One important thing about the real estate market is that it keeps chugging along, almost regardless of conditions.
That's because sometimes the time simply has come for a home to be sold, or for a buyer to buy. Life circumstances drive a lot of the activity.
A certain number of buyers and sellers are…
One important thing about the real estate market is that it keeps chugging along, almost regardless of conditions.
That's because sometimes the time simply has come for a home to be sold, or for a buyer to buy. Life circumstances drive a lot of the activity.
A certain number of buyers and sellers are discretionary or even speculators, meaning they can choose to buy or sell, or not. The market may slow, but it won't stop, if fewer of those people decide to join the market.
Perhaps the best way to see the basic truth of the market's constant roll is to look at how our local Manhattan Beach real estate market performed during a true crisis in the economy.
More than a decade ago, in Fall 2008, the stock market crashed. Banks were hit hard. Companies failed. Millions of people lost their jobs. Mortgage lenders evaporated. Credit locked up.
It was a terrible time to buy or sell a house.
Somehow, people kept doing it.
We'll focus you first on the left side of our chart.
The year 2007 had some fluctuations in the market, but still a robust total number of sales at 445 for the year.
But by that crash year of 2008, the number of sales dove 25% to 332.
Stop for a minute, though. In 2008, 332 homes sold in Manhattan Beach! That's not zero. It's not half the total from the year before. And it's nearly one home sale per day.
No one really remembers 2009 fondly, either. But home sales ticked up 7% to 355 total.
Since then, almost every year has seen nearly 400 sales, sometimes more. Pretty smooth recovery, and pretty quick, too.
And let's be clear, lots and lots of SoCal real estate markets didn't look this good over the same span of time.
When we look back at quarterly data, it's clear that Q4 2008 was the biggest casualty in the Fall 2008 crash in Manhattan Beach.
Yes, this should be obvious, but stick with us.
Q4 2008 saw only 53 closed sales. Those were the lucky ones.
It was a drop from 2007's Q4, when things were already a little wiggly, and far below the average of the years in this chart, 2007-2019, where you saw an average 89 closings in the Oct.-Dec. period.
Here is what we find amazing: Only a year after that crater, the Manhattan Beach real estate market had begun to recover so effectively that sales volume was nearly double Q4 2008's low.
We have observed here before that Q4 2009 was a turning point in local real estate, the time when a declining and uncertain market suddenly solidified. This is one of the data points that supports that finding.
The big point here is that there is some natural pace and equilibrium to the local real estate market. We can estimate a sales pace for this area almost without taking account of broader conditions. You'll see more sales when everyone feels that booming sensation, but still plenty of sales when they feel the opposite.
Prices are certainly impacted when people feel (or are) less wealthy, and when credit or lending is tight.
Prices are a different part of this story.
Interesting, Dave, why would you bring this up now?
Well, there's something in the air.
As we write, the Dow is up only 7% from late January 2017, having given away a bunch of gains due to a novel virus and big uncertainties.
We're not going to speculate on what the market's doing, or where it's going.
But against that backdrop, we just saw an amazing week in local real estate, with 19 Manhattan Beach homes going under contract within the past 7 days.
Seems like there's no sand in the gears right now. Heck, just 2 weeks ago in our end-of-February update, we were touting the fact that 11 homes had gone under contract in the prior week. The recent pace is even hotter.
It's selling season right now. Rates are low and, incredibly, getting lower.
So sure, there's pressure, there's uncertainty. Economists at the California Association of Realtors issued a cautious update this week suggesting they'll revise downward their forecast for the state's real estate market.
Still, experience shows that plenty of homes will sell regardless. Mostly because there are lots of willing sellers and willing buyers.
And if things were to slow, just look above to imagine how we might recover.
Please see our blog disclaimer.
Listings presented above are supplied via the MLS and are brokered by a variety of agents and firms, not Dave Fratello or Edge Real Estate Agency, unless so stated with the listing. Images and links to properties above lead to a full MLS display of information, including home details, lot size, all photos, and listing broker and agent information and contact information.