South Bay Housing Inventory Down 1/3rd

Posted by Dave Fratello on Thursday, March 29th, 2012 at 10:03pm.

It's not just Manhattan Beach where the real estate market seems tight.

Across the South Bay, inventory is down one-third (33%) from the same point last year. (Click any chart in this post to enlarge.)

MB is faring slightly worse with a 39% drop in SFR inventory year-over- year, one factor in the quick sales and even multiple-bid situations we see around town with good new listings.

As you'll see in MB Confidential's new charts here, MB inventory isn't lagging as much on a percentage basis as Redondo or Hermosa.

However, in absolute numbers, MB inventory is down the most from 2011 among the beach cities. There are 43 fewer SFR offerings now than there were at the same moment last year.

Buyers looking at MB SFRs have 67 options today. Last year: 110.

Now, if buyers today had 43 more choices, wouldn't the market feel just a little different? Heck, with just 10 more quality choices at middle-of-the-road price points, things might be different.

Meantime, Redondo and Hermosa have barely more than half the inventory they had last year. We simply don't know whether those markets are heating up as a result, though logic suggests it; we'll ask around.

If you consider all the markets in the South Bay that we're reporting on here, there are 212 fewer SFR options than a year ago.

This one-third across-the-board drop in South Bay inventory says a lot. It says MB may be different in its ways, but also that our market is right in line with a broader local trend. There is simply less out there to buy.

It's a curious trend, since we've had about 2 years of a flat-to-good market. Some say we've been "bouncing around the bottom" for a while and others say the South Bay is heating up, ready to pop. Others just say it has been "normal" for a while, a welcome respite from boom and bust.

Still, it's not like sellers should be depressed about trying the market, despairing about their chances of making a deal. The outlook has been OK for a while. For buyers, interest rates remain at historic lows, and many think prices are attractive coming out of the local bust.

One hypothesis we've picked up: There's no inventory because there's no inventory.

Tautology? Not necessarily. If you consider the plight of a "discretionary" seller – someone who would sell to move up, or even to downsize after the kids have grown and moved on – that would-be seller wants to believe there is somewhere to go. They see nothing attractive, so they stay put.

And don't rule out the role of refinancings. Whatever you paid and whenever you paid it, if you refi'd your home in the past couple of years, you're paying less on a monthly basis, maybe a lot less. You may figure, "that's as good as it's going to get." Do you really want to mess with a situation that works by looking for a new place, moving and paying the transaction costs? 

Who really knows what's holding inventory off the market? The buyers chasing what's left are going to redefine the market here over the next several weeks.

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Nerdy notes: Inventory figures are drawn from the MLS, and are reliable but not guaranteed. The 2011 data were compiled for a Daily Breeze column concerning housing inventory. We snapped our inventory snapshot on March 30, 2011, treating the South Bay as 5 markets – 3 beach cities, PV and Torrance. So now we're comparing inventory in each of those markets as of March 29, 2012, against the data from then.

Beware other compilations: That great new glossy RE mag that comes to your driveway published some numbers recently that don't check out. They said South Bay SFR inventory was down by over 600 year-over-year, a whopping 65% decline in inventory. That's 3 times the number drop and twice the percentage we found.

Imagine that, for some reason, real estate sales were prohibited by law – you still wouldn't see a drop that big. The mag's data looks like a simple problem of comparing oranges to apples. You know we here at MBC don't trust any numbers we haven't compiled ourselves. We like both oranges and apples, but not mixed together.
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