Golden Hills Market Trends

Redondo Beach Golden Hills Market Dynamics


Overview


As I've written about extensively on this site and others, North Redondo Beach 90278 has been the hottest zip code in coastal LA County over the past few years and has out performed the broader market in general. Within Redondo Beach, homes in the Golden Hills neighborhood have seen the steepest appreciation and only now are we seeing some price resistance throughout the range.

I usually post one year charts so please note the above chart follows a 2 year trend line. Also for this analysis I am looking at Single Family Residences (SFRs) only as they are the preponderance of the properties.

For 2014 there were 79 Golden Hills sales with a median price of $844,000 and an average price of $842,466 which would have bought a hypothetical 3 bedroom 2.5 1730 SqFt house.

During 2015 there were 93 sales averaging $977,129 for a 3 bedroom house and with a median price of $940,000.

So in just that year the average price jumped 16% and the went up almost $100K.

Through 11.5 months of 2016 there have been 84 sales indicating that we may exceed the prior year's sales. The average price as of this post is $997,399 and the median is $896K and that's where this analysis gets very interesting. The high end of the market, which is at all time highs, is pulling the average up but the median is regressing to just below the buying public's resistance point for most resales. Hold that thought for a second and let's look at some of the driving factors for this.

Supply and Demand


Realtors often analyze the "absorption rate" which can be a greater predictor of market dynamics than comps, price per SqFt or anything else. With a few exceptions, the supply of homes in the Golden Hills has been tight even sometimes dipping to about 2 weeks on hand. With lots of people chasing fewer properties, the prices get bid up. 


As you can clearly see, with the exception of that Dec '15 to Jan '16 transition, most of the time we have been below 1.5 months of inventory and often as low as 1-2 weeks. These are as extreme as a seller advantage as we can see. With the record low interest rates this created a perfect storm for price acceleration,

By absorption rate what is being referred to is that if 10 properties come on the market - how long will it take for them to be sold.

Case Study #1 1748 Dixon St

I first represented the buyer of 1748 Dixon St which closed in March of 2014 (earlier than the window on the graph) for $788,000. When she had to sell it due to a job relocation just about a year later it went for $920,000 with multiple offers in 3 days after it was listed for $879,000. Very interesting discussion I had with the appraiser who wanted to know what improvements had been done (new roof). While I would like to say I got my client a great deal on the purchase and did an amazing job on the listings, truthfully we rode the tide up.

1748 Dixon St Redondo Beach Golden Hills

Today the same property would go for a little over $1M at a minimum. (Reverse floor plan Tall & Skinny approximately 1900 SqFt). The ones with updated kitchens etc sell for more.

Case Study # 2 1615 Armour Lane

I chose this one because it closed in March of 2016 about a year later than Dixon and was originally listed for $879K, same price as Dixon. The difference is that Armour is a smaller 1558 SqFt, single car garage property with the older Tall & Skinny floor plan (not reverse). My client paid $893,000.

A year earlier, similar floor plan homes were selling for $765,000 (i.e. 1736 Spreckels Ln). So we see a few things happening other than rapid price appreciation. One of those is the principle of substitution which plays out in this case as being that at a similar price point the buyer just buys a smaller house.

Resistance Points and Price Support


Just as with stocks which follow their own supply and demand curves, Real Estate prices have naturally built in resistance points on the upside and price support on the downside. 

Over the last few months we have seen resistance at the very high end, meaning above $1.5M in North Redondo and a lot at the $1.3M level.

For traditional Golden Hills Tall and Skinny homes on 2500 SqFt lots, the resistance is right around $1M unless the property is newer, larger or has some other amenity (view). The next inflection point for resistance is $1.3M which is a price point new 2 on a lots have been coming out at (none of those are in Golden Hills). And the new construction 3 on a lots seem to have a tough time cracking the $1M mark.

Fortunately for most home owners we see the price support pretty much where the market was at the beginning of 2016 meaning that if you bought this year, at the new all time highs, you are not on solid ground yet. But everything prior to 2016 is very solid at least for now.


Interest Rates and Substitution


Post IS Election, interest rates have gone up even before the FED has taken any action. Why? Basically the stock market performance has left the bond market chasing investors.

So as we see buyers interest rate priced out of Manhattan Beach, chances are that they will be looking for homes in Redondo Beach and many of them will be looking in Golden Hills. Why?

Location, Location, Location


I mentioned earlier that location along with supply and demand has been a drive. Because Golden Hills is further west than many parts of East Manhattan Beach buyers find it very attractive as you can still walk or bike to the beach. And that's what it's all about, right?