Redondo Beach Real Estate Market Update: Are Sales Slowing Down?

Months of Housing Inventory N Redondo Beach
So there's a lot of chatter recently that the housing market has "softened". Really? I guess it depends on what your expectations are and whether you are buying or selling real estate. As for Redondo Beach, it is still, for the most part, a seller's market. Having said that, let me also add that buyers aren't just writing offers on anything that comes on the market and sellers can't arbitrarily set prices not supported by facts and comps.

Let's start with the facts, because, well numbers don't lie (for the most part). Of course they can be cleverly manipulated but I'm just not that clever.

During July there were 50 closed escrows in North Redondo Beach 90278. The most expensive property sold was for an even $1.3M and the least expensive was a mobile home in the park on 190th. So even taking the mobile out of the equation, that would be 49 sales. The median sale price, with or without the mobile is right around $750K. 

By comparison, the were 42 sales in June, 43 in May and 52 in April. Median prices were $715K, $715K, and $730K respectively. So based on those numbers looks like the market is fairly stable to me.

Currently as of this blog post, per the MLS there are 56 properties in escrow in North Redondo Beach and 10 listings have closed escrow in 99278 during the first 10 days. Looks like another month of 40-50 home sales is taking shape. 

For Sale vs Sold Real Estate Listings
So why the perception that the real estate market at the beach has slowed or softened. Well for one thing there are currently 70 active MLS listings for sale in 90278 and that is somewhat more inventory than buyers (and agents) have been seeing. But, make no mistake we are still in a seller's market. Let me define that again for those who have not been following my posts.

In Real Estate, a seller's market is less than 90 days of inventory on hand. So, with an average sales rate in the mid 40's per month, let's say 45 units, we would need to see 135 MLS listings in North Redondo Beach before we could say it is a "balanced" real estate market. We're simply just not there yet. As the first graphic on this page shows we're running at about 1.5 months of inventory right now and except for a short spike have been below 2 months of inventory for quite while.

So why the perception of a slowdown? A few reasons. First housing prices are not accelerating at the rapid rate they were last year when my buyer clients would literally see the value of their new homes increase by the time they closed escrow 30 days or so after making an offer. Second, there have not been the flood of buyers at open houses - including broker's opens, that there were a few months ago.

Let's look at each of these individually.

As for traffic at listings, with the heat, humidity, and summer vacation scheduled there is no doubt that foot traffic has slowed down somewhat. As schools start up again and people get back from vacations we'll get a good indication over the next few weeks as to how vibrant buyer interest is. But even with the slower traffic what I am definitely seeing is that any listing priced to sell will get multiple offers the first weekend and over list price in most instances. By "priced to sell" I really mean 3-5% below the market.

Average price per sq ft 90278
And to me it is somewhat ironic that with all the information available for buyers on the various portal sites that they have not figured out yet that listing agents are still playing this game. (Truth be told I do it sometimes as well.) 

The second piece of the supposed market slowdown is reflected in the listing prices. As a seller, you can not just add 1-3% to the most recent sale to "test the market" and then expect t get offers the first weekend. If you do get offers they will be lowball ones at that.

What I am feeling is buyer resistance to over exuberant (there's that word again) prices. Also buyer weariness at making multiple offers and not only not getting into escrow but sometimes not even getting a response (counter offer). My rule of thumb is that if I get a fully documented offer at or above the asking price I believe the buyer at least deserves the courtesy of a counter offer. Unless you already have the proverbial offer you can't refuse.