A couple of months ago I stopped doing South Bay home market monthly updates.
Just a single month of South Bay housing numbers with seasonality all screwed up thanks to the pandemic created some wild numbers that would not tell the whole picture.
Right now, the monthly numbers are demonstrating some incredible strength in the housing market. No doubt, low interest rates and the desire for more space are fueling a housing run unlike anything we have seen since liar loans and the Great Recession.
Buyers are in major FOMO (fear of missing out) mode because home prices keep going up and the competition is fierce. I am seeing this FOMO in some of our clients too.
This week, I want to take the monthly numbers that are incredible throughout the state, but try to put things into perspective to calm nervous buyers.
My hope is to help you tune out the noise and continue to make good real estate decisions without the “fear of missing out.”
C.A.R.’s November Home Sales & Price Report
C.A.R. (California Association of Realtors) released jaw-dropping numbers this week about the California housing market. Check out the incredible year-over-year November statistics:
- Existing single-family homes sales totaled 508,820 this November…that is up 26.5% from November of 2019.
- The statewide median price in November was up 18.5% from November of 2019.
- The county of Los Angeles saw its November median price go to $664,160, which is 11.7% higher than November of last year at $594,840.
There is no other way to slice it, those housing stats are about as strong it gets.
The market is way up, but numbers like these can fuel FOMO if you do not put it all in perspective. Oftentimes, FOMO leads to bad decisions when you feel pressure to buy a home now, when in reality over the long-term, that particular home may not be the right fit for you.
To put things in perspective, if you compare the price and sales numbers from just a month ago, not much has changed.
- Existing single-family homes sales this month compared to last month were up 5%.
- The statewide median prices in October were $711,300, whereas this month prices fell by 1.7% to $699,000.
- The county of Los Angeles’ median price in October was $728,160 which means prices dropped 8.8% month-over-month if you compare it to November’s price at $664,160.
As you can see, numbers are what you make them.
Do not get it wrong, prices have run up in a big way. As a buyer, there is low inventory and it is about as competitive of a market as we have seen in the last decade…but don’t let the incredible year-over-year monthly numbers scare you.
The biggest thing to remember is that normally November and December are incredibly slow months in the real estate market.
Since COVID-19 has thrown off traditional seasonality, year-over-year comps are easy to blow out of the water. With no winter swoon and the market making up for a lost spring, the frenzied market is going to feel even hotter than it might actually be.
Tune out the noise and realize the market is the same it has been over the past few months. The run has been big, but it has happened gradually since April/May.
State Numbers Compared to the South Bay Market
Below are some additional quick hitter highlights from C.A.R.’s November year-over-year report:
- Sales are up 26.5%
- 1.9 months of supply (lowest level in 16 years)
- 9 median days on market (record low)
- Sale to list price ratio is 100.5% (highest recorded in last 30 years)
Again, incredibly strong numbers that will blow your mind, however, all markets are local. Let’s see how it compares to the South Bay local market I like to cover in the weekly blog.
- Manhattan Beach
- Sales are flat
- 3.5 months of supply
- 42 median days on market
- Sale to list price ratio is 93.8%
Manhattan Beach sales in November are the same as they were last November. You can breathe a sigh of relief. Months supply is normal and has been at 3.5 months many time before (and even lower in past years). Days on market and price to list are not as crazy as the state numbers.
- Hermosa Beach
- Sales are down 35%
- 3.8 months of supply
- 14 median days on market
- Sale to list price ratio is 99.2%
Hermosa Beach is a small city, so the monthly data is volatile and should be taken with a grain of salt. Lower sales are a function of small city variations, but the 3.8 months of supply in Hermosa is very normal. Days on market is 14 days, which is low for the city but not unheard of over the years.
- Redondo Beach
- Sales are up 20.8%
- 1.9 months of supply
- 10 median days on market
- Sale to list price ratio is 100.0%
Redondo Beach sales have boomed, but if you followed the blog this year, you’ll know that Redondo’s home market was slower to get re-started after the stay-at home-order went into place. This is some catch-up. The 1.9 months supply is extremely low and 10 days on market is just about a record low; however, Redondo has hit 10 days on market in 2017, 2018, and almost got there last year too. So again, not unheard-of numbers like the rest of the state.
- Palos Verdes 90274
- Sales are down 16.7%
- 2.9 months of supply
- 23 median days on market
- Sale to list price ratio is 98.9%
Palos Verdes’ 90274 zip is seeing a drop in sales due to just 2.2 months of supply. Days on market is 23 which is low, but these day on market counts have been standard since 2017.
- Palos Verdes 90275
- Sales are up 22.7%
- 2.2 months of supply
- 13 median days on market
- Sale to list price ratio is 100.0%
Finally, Palos Verdes’ 90275 zip has seen a boom higher in sales compared to its 90274 counterpart. Supply is the lowest it has ever been, but it came close to these levels back in 2017 and 2018. The 13 days on market is just about the lowest ever, while full price of 100% is impressive for this market.
C.A.R.’s yearly November report numbers are absolutely incredible. The California housing market has been incredibly strong and the South Bay market is enjoying an amazing second half of 2020 as well.
If you have been a buyer over the past few months, it has been so tough battling with multiple offers and rising prices. That said, do not let FOMO set in while reading about the November housing numbers.
Sure, the numbers are strong, but realize comps in relation to last November are easy and f you look at year-to-date sales compared to last year…they are essentially the same.
Additionally, with rates down to historic lows, your buying power has increased over 10%, which allows most buyers to handle the rise in prices. Of course, everyone would love to time the market perfectly and enjoy this nice run up, but if you are making a long-term investment, you will get your growth far beyond 10% over time.
Do not let the state numbers and national news fuel your FOMO. We are still in the same market of the past few months…just up against easier comps.
Stay disciplined and make sure you wait to find the right option, and when that time comes, you can push hard to make sure you secure that perfect home.