As we hit our stride in 2023, I am excited to get back to covering some micro-market happenings in the South Bay home market.
The past two months, the blog’s focus has revolved around big data, forecasts, and fourth quarter performance. If you are just discovering the blog or missed the last few prints, then here are some highlights below for you to catch-up…
“The Best (and Worst) performing South Bay Home Markets of 2022”
Always an interesting read to see which submarkets crushed it and which ones underperformed. It might surprise you!
“South Bay Real Estate: 2023 Fearless Predictions”
My annual post that gets the most clicks, by far, then any other blog topic. Readers love the non-traditional forecasts and where else can you find South Bay specific forecasts?
“South Bay Q4 and Year End Home Statistics”
This post has juicy Q4 home stats that are as unimpressive as we have seen in a few years, not to mention yearlong data that is just as interesting.
These were some great overviews of our entire marketplace, but for today, I want to dive into some specific listings from Manhattan Beach to Palos Verdes.
This 2023 year is going to be a big test for our home market with sky-high interest rates and some early listings may offer clues into how the market may shape out over the next 12 months.
Let’s look at homes re-listed (sold as recently a few months or couple of years ago) because a year prior in our incredibly strong market, these homes would have sold for even higher in our low-rate fueled environment, but today that looks to be making a shift.
Hermosa Beach Sand Section Resale
First up is a recently expired listing in Hermosa Beach south Sand Section walk streets.
Newly constructed in 2021, this home is one of the most desirable options off The Strand.
57 7th Street
- 4-beds, 5-baths, 4,247 sq. ft.
- Sold: $7,200,000 (October of 2022)
This closing almost reached $1,700 price per square foot am was a substantial all-cash sale to conclude the 2022 year as real estate was slowing thanks to high interest rates. The buyer, undeterred by rates, paid a big price for brand new construction to avoid the likely three-year headaches brought about from building and working with the Coastal Commission.
The property was brought back on the MLS just two months later for a lower price of $6.5 million.
Peculiar – to say the least!
A purchase of that magnitude, only to be listed months later at a 10% loss makes little sense.
Of course, we are not privy to the owner’s motivations or strategy behind the original transaction; however, these types of moves can sometimes be indicative of a slowing market. Further, a purchase, relist shortly thereafter, and potentially closing significantly less is not the characteristic of a strong market.
All that said, this listing was canceled just two weeks after listing and remains off the MLS.
Will it be back to sell lower? Or did the owner want to test the market to see if the property could be moved to take on a better investment opportunity?
We may never know.
Rancho Palos Verdes Bay Club Resale
Next up is Rancho Palos Verdes’ Bay Club condo complex atop the gorgeous Palos Verdes bluffs.
This condo is an excellent case study to keep tabs on since it originally sold right as real estate was picking up from Coronavirus hitting our economy in the summer of 2020.
32614 Coast Site Drive #107
- 2-beds, 2-baths, 1,433 sq. ft.
- Sold: $710,000 (July of 2020)
The July 2020 purchase date was great timing as the market started its ascent higher at that time, and buyers could capture some of the lowest mortgage rates in our nation’s history.
Recently, this property was brought back to the market in October 2022 at an asking price of $920,000.
It was quickly reduced to $895,000 after just a week on the market, seemingly went to escrow which then fell out, and was reduced again to $875,000.
The now asking price is a little above a 20% premium to the 2020 purchase price which would have seemed fair in the beginning of 2022 amid the firing hot market.
Not so much today with nosebleed interest rates.
While there is no flashing red light on this condo listing, this is certainly a condo to watch and see how the market’s appetite will absorb this sale.
In my November 30th post, “More Palos Verdes Real Estate Price Depreciation,” I discuss a disappointing result for a Lunada Bay condo sale that was ripped lower on price.
Could this condo receive the same fate and take a massive discount to get a deal done?
Time will tell.
Manhattan Beach Tree Section Resale
And finally, to the ultra-strong Tree Section market plagued with limited inventory.
If you have read past blogs, you will know the Tree Section is doing well with a dearth of reasonable options for home buyers.
Cue another less than a year resale that could be a great indicator on the strength of this submarket.
750 29th Street
- 6-beds, 7-baths, 4,835 sq. ft.
- Sold: $5,985,000 (May of 2022)
Another new construction home that was purchased all-cash in the middle of 2022.
The relist is asking a small premium, just 5%, which would cover the agent fees associated with getting the property sold. It has been on the market for just over a month without a deal.
There is nothing more to this one other than the market will be watching.
Can the strong, in-demand Tree Section continue to drive more sales in a high rate and slowing economic environment? Or will the sellers have to take a lower price from their acquisition just because you cannot always time everything perfectly?
This listing has time since it is one of the few turnkey options in the Trees, however, savvy buyers will note the purchase from last year and almost assuredly try to beat up the price.
Will the seller or buyer come out on top?
Conclusion
As we begin the new year, we likely are going to brave a new type of market based on Q4 and yearly numbers – not to mention some of the anecdotal evidence we are seeing with clients.
The year is still far too young to jump to conclusions, and this market will not get rolling in full until February/March.
But in the meantime, these three examples, among others, you should carefully watch to see if they achieve price discounts, price premiums, or get pulled from the market. These are going to be important clues and early indicators of our local home market for 2023.
Wishing you an amazing January and hope you are still hitting those personal, business, and real estate resolutions!
Richard Haynes
DRE: 01779425
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The Richard Haynes Real Estate ShowA leader in South Bay real estate for the better part of a decade, Richard thrives as an advisor to his clients with over $248 million in sales as a broker or investment principal at his boutique agency, Haynes. Richard is known for his keen local market insights which have been featured in the L.A. Times, The Street, and Forbes, along with his weekly South Bay real estate blog. [read more]