Q3 Stats: Fewer New Deals in '17

By Dave Fratello | October 12th, 2017

With our last deep dive into the data, maybe we "left you hanging" a bit.

If you were reading closely and for comprehension (hey, our favorite kind of reader!), then you noticed that our last post left something of an open question.

In that post ("Q3 Stats: New Inventory a Bit Slower Than '16"), summarizing third-quarter inventory stats for Manhattan Beach for 5 years, we asked:

"[W]as inventory holding high [in the 3rd quarter] because there were more sellers coming to market?" 

We answered: No. (With data.) 

So, what was it?

If inventory wasn't high/rising due to more new inventory coming out, then there's only one good explanation left...

Fewer sales. Yep.

Specifically, fewer homes went into escrow in Manhattan Beach during the 3rd quarter of 2017 than in any of the previous 4 years. 

The 82 new escrows in 2017's third quarter is a figure that stands out. We were down this year by 19-27%, depending on which year you look back to. 

We can always say that Summer is a slower period. But when we compare the same periods against each other year-over-year, the data matter.

This Q3 was a much slower period. 

It's funny, because no part of Summer felt like a complete buyer boycott. (There was still almost a deal a day in Manhattan Beach, after all.) 

But the numbers tell us something about the demand side of the equation. It was softer this Summer.

So are you wondering who to blame? Or, specifically, which part of town? 

Sand Section, you're off the hook!

This time, it was the Tree Section that saw a 50% drop year-over-year in sales during the Summer months, from 28 in Q3 2016 to 14 in Q3 2017. 

In each of the prior 4 years, the Trees saw new deals at a mid-20s to mid-30s pace in Q3.

Not this time. 

Yes, the Hill Section saw a drop of 5 new deals from last year, but with tiny inventory from month to month, it's hard to pin the blame there. Some years we see several Q3 sales, sometimes just a few. 

East Manhattan? Down by only 1 from last year to 37, and remarkably consistent across 5 years of 3rd quarters.

Sand Section? Up by 1 from last year, to 23! A bit slower than 3-4 years ago. 

The bottom line: Demand for homes in Manhattan Beach drooped this Summer. 

That's why inventory slid higher than 2016 and has remained above last year's levels. 

We're only 12 days into Q4, so it's too early to say what the trend looks like right now.

One last data report covers closed sales. 

Since we were compiling all these stats from 5 years' worth of 3rd quarters, we looked at sales. 

2017 was consistent with the trend across each of the past 4 years, with 98 sales closing in the period of July 1-Sept. 30, much like the 99 last year, 94 the year before, and 96 the year before that.

Only the 112 closed sales in Q3 of 2013 stands out as a bit of an anomaly. (Oh, but we do remember back to that time... the market had just really rocketed in Spring 2013. You can see the momentum from Spring in the high number of Summer closings from that year.)

So, to review these 5 years' worth of stats... (We spent quite a bit of time compiling them, so please don't blame us for milking it a bit.) 

The number of closed sales was consistent with recent years, the number of new listings was lower than last year, and inventory has crept up to a high for this time of year.

It's just the number of new deals/new escrows that lagged in Q3. 

There's time for the market to recover. In fact, there's a whole quarter. 

Sellers should probably take heed of how the wind's blowing, though, if they want to improve buyers' motivation.  

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