Polliwog Park..

We are beginning to see the effects of stricter guidelines on loans coupled with fears about big price declines on Manhattan Beach real estate. September sales are below those in August and pending sales are sparse....as of today only 7 homes went into escrow in September out of 121 active listings. The townhome market however is holding it's own with 9 pending sales and 15 active listings. Manhattan Village saw two sell within days.

If rates on Jumbo loans drop below 7% we may see an uptick in home sales. I think 7% is a real barrier for many who remember significantly lower rates and are waiting(praying) for rates to drop. I'm not sure that's going to happen. I suspect we are going to have to get used to higher rates which means higher home costs. A 1% increase in interest rates is like raising the price by 10%. So while prices may seem to be dropping the real cost of ownership is not decreasing.

Friday saw news that consumers are spending and inflation seems to be in check making fears of a recession temporarily lessen. But don't worry there will be another speech or article by someone next week predicting a recession or inflation or another 40% decline in prices on homes. The truth is that no one has a clue about what is going to happen in six weeks let alone in 6 months but that doesn't make news.

There are 121 homes currently for sale in Manhattan Beach.. on September 15, 2007 there were 118.. so inventory is up by three homes in about 2 weeks. Not exactly a rush to unload property. Last year, on October 1, 2006, there were 215 homes for sale... making inventory significantly lower this year then the same period last year. There are a lot more buyers this year compared to last year when everyone dropped out of the market. If rates drop in October as they did last year you could see an increase in sales in the 4th quarter as buyers scramble to take advantage of lower rates before the end of the year.

Truthfully, I have no idea how things will fare over the next 3 months.. but here is what I think may happen. Prices are going to remain very flat and in some areas decline over the next few months. If we make it through the October adjustable loan reset period without a big inventory increase we should be OK. For the market to decline 30%-40% there would have to be a huge increase in inventory and that's not happening in any of the Beach Cities at this time. I think we will see the market segmented into subareas based on location and desirability. That is... premium homes in A locations ... The Strand, the 100 blocks of walk streets and view homes in the Hill section... will continue to command high prices and attract buyers with big bucks to spend. At the other end will be homes in poor condition and/or in marginal to bad locations. These properties will see prices decline and remain on the market for significantly longer periods. Homes under $2 million will continue to move faster then those in the $2.2-$3.5 range... however buyers will be very picky about what they will pay and sellers will have to adjust their expectations to get their homes sold.

There are a number of homes for sale in the $1.6-$2.2 range that have been on the market since the Spring. They were over priced when they hit the market and many are still priced over market value. As these properties adjust prices to market value or go off the market many will think prices have dropped but that won't be quite true. If they had been priced at market value instead of wishful value they would have sold long ago. We are going to see a meeting of expectation and reality which will disappoint both buyers and sellers. We may begin to see more foreclosures and short sales hit the market in early November. People who want/need to close before the end of the year will be ready to negotiate price. This is the point when we will see real price declines if they are going to hit our market.... but I don't believe it will be 20%-30%. OK .. so much for my crystal ball predictions.... it will be interesting to see what happens over the next few months..

Manhattan Beach: Market Snapshot September 29, 2007
Click on graphs to enlarge


Manhattan Beach: Price Ranges September 29, 2007

Manhattan Beach: Market Snapshot September 15, 2007

Manhattan Beach: Market Snapshot August 25, 2007
Manhattan Beach: Market Snapshot July 18, 2007
Manhattan Beach: Market Snapshot June 25, 2007
Manhattan Beach: Market Snapshot June 2, 2007
Manhattan Beach: Market Snapshot May 6, 2007
Manhattan Beach: Market Snapshot April 23, 2007

All content copyrighted@ 2007 Kaye Thomas