Home Prices in North Redondo Beach CA: Buyers are Facing "Sticker Shock" in 90278 this Spring

I was doing an open house in Redondo Beach at my listing at 2114 Huntington Lane Unit A (now in escrow) a few weeks ago when a buyer said to me "I thought I really could find what I wanted if I went up to $800K but now I realize I have to go higher". The comment was not in reference to that particular property just the trend of less to look at and what is available is priced higher than it was last year. Sometimes a lot higher. Welcome to this year's Seller's Market in Redondo Beach where many Buyers are facing "sticker shock" as housing prices continue to rise.

I sell a lot of Redondo Beach properties and traditionally I've said that 90278 is a $600K-$800K market and there were good choices in that price range. I'm not so sure about that anymore and have to believe the feedback I heard from that buyer that most likely you will have to be above $800K, if not now in the near future, or at a minimum spend more than you expected to. (FYI, Huntington in escrow, 16 days on market.)

Months of Housing Inventory in Redondo Beach 90278
I am seeing more buyers electing to go with 5/1 and 7/1 ARMS in order to keep their payments down (as compared to 30 year fixed rates) but that can only last so long in terms of giving the market some legs.

So, if you are a buyer looking for a home in 90278 and have been following prices on the internet for a while, expect to pay upwards of 10% more than if you bought 9 months ago. That is if you find a property considering how low the inventory is. We've been running at about 1 month of inventory, 50 some homes for sale and an almost equal amount selling, for quite a while now. So even if more listings come on the market, there are still far more buyers than likely listings we'll see. For all those stories of 10 plus multiple offers (over the asking price) the buyers who missed out aren't going away. They'll just offer to pay more on the next property stoking the price escalation.

2419 Grant Av Unit A Redondo Beach CA
I usually track 4 North Redondo Beach housing "types": 3 on a lot townhomes, 2 on a lot townhomes, new construction and  "Tall & Skinnies". That kind of covers most of the market.

I've seen rapid escalation in 3 on a lot properties. Here's an example. I represented the Buyers of 2419 Grant Ave Unit A a little over a year ago. That property is a front unit of a 3 on a lot built by Powers Development in 2003 with your standard reverse floorplan and 3 bedrooms. It sold for $629,000. Now I see 2518 Grant Unit A just listed for $759,000. It is one year newer and about 100 sq ft larger. Also one block further east and facing north so that you see the power pole towers right in front of you when you look out your front window.

Townhouse Listing at 2518 Grant Ave 90278
All that considered, the price is an increase of just over 20% in one year. Sticker shock if you've been saving to buy a home in North Redondo Beach and are chasing the market up.

But is 2518 Grant Av over priced? Not really by current standards. Unit C just sold for $726,800 about a month ago.  2014 Grant Ave Unit C sold for an even $750K, 2617 Grant sold for $710K, well you get the idea. With brand new construction selling for well over $800K, mid $7's is the going rate for any 3-4 bedroom 3 on a lots about 10 years old, drop down to mid to high $6's for 1990's, etc.

Going back to sticker shock for a second, YTD there have been 114 closed escrows in North Redondo Beach per the MLS. The median price is $700K right on the nose. The average selling price is $725,718 for a 1779 3 bedroom (kind of sounds like a 3 on a lot to me).

Casner built detached N Redondo Townhome
So, if the cost of an attached 3 on a lot is now upwards of $700K for anything built after 2000, where does that leave 2 on lots? If you are looking for a newer detached  4 bedroom expect, well expect sticker shock because you could easily spend $900K or more.

For example 2212 Marshallfield Ln Unit A just closed escrow for $900,000. 4 bedrooms, 2.5 baths, 2350 sq ft built in 2003 by Casner. 2007 Marshallfield, one year newer closed for $936K and that one was REO! Move up to $999K and you can buy brand new Amir Amiri detached 2 on a lot townhomes. So now we're talking about million dollar North Redondo Beach Townhouses which has to have some buyers heads spinning even if they are really, really nice properties.

For Sale vs Sold Trend in n Redondo Beach
The price acceleration may play out in a few different ways.

One, as prices continue to rise more and more home owners who were previously underwater decide to sell (assuming they can find somewhere to move to). If that trend picks up, supply and demand become more in balance and instead of this lopsided Seller's market we've been in for a while, things even out.

Or, if prices and interest rates continue to increase then at some point buyers just say "forget about it, I'll rent". We're not there yet, but Zillow considers that 57% of the homes in the LA market are overpriced by historical historical standards. That's scary.

Or, as has happened previously, buyers substitute loan products and location in order to buy.

Let's look at one last category, maybe the most shocking to me, and I'm in the Real Estate business.

Golden Hills "Tall & Skinny" SFR
Recently, my Buyer clients closed on a traditional Tall and Skinny in the Golden Hills neighborhood just adjacent to Manhattan Beach. The purchase price was $788K which we felt was pretty good for a 1900 (approx) sq ft mostly original home built in 1984 (needing a new roof). But just last week properties on Carver and Ford listed for $889K and $899K went into escrow in less than a week. They were newer, built in 1992 and had some nicer features but we're not only talking about a $100K bump, that's about a 14% jump since mid March.  Right now it seems as if Buyers have an insatiable demand for anything Golden Hills. I'm seeing some homes go into escrow at very surprising prices. Surprising on the high side that it.

Let's circle back to the original topic: buyer sticker shock at Redondo beach home prices. As of the date of this post there are 61 active North Redondo Beach listings. The median price is $725K. There are 12 homes listed between the median price and $799K. That's almost 20% of the market. There's another 12 listed between $800K-$900K. More telling, of the new listings this week, they are all above the median price. So, if you are planning to buy in North Redondo Beach, be prepared to budget more than you had anticipated.