September North Redondo Beach Real Estate Market Update

North Redondo Beach Market Overview

North Redondo Beach August 2017 Sales


August Sales - Best Month YTD for North Redondo Beach

  • 61 Sales Closed August 2017
  • Median sales price $912,500
  • Average Sales Price $981,561
  • Average Days on Market 20
  • 51 Listings in Escrow 30 Days or Less
  • 41 Homes Sold Over the List Price
  • Highest Priced Sale $1,665,000
  • 22 Single Family Residences Sold
  • 39 Condos / Townhomes Sold
  • 7 New Construction Homes Sold
The blistering pace of August sales has continued well in September with far more Buyers looking for properties than there are listings to buy. The average price, median price and top prices are now at all time highs as 90278 remains the best coastal value beach community in LA County.

While it is a great time to be a Seller, if you are a Buyer, don't despair. For most people Buying still is more attractive than renting and makes much more financial sense if you intend to be in the home for 5 years or more. Interest rates, at least for now, are still at all time lows. Well at least for the time being.

MARKET TRENDS 

ARE WE AT THE TOP?

This is the most pressing question on the minds of both Buyers and Sellers right now. As I have said previously no one rings a bell at tops or bottoms before markets shift. Personally I don't think we are at the top yet - at least as far as North Redondo Beach goes but no one has a crystal ball.

What we can look at are some trends.

As of this writing there are 47 active listings in 90278 with another 54 in escrow. Of the active listings, 17 have had price reductions. Throw in the listing that was "churned" at a lower price and we should have 18. 

Here's an important data point: of the active listings 23 have been on the market for less than 30 days and none of those have had price reductions. That means, doing some quick math, that of the other 24, 17 have had their prices reduced. 

Looking at the 54 under contract properties,  38 were in escrow in under 30 days and only one had a price reduction. Of the remaining properties, 11 needed price reductions to get an offer.  Again, we are seeing that the longer a listing lingers on the market the less likely it is to sell at the list price or above.

And we are also seeing that most of the listings will go into escrow in a short period of time if priced right leading me to conclude that while prices are at all time highs, we're not at the top. Yet.

WHO IS SELLING?

So, who is selling now? A lot or relocations, absentee landlords, and downsizing retired families. There's a few "move up" Sellers and some who have outgrown their current home. And new construction builders. We're not seeing a lot of flippers in the market and just a few distressed sales other than probates and trust sales. Why it is important for Buyers to know who is Selling is because your strategy for making offers on properties will change depending on the answer to the age old open house question "why are they selling?". It also may affect the list prices and what if any repairs you can negotiate.


WHO IS BUYING?

At my Open Houses I see an equal mix of family formation, baby on the way, and relocation buyers. Many of the current Redondo Beach Buyers are renting in Manhattan or Hermosa Beach or similar Westside neighborhoods including Santa Monica, Culver City, and Playa Vista. Outside of Buyers relocating from other parts of the country (for work) most are first time Buyers and currently renting.

Down payments tend to be strong with 20% plus very common.


INTEREST RATES LIKELY TO INCREASE


I get it. Everyone is tired of hearing this from Real Estate Agents. But rates are really likely to go up this time. Here's why.

The Federal Reserve finally pulled the trigger on its much-anticipated balance sheet normalization plan. This was billed as big news and a major turning point in US monetary policy. 

"Balance sheet normalization" simply means the Fed will buy slightly fewer bonds and mortgage-backed-securities (MBS) each month.  To be clear, the Fed was adding more and more bonds each month under the various quantitative easing (QE) programs.  This caused the balance sheet to grow.

Reinvestments account for the lion's share of purchase demand for newly originated Fannie and Freddie 30yr Fixed mortgages.  They're also a major source of demand for Treasuries.  As such, reinvestments are one of the key ingredients in the low rate environment.

Naturally, investors were (and still are) concerned about the effects of normalizing the balance sheet, but the Fed has done a good job of convincing markets that it will be an even more gradual process than the tapering of QE purchases, and that the balance sheet will end up leveling-off at a much higher dollar amount than before the Financial Crisis.

One possible way this plays out is that others, let's say Wall Street, steps in to buy some mortgage backed securities. That can keep the rates where they are for a while. But as the FED inevitably hikes, as they say they will do, even the Wall St investors will have to follow suit.


MIXED USE MORATORIUM


The Redondo Beach City Council voted unanimously on Tuesday to extend the city’s moratorium on mixed-use developments for 10.5 months, the Los Angeles Times reports.

The votes comes amid resident concerns over a scourge of traffic, and extends a previously implemented 45-day moratorium the council voted for in August. At that time, much of the debate around the ban focused on concerns of existing residents about the potential crowding that new development and new residents would bring to the beachside community.

As the city’s mayor, Bill Brand, said at the time, “Redondo does not have a housing shortage, and the crisis we do have really is a traffic crisis and an on-again, off-again water crisis ... and if we continue with a lot of this residential, soon we’ll have school overcrowding.”

The 10.5-month construction pause is meant to give city leaders a chance to devise new rules for mixed-use projects.

It’s not totally clear how many projects would be affected by the building pause.

The moratorium will prevent future mixed-use projects in areas zoned for mixed-use development, but doesn’t apply to previously approved projects, or projects in residential areas. It won’t apply to a planned makeover of the South Bay Galleria that would add housing to the retail center because the Galleria is in a “specialty zone,” says the Times.

This isn’t Redondo Beach’s first move to limit development in its borders. In March, voters approved a ballot measure limiting waterfront development in the city. It’s not certain what the passage of the measure means for a massive makeover planned for the city’s pier.