As I noted a few months ago when I posted the First Quarter Sales figures for Manhattan Beach this will become a regular feature every quarter. I've been tracking so many different numbers over the last few days that I'm seeing numbers everywhere and even find myself dreaming about median price and price per square foot.

We all know that statistics can take on a life of their own. When viewing our local Manhattan Beach real estate market , the numbers tell their own tale. If you look at the numbers on a month by month basis things look pretty bad. While still dismal, when viewed over time, a pattern begins to emerge showing that the number of sales, while significantly lower then those in 2007, have been fairly stable over the last two years.

The volume of sales is down about 40% from 2007 and roughly 16% from 2008 for the first part of the year. The kicker in the deck is prices. Between the first 6 months of 2007 and the same period of 2008 prices were down less then 5% but this year is a different story. Since the begining of the year home prices have dropped about 17% compared to the same period last year. There were 75 homes that sold from January to June 2009. Of those 75 homes, 60 of them had at least one price reduction before finding a buyer, 4 were sold over the list price and 11 appear to have sold at the listed price.

There is more going on now then these number show. Currently there are 150 homes for sale in Manhattan Beach. Inventory has dropped dramatically because homes are selling.... the big question is what is selling. There are 81 properties pending...67 homes and 14 townhomes. The median asking price for homes that are in escrow is $1,575,000 and for townhomes it is $1,194,000. The median sold price for homes in June was $ 1, 402,500 and $1,217,000 for townhomes.. But.... the median list price for homes that are for sale is $2,349,500 and $1,364,000 for townhomes.

Herein lies the problem with our current market. Of the 150 homes for sale only 65( less then half) are priced under $2,000,000. There is very little demand for homes priced over $2,000,000 for a number of reasons, but mainly because of financing. While we have our share of buyers with some big bucks... they are not in the majority. Most buyers looking in Manhattan Beach today have 30%-50% cash needed for a down payment on a home under $2.5 but they still need some type of bank financing. There are lenders offering loans over $1.5 but most lenders really don't want to make loans over that number. So I'm thinking that one of two things will happpen... either these higher end homes will be taken off the market or you are going to see some very hefty price reductions in the future. I also think you are going to see an increase in owner financing to bridge the gap.

Manhattan Beach: Sold January-June 2007-2009(click on graph to enlarge)

Manhattan Beach: Sold April-June 2007-2009

Manhattan Beach: Sold West of Sepulveda January-June 2007-2009

Manhattan Beach: Sold West of Sepulveda April-June 2007-2009

Manhattan Beach: Sold East of Sepulveda April-June 2007-2009

When you review sales in the South Bay-Beach Cities a few things stand out... sales are up and inventory is down a bit from the highs of the last few months. The biggest thing you will notice is that there is a huge difference between the median list price and the median sold price for homes in all of the Beach Cities, with the exception of North Redondo.

The biggest disconnect between the asking price and the actual sale price for homes and townhomes is in Manhattan Beach and South Redondo. In Manhattan Beach the current median list price of a home is $1,899,000 while the median sold price is $1,200,000. In South Redondo the median list price is $1,350,000 and the sold price is $730,000.

There has been a number of articles in the media recently about how sticky the prices have remained in most of the upscale areas in all parts of the country. The general consensus is that prices may soon begin to fall in these areas as the economy continues to falter. In the last few days, with interest rates bouncing around like crazy, there is concern that the flurry of home sales activity in recent months will halt if rates suddenly move upward. I believe that is true.

Pending sales are defintiely up in all the Beach Cities as many sellers have begun to lower their asking price by some substantial amounts. New listings that are priced right are also selling quickly while older listings with high prices continue to remain on the market. I suspect that in the coming months you are going to see prices finally move downward on homes that have been on the market for a long time without finding a buyer. There are a number of properties that have been for sale for well over a year. If owners are serious about selling they will have to reduce the price to a point where potential buyers find value.

The market in North Redondo saw prices adjust in 2007. As prices adapted to the demands of the market rather early we are now seeing the segment of the market possibly reaching the bottom. Last fall you could buy a starter home in North Redondo in the TRW tract for $475,000- $550,000. Those deals are gone. Prices have increased from the lows of October - December. Interest rates have played a part but so have low prices.

South Bay-Beach Cities: Sold April 2009 (click on graph to enlarge)

South Bay-Beach Cities: Sold March 2009

South Bay-Beach Cities: Sold February 2009

South Bay-Beach Cities: Sold January 2009

South Bay-Beach cities: Sold December 2008

South Bay-Beach Cities: Sold November 2008

South Bay-Beach cities: Sold October 2008

South Bay-Beach Cities: Sold September 2008

South Bay-Beach Cities: Sold August 2008

South Bay-Beach Cities: Sold July 2008

South Bay-Beach Cities: Sold June 2008

South Bay-Beach Cities: Sold May 2008

South Bay-Beach Cities: Sold April 2008

South Bay-Beach Cities: SOLD March 2008

South Bay-Beach Cities: Sold February 2008

South Bay-Beach Cities: Sold January 2008

South Bay-Beach Cities: Sold November 2007

South Bay-Beach Cities: October SOLD 2007

South Bay-Beach Cities: SOLD September 2007

South Bay-Beach Cities: August SOLD 2007

South Bay- Beach Cities: July Sold 2007

South Bay-Beach Cities: Sold June 2007

South Bay-Beach Cities: Sold May 2007

South Bay-Beach Cities: Sold March 2007

South Bay-Beach Cities: Sold February 2007

South Bay-Beach Cities: Sold January 2007

One of the biggest issues facing the Manhattan Beach-Beach Cities real estate market has been the lack of jumbo loans at reasonable rates. Most lenders who were making Jumbos were doing them at rates that were really high compared to the rest of the market... bouncing between 7.5%-8.5%. As our Beach Cities real estate market, even with current price declines, remains one of the most expensive in the state the lack of Jumbo financing has been troublesome.

The rumors started last December... lenders were going to begin funding Jumbo loans in the spring. In January there was a little movement from some of the big boys but rates were still fairly high compared to conforming rates. A few major lenders began offering loans at 6%-6.5% which was looking very good. Now it appears that Bank of America has stepped up and is offering Jumbo loans ($729,750+) at very competitive... actually dirt cheap... rates!

I called Bill Nazur at Bank of America to see what was happening... and the rumors are true. Bill has been making loans since the 80's and knows what's what when talking mortgages. The basics are that BofA is making jumbo loans $730,000 and up. They are making loans over $1million which had been the maximum for many lenders. Depending on your credit you can get one with 20% down at an interest rate between 5.625%-5.875% that is fixed for 30 years.... did I say dirt cheap rates! If you are looking at a sale price of $1,000,000 or less with 20% down your FICO has to at least 680. With a FICO of 720 you can purchase a home up to a price of $1.5 with 20% down. Needless to say Bill is swamped with clients right now but he always has time to answer questions... so shoot him an email and he can give you more information on their program.

He recently qualified on of my clients for a $1.5 price with 20% down and and a fixed rate between 5.625%- $5.85 depending on when they lock in the interest rate. Bill told me that BofA has been doing these loans for some time. According to Inside Mortgage Finance they were the largest originator of jumbo loans in the 4th quarter of 2008. They are only making the loans via Bank of America directly. That means that you have to talk to someone at BofA to get the information on these loans. The bank is keeping these loans on an in-house basis in the bank's portfolio. No marginal borrowers allowed... you have to have good credit and reserves to get on of these loans.

Now that BofA has publicized their program I'm guessing you will see more lenders in-housing similar loans at equally competetive rates. This is good news for Manhattan Beach-Beach Cities homeowners who need to refinance a large loan and buyers who would rather not put 50% down on a home under $2 million.

UPDATE:  Bank of America will make loans with 20% down on homes priced to $1.5 million.  On homes priced from $1.5 million -$3. million you will need 30% down.  The higher your FICO sclore the less you will need in reserves.