days Of Redondo Beach Short Sales May Be Winding Down

Although the South Bay and certainly the Beach Cities were fairly protected from the wave of short sales and bank foreclosures that plummeted prices in other areas of California, there were opportunities out there.  As Redondo Beach is both larger than neighboring Hermosa and Manhattan Beach, and typically caters to more first time home buyers, it felt the foreclosure brunt the most and it wasn’t a challenge to find “deals” on such properties.  Gone may be the days of short sale deals and homes selling below market value, as the inventory of both standard sales, and distressed home sales has continued to decline while demand has grown.  The influx of investors buying up short sale and foreclosures added to the pressure.  As of December 2011 there were 46 active short sales and foreclosures in Redondo Beach and just a year later the inventory was down to 9 distressed sales.  This will likely lead to rising prices as these short sales were the driving factor behind the declining prices over the past few years.

The chart above shows the monthly inventory of distressed homes in Redondo Beach from October of 2011 until December of 2012.

Home Listings on the Decline in the Beach Cities Area

The number of frustrated South Bay home buyers (and buyers agents) continues to rise as the inventory of available homes in the South Bay and Beach Cities continues to decline with a multi year low for the month of October.  October closed out with 224 active homes for sale in Manhattan Beach, Hermosa Beach, Redondo and El Segundo which was dramatically lower than any other month and down over 50% from last September.  Currently there are 216 homes for sale with the downward trend appearing to continue.  Pending sales were on the rise as well with October closing with  180 homes in escrow.  That’s an unbelievable ratio of active to pending sales and something not seen in many years.  Click here to view the current homes for sale or to see October 2012 home sales per city.

Manhattan Redondo and Hermosa Beach real estate trends

 

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