YES, "THAT" HAPPENED
I've been an agent through a number of market shifts. Some are quite dramatic, like when the bottom totally feel out of housing during the great recession, and others not so much. This one, not so much.
The leading indicators have been there for quite awhile. My theme for last month's market update was "sound the alarms". They have now been sounded and yes, we can "officially" say the market has officially "shifted". That's real estate jargon for maybe the crazy price acceleration is slowing and buyers have some leverage.
Technically, in the Beach Cities and almost every South Bay neighborhood as well as throughout most of LA, we are in what is considered a "balanced market". That is, there is between 3-6 months inventory on hand. And actually, for the most part, we are at the lower end of the 3 months more often than not. But, that's not the way it feels. The feeling is that the mood of 2019 will be "the revenge of the buyers". Here's what I'm talking about.
Throughout the massive run up in prices over the last 5 years and even as recently as earlier this year, buyers were willing to make compromises because of the persistent low inventory. By that I mean paying more than they were initially considering, compromising on location or schools, settling on age or condition and the bedroom or bathroom count. The reason was very simple: if they held out for a property that checked all the boxes, they would never find it. At least not in their price range. And with historically low interest rates, there was no doubt that many could expand their price point.
Then, starting about a year ago a few things stated to change. And, unlike the stock market, changes in real estate take quite a while to ripple through the system.
Many of us who do this professionally were surprised that immediately after the tax laws changed there didn't seem to be any change in buyer sentiment. Basically no effect on the market. The same was true even as interest rates started to creep up.
But then a tipping point came: more inventory.
With more inventory came more choices and that was the pressure relief valve. As buyers started to feel that maybe they could wait or negotiate the price, more properties started to sit on the market longer.
And then came the price reductions followed by the articles in the national press that there are more price reductions.
Two curious observations. Well at least to me.
First, agents may have started to figure this out way after it was apparent to their buyer clients. How did that happen?
Buyers looking at their real estate apps started to see more price reductions and inventory. They were paying attention.
Secondly, in many neighborhoods it is the rising inventory of new construction that is placing the downward pressure on resale properties. Funny how that works and more on that later in this post.
So with that backdrop, let's take a deep dive into what sold (or didn't) in Redondo Beach during October.
OCTOBER REDONDO BEACH SALESThe good news is that sales were up from an abysmal low point. During October there were 40 closed escrows in North Redondo Beach, up from 23 sales during September.
In South Redondo Beach, there were 30 sales, up from 24 the previous month.
Year to date (through the end of October) there have been 377 sales in North Redondo and 318 in South Redondo. Last year for the first 10 months there were 447 sales in 90278 and 345 in 90277.
The drop in North Redondo Sales is stunning and I'll discuss why a little later. South Redondo is simply not as dramatic.
NORTH REDONDO BEACH OCTOBER SALES
MLS Area 151 which is north of Artesia Blvd has 14 sales. MLS Area 152, south of Artesia had 10 sales. "El Nido" aka MLA Area 153 had 5 sales including 3 new construction homes. Golden Hills, Area 154 had 11 sales which is very strong for a perennially desirable neighborhood.
The median North Redondo sales price was $976,000 which is a decline form earlier in the year. The median days on market was 16.5 days.
As is often the case in 90278, 75% of the sales were in escrow in under 30 days. After 30 days on market, all but one listing sold for under the asking price with 19 overall selling under the asking price.
That left 18 closing at over the asking price and the rest at the list price. Of the properties that went into escrow in the first 7 days, 9 out of town sold over.
The lowest priced home sold for $400K and that was an age restricted condo unit at 2750 Artesia Blvd. The most expensive home sold was a 3616 Sq Ft SFR on May Ave in the TRW tract which went for $1,840,000.
There were 5 new construction properties sold.
SOUTH REDONDO BEACH OCTOBER SALESThere were 4 SFRs sold in MLS Area 128, Hollywood Riviera. In Area 155 which is north of Torrance Blvd and east of PCH, there were ten sales and south of Torrance Blvd 8 homes sold. Eight also sold west of PCH.
Prices in South Redondo Beach ranged from $572,000 for a 2 bedroom in Brookside Village up to $2,949,000 for a resale SFR built in 2015 in the Riviera.
Fourteen properties sold for over the MLS list price and 12 under with the rest at the list price. The median price was $1,180,000. The median days on market was 11.5.
WHAT TO WATCH FORAs the year winds down, be on the lookout for:
- Price reductions on new construction
- More properties selling below the asking price than at or over
These two may go hand in hand.
Currently, there are 35 new construction properties in Redondo Beach ranging from to .
Of those 22 are in North Redondo which really distorts the over all inventory. As we head into the end of the year, I would not be surprised if we start to see reductions on some new inventory in North Redondo which will create unnatural downward pressure on resale properties. Earlier in the year there was some price inversion with resales selling for the same price or even higher than new in a few instances.
And as I often write, all other things being equal, people will almost always pay more for new than resale.
When we get to the point that 70% or more of the closed listings are below the asking price, we have passed a red line into a new market: Buyer's Revenge.