Over the past four-plus years of writing the real estate column for SPT we have always tried to offer an annual review of our local real estate market. This year has been unique from previous years in that it has turned out to be the “tale of two halves” in our local market. While we began the year on a pretty stable footing, the second half of the year has been defined by a significant slowdown in our local real estate market.
To give the full picture of how our local market fared, let’s look back at how the market settled out in 2021 compared to 2020. 2021 (post-pandemic) ended up considerably higher in prices and volume compared to 2020. According to local MLS statistics (2021 vs. 2020), there were 411 single-family residences sold in San Pedro (+15.7%) with an average sales price of $870,000 (+15%) and average days on market (DOM) of 10 days (-23%). In neighboring Rancho Palos Verdes, there were 488 SFR’s sold (+22.3%) with an average sales price of $1,719MM (+18.5%) and average DOM of 8 days (-38%). Overall, there were 4,841 SFR’s sold (+22.1%) in the Greater South Bay with an average sales price of $1,109MM (+16.8%) and average DOM of 8 days (-27.2%). The overall trend across the Greater South Bay was an increase in sales volume, substantially higher prices, and fewer days on market.
Back in July we discussed the transitional phase our local real estate market was experiencing due to a slowing economy, inflationary concerns, and the average 30-year fixed rate mortgage climbing from below 3.25% for much of 2021 to 5.78% in mid June. So how did the final six months of 2022 play out?
According to MLS statistics (2022 vs. 2021) at the time of our column submission (12/12/2022), there were 294 SFRs sold in San Pedro, which was down -23.4% with approx. 90 fewer homes sold. However, the average sales price for a SFR remained strong at $960,000, which was +10.3% higher than the same period last year. DOM remained unchanged at 10 days. In Rancho Palos Verdes, there were 346 homes sold, which was down from 461 homes sold in 2021. This was a -24.9% decrease and a whopping 115 fewer home sales. Average sales prices rose from $1,725MM to $1,855MM, which was a +7.5% increase. DOM went from 8 to 10 days. Overall, there were 3,448 SFR’s sold in the Greater South Bay, which was down significantly with 1,151 fewer homes sold (-25%). The average sales price remained stable at $1,187MM, which was up +6.65%. DOM went from 8 to 10 days. It’s clear that rising mortgage rates and inflationary concerns had a significant impact on sales volume in our local market. Although price appreciation has slowed, overall market conditions have remained stable where values are concerned.
What’s the outlook for 2023? The California Association of Realtors® projects a -7.2% decline in existing SFR sales (333,450 units) and home prices are forecasted to decline by -8.8% to an average of $758,000. Stubbornly high inflation and growing economic concerns will keep the average for 30-year, fixed mortgage interest rates elevated at 6.6% in 2023, up from 5.2% in 2022 and from 3% in 2021 but will remain relatively low by historical standards. Housing supply continues to remain tight in the Greater South Bay. While sales volume is expected to continue to soften, housing prices in our local market should remain relatively stable to down slightly as long as people have jobs, the unemployment rate does not increase significantly, and inventory remains low. One thing is certain, we will continue to stay on the pulse of our local real estate market and keep our readers informed in 2023. Wishing you all a Happy New Year!
Mike Harper and Peter Hazdovac are both licensed Realtors® with Keller Williams Realty. For more info, visit www.harperhazdovac.com.