Billion-Dollar Bulge Busts with Sales Down

By Dave Fratello | December 8th, 2022

billion-dollar-sales-bulge-in-manhattan-beach

The rollicking real estate market of 2020-21 brought total sales in Manhattan Beach to unprecedented heights.

Most prominently, the amount of money spent on local homes in 2021 soared to $3.554 billion by year-end.

Right now, it looks like 2022 will lack that "extra" billion dollars seen last year.

That bulge has busted.

The 12-month period from Dec. 1, 2021-Nov. 30, 2022 saw $2.461 billion spent on homes in Manhattan Beach. 

That's a drop of $1.093 billion from the full year of 2021.

It's extremely unlikely that Dec. 2022 data are going to push the Jan. 1-Dec. 31, 2022, totals over $2.5 billion. As the trend line above shows, we're going the opposite direction right now.

Consider that we now include in the Nov. 2022 data a pretty good Dec. 2021, with $239M in sales.

Just four months of 2022 have seen, or exceeded, that dollar volume (April-July). November this year saw a total of $132M in closings.

We're only likely to see a much lower year-end figure. Logically, we should expect the year-end total somewhere in the $2.3 billion range for Manhattan Beach home sales in all of 2022, which could be a $1.2 billion drop from the year before.

Fewer Sales, Less Money

This is all about the fact that so many fewer homes have sold this year. Prices haven't adjusted much on a macro level, although clearly sellers are taking less today than they would have earlier this year.

For instance, the Nov. 2022 dollar volume total is based on just 338 sales.

The Dec. 2021 total was based on 518 sales, or fully 180 more homes transacted.

Trend Began in Late 2020

As our chart shows, this "billion dollar bulge" began in October 2020, the first time (recently) that we shot above $2.4 billion in volume. Dollar volume totals rose like a moonshot for 16 months, with the downward trend beginning in March 2022.

Prior to then, dollar volume for local home sales had only once temporarily peaked over the $2.4 billion range, in late 2017-early 2018. 

The dotted line on our chart above shows you that our total right now is a bit under February 2018's blip at $2.473 billion, the high point for a few years before the Oct. 2022 rise.

Lessons and Predictions

Lesson #1: That was fun while it lasted.

Lesson #2: Injecting trillions of dollars into the economy to stave off a pandemic collapse brought a few extra billion dollars to Manhattan Beach.

Lesson #3: Super low mortgage rates drove a lot of the 2020-22 frenzy, which has now ended, along with the low rates.

Prediction #1: Sales volume, by dollars, might continue to fall until next April/May.

Prediction #2: Volume could be under $2.3 billion for the full year of 2022, and may bottom out nearer to $2.0 billion for a 12-month period before rising again.

Prediction #3: We'll have a more "normal" Spring market in Manhattan Beach as those who do choose to sell adjust to market conditions and buyers' concerns.

We often don't like to commit "predictions" to "print." But these are all testable propositions that we'll come back to next year and see how we did.

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