On the Way to Equilibrium? 1st Half of 2019 Market Update
Even if you don't have to make a move this summer, it is hard enough to find time to get to the beach. In recent summers, the market has moved so quickly that Buyers were having to keep an open schedule to make sure to view any new listings that arose each weekend. While this is still the reality for certain properties and price ranges, as we speak, inventory is on the rise, which is a welcome relief to Buyers and hopefully will allow for more beach time. Sellers are having to be more thoughtful about the condition and price with which they decide to list their home. You never get a second chance to make a first impression, and data shows a dramatic drop-off of viewings and interest after week two on the market.
I believe the three most telling data points for the pace and direction of our market are: inventory, price and days on market.
By City: Inventory in Months and % Increase Over Last 12 Months
BUYER’S MARKET more than 6 months of inventory
SELLER’S MARKET less than 5-6 months of inventory
INVENTORY Inventory [defined as the number of homes for sale at the end of a given month, divided by the average monthly pending sales from the last 12 months] is rising in our Beach City communities giving Buyers more options, however demand still outpaces supply. For a well-priced, turnkey-condition home with a desirable lot and/or location and floorplan, bidding wars with multiple offers are still enduring. North Redondo Beach still has the greatest shortage of inventory, with under two months of supply on average. South Redondo: 2.5 months, Manhattan: 3.5 months, Hermosa: just over 4 months.
PRICE While the double-digit appreciation run over the last five years is staggering, it has slowed in the past year. The average Manhattan Beach home has appreciated 53% in that time; Hermosa 63%, North Redondo 47% and South Redondo 39%. Those wise investors that got into the South Bay market over the last 9 years have earned great equity. Housing economists for the main core of the market are predicting continued appreciation of 2-4% per year, a rate past generations are accustomed to compared with recent white-hot gains. This prediction reminds me of a saying I hear commonly among tenured realtors that have been in the business for decades through ups and downs: Don't wait to buy. Buy and wait.
The Move-Up market is robust and timely. If you are going to sell at the lower price point which is still thinnest on inventory, you are very likely to find a great deal at a higher price point now and in coming months.
Wages have not increased in any proportion to recent housing gains, leaving our local rental market very competitive with bidding wars and record high rents. This further compounds the challenge for those professionals and families renting in our great South Bay school districts with strong incomes to save enough for a down payment to break into the market. I find time and time again, the biggest fallacy to those renting is that you must save 20% to purchase a home.
DAYS ON MARKET Constrained inventory combined with our desirable schools and strong local jobs market, as well as continued historically low mortgage rates continue to propel most inventory to sell quickly, with median days on market ranging by city from 12 to 28 days.
In summary, while appreciation slows and inventory rises, demand to buy in our Beach Cities remains remarkably strong. Affordability at entry prices is a critical issue we are facing. Days on market at the "ultra-luxury" mark of $5,000,000+ has increased significantly, requiring more patience of Sellers, which further highlights the importance of identifying the right agent to represent your asset.
Contact Liz for a PDF version of this market update [firstname.lastname@example.org].
All data sourced from MLS July 2019.