MB Market Update for 4/1/16

By Dave Fratello | April 4th, 2016

On occasion of this market update (data as of 4/1, but no jokes here today), we'll venture an opinion:

This might be the most interesting time in the Manhattan Beach real estate market in 3-4 years.

Interesting, because there's a big question facing us: Which way, MB?

To spin that out a bit more, the question is whether current inventory growth – slightly over 100 listings these days – is the beginning of a bona fide change in the market.

We've lived in a sellers' market for so long, it's a bit hard to remember what a buyers' market can be like.

Buyers haven't had choice and time and the ability to be patient for so long, everyone's jangled and treats frenzies as the norm. Every single offering process is going to be a bidding war. Every list price is just the start. Every seller is going to hammer buyers into speeding up their contingencies and taking a property "as is," because after all, there's another buyer to replace you if you don't like it, Mr. and Mrs. Buyer.

That was "normal" for a long time. Maybe less so now. More inventory could be the first step toward stabilizing or (gasp!) dropping prices. It's Econ 101. You can look it up.

You know who already understands that the market may be changing? Actual, living, breathing buyers and sellers.

This has been Topic A in several of Dave's conversations with clients and prospective clients, for a few weeks at least. It seems that people who are in the market, or thinking about getting in, don't need to be told which way the wind is blowing. Bravo for common sense.

Oh, but there's a steady argument developing out there among the professionals who do this work full-time. A few observations and thoughts that we've heard recently – some contradict each other:

We're moving toward a "normal" market. Low inventory and rising prices were getting out of hand and the trends weren't sustainable, goes this thinking. One opinion we heard was that about 120 active listings is "normal" for MB. (More than one person has asked Dave for more historical inventory data after our "100+" post last week. Updates TK.)

There are more new listings coming. A combination of new construction (focused in the Tree Section) and other sellers seeing their opportunity to get today's prices will mean more new inventory over the next couple months.

Inventory could actually drop, fast & soon. The current inventory bulge is misleading, as many listings are either quietly under contract or just about to be snapped up.

There is nothing new or changed in the fundamentals in MB. Interest rates are the same, the economy is the same, the inherent desirability of Manhattan Beach is the same.

Watch new construction. If spec builders stop buying lots and initiating new projects, they're nervous. They bet on the future and won't dive into new ones if they can't pencil out a good profit today. (To be fair, builders rarely pay retail anyway.)

You have to break down the market into segments. Some are crowded, some aren't. This is the wrong time to generalize about the market for Manhattan Beach as a whole.

Historically, MB does not drop first. Other markets around Manhattan Beach – in the South Bay and other parts of LA – are experiencing the kinds of crowded, multiple-offer situations that we've treated as the norm here; they're heating up now. MB is usually one of the last markets to slow or dip, so it doesn't make sense for us to "go first" now.

That's just a sampling.

The way we find out who's right and what's next is... watch, wait and participate!

Here's the rest of our local real estate market update report for the period ending 4/1/16: