The Redondo Beach Pier



After I posted about  down payments on  home sales in Manhattan Beach,   a reader asked if I would do a similar post on Redondo Beach home sales. I apologize for taking so long but I've been out of town packing up my Mom's home so she can move back to the mainland... but that's another story.

Reviewing the  percentage of cash used for down payments on recent home sales has pointed out the difference in Manhattan Beach home buyers and Redondo Beach home buyers.  I was so intrigued that I'm going to post for Hermosa Beach  and El Segundo in a few days to complete the comparison for all the Beach Cities. 

North Redondo and Manhattan Beach are opposites in the Beach Cities real estate markets.   Manhattan Beach is of course the high end with North Redondo being the entry level.  In Manhattan Beach all cash sales made up over 20% of the market.  In North Redondo they were less then 10% and in South Redondo they were  slightly above 10% of closed sales.

 In North Redondo 80 single family homes closed escrow from October 1, 2009-March 7, 2010.  Of those 80 homes 6 were cash sales,  50 buyers put 20%  or more down while 18 buyers used either  VA or FHA funding less then 10% down.  In South Redondo 37 homes closed escrow during the same period.  4 were cash sales, 21 were purchased with 20% or more down and 10 were purchased using FHA loans.  In Manhattan Beach, of the 119 homes sold,  only one property sold using FHA financing, and 115 sold with more then 20% down.   




North Redondo:  Down payment %  for single family homes
















South Redondo: Down payment  % for single family homes


















**As with Manhattan Beach the figures are based on  single family homes...

Recently there has been  a lot of  speculation at our local consumer blog,  MBC  about where  the Manhattan Beach and the Beach Cities real estate market is headed.   While we have seen prices decline in the last year we still don't have a large number of foreclosure or short sale properties in either Manhattan Beach or the Beach Cities.   As we haven't experienced that perfect storm of massive  numbers of foreclosures along with high numbers of short sales,  property values are still higher then many expected. 

From September 2009 to today ( February 19, 2010) there have been 119 single family homes close escrow.   Of the 119 closed home sales 24 (20%) were all cash. 4 sales had less then 20% down,  26 sales had 20% down and the other 65 sales saw down payments in excess of 20%.  What was interesting is that not all the cash sales were upscale homes.  Cash sales were across the spectrum on price.  By the same token a number of Luxury  homes buyers leveraged their purchases with loans above the $1,000,000 maxi mun mortgage interest deduction figure.   There were 15 home sales over $3,000,000.  Of those 15 homes  4 sold all cash, 5 had down payments of 40% or more and the other 6 buyers put down  between 20%-30%.   A few of these folks may have been reaching on price but I'm guessing a number of these buyers were taking advantage of very low interest rates and are keeping their cash for future investments.

 Another interesting factor was the number of  buyers who got  a first  loan of  $729,750 and a second loan to make the total loan amount about  $1,000,000 to take advantage of the mortgage deduction limit.  A year ago lenders were not making second loans no matter how much money a buyer had as a down payment.  There were also a few folks who obtained new secondary financing  a few months after the close of escrow. 


I don't know about  the percentage of down payments in other zip codes but I would think that a market where the median price is well over $1,000,000 and  20% of all sales are cash sales is a market where most owners and buyers  are  financially savvy.  The bad news is that  I expect to see more foreclosures and short sales in the coming months as the California economy continues to be in trouble and mortgage rates get ready to move higher.   The good news  is that our local real estate market looks as if it will continue to weather the storm better then expected.

Hermosa Strand... old and new


After a very slow first half of the year Hermosa saw the number of home and townhome sales almost double in the second half of 2009.  There were 64 homes and 53 townhomes that closed escrow from July-December 2009.    Hermosa hasn't seen that many 3rd and 4th quarter sales since 2005. 

The Hermosa Beach real estate market has been a bit different then the other Beach Cities.  Prices continued  on the high side  for most of the year and inventory didn't move.  Most sellers were not lowering prices and   properties would  re-list over and over at the same price.  After July  changes in the real estate market forced sellers to adjust prices as more short sales and REO's began to sell at prices well under where competing properties were listed.   Units in the Moorings are a good example of how changes in the market  forced many sellers to rethink their pricing strategy. 


Hermosa has a number of Strand properties on the market.  There are currently 7 Strand homes for sale in Hermosa. Prices range from just under $4,000,000 to almost $16,000,000.   Over the last year 4 have closed escrow and 2 are pending.  While asking prices are similar to those in Manhattan Beach the final sold prices this year have been  lower then the prices on similar homes in Manhattan Beach.    This will be an interesting segment of the market to watch as some pricey new homes hit the market.


Hermosa Beach, like Manhattan Beach has little in the way single family homes that are new construction .  While there is  new construction most of the new homes have been built by private parties and are not going on the market.  There are few homes available that were built after 2006  which means that buyers will have to either build themselves  if they want new or buy an older home that has been extensively remodeled.  Even the townhome market is not seeing much in the way of new construction other then the project on 21st street. 


As the new year opens there are 48 homes and 32 townhomes/condos for sale.  There are 20 homes and 19 townhomes in escrow.  As of February 15, 2010 18 homes and 7 townhomes have closed escrow.  It's  looking like a better year for home sales in Hermosa Beach.


Hermosa Beach:  Sold July-December 2000-2009(click on graph to enlarge)


















Hermosa Beach: Sand Sold July-December 2000-2009














 

 

Hermosa Beach:  Valley Sold July-December 2000-2009

Hermosa Beach: Hills Sold July-December 2000-2009

 Financing was difficult to obtain as the FEDS had dropped the conforming jumbo loan limit to $625,000 from $729,750 as of November 2008.  While the FEDS agreed to raise the limit again in February,  lenders were not able to fund loans until the end of April.  Jumbo loans were only being offered by a few institutions and they were (and still are)  difficult to obtain as most lenders want very high FICO scores along with down payments in excess of 20%.   That left of lot of months with few choices for many consumers who were considering buying a home.  Just to make things more interesting the government also changed the way appraisals were handled which led to a slew of issues that are still a problem.

Another area of concern is foreclosures.  While stories run high about shadow inventory there isn't any real information on the numbers.  Issues with continued high unemployment nationally and in California will  exert pressure on  homeowners at the high and low end of the scale. Loan resets are a reality and will have some effect on all homeowners.  In California a moratorium on foreclosures by the state legislature has ended and we may indeed see more distressed properties hit the market.  The big question is will they be in Manhattan Beach or Morongo Valley.

Manhattan Beach: Home Sales January-December 2000-2009

Manhattan Beach sales by month: ( single family homes no townhomes)

 

 Manhattan Beach: Westside/Eastside July-December 2007-2009

I apologize for posting this information so later but sometimes life gets in the path of real estate... I will also  be posting information for Hermosa, Redondo and El Segundo.  

Manhattan Beach: January 2010 Days on Market...

What a difference a year makes.   The Manhattan Beach-Beach Cities  real estate market for the 4th quarter of  2008 was one of the most dismal in many years.  One year later the 4th quarter of 2009 saw inventory drop dramatically as sales volume showed a marked increase over that of a year ago.  The reason for this turn around was twofold... prices finally declined and jumbo loans, while not easily obtained, are being offered by a number of lenders.

  The question now facing  potential buyers and sellers is where the market is headed in 2010.    There is the camp that believes the market has reached bottom and will soon start recouping recent losses (mainly sellers). At the other end of the spectrum are those who believe the market will see an additional 30% decline in value(mainly buyers).  Most folks are somewhere in the middle and think things will likely get a bit worse before they get a lot better.

Manhattan Beach is often a harder market to figure then other Beach City real estate markets because of the financial resources of many buyers and sellers in the Manhattan Beach market. There are  a number of buyers who have the money to pay all cash or put down 50%  or more for a property with a price tag in the multi-million dollar range. In recent months we have seen a number of properties that were purchased within the last 5 years sell below their acquisition price.   While no one knows for sure,  it doesn't appear that the owners of those properties filed bankruptcy immediately after the sale.  

This doesn't mean the Manhattan Beach is immune from market forces but it may mean that we won't get hit as hard.  As an example there is a lot of concern over  Alt-A loan resets.  These might not be as big a problem for owners who have financial reserves as they are for folks who have little or no backup.   While not everyone in Manhattan Beach is in good financial shape there are probably more who are then are not.  The same is true when dealing with employment issues.  I have a number of clients who are not making as much money as they did in the past.  They are not in financial trouble but they are watching what they spend.  None of them are likely to lose their homes but discretionary spending is tighter then in prior years.

I expect to see inventory increase in the coming weeks.  Since the beginning of the year  homes that went off market last year are returning at lower prices and finding buyers fairly quickly.   The big hurdle now will be financing.  I'm believe that we will know the direction the market will take sometime in late spring or early summer.  The FEDS are planning to stop  backing the MBS market in March.  This move will  likely force rates up.  In addition, banks that have been holding inventory off the market may find they need to move it off their books.  Banks may also finally decide that it would be a smart move on their part to find a better way to handle short sales and REO listings.

Manhattan Beach: Market Snapshot January 17, 2010

Manhattan Beach: Price ranges January 17, 2010

***I'm making a change in the market snapshots and will be using sold sales from the previous month rather then partial sales in the reporting month.