Los Angeles County South Bay Beach Cities Real Estate $$$ Transacted for April 2008

By dollars transacted this is the weakest April market that the area has experienced in years.

This month, it appears to be Redondo Beach and Manhattan Beach that are the markets of the damned. On a purely raw dollar basis, Redondo Beach home sale dollar volume transacted in April 2008 is down -51.1% YOY, while for Manhattan Beach the number is -57.3%. Did one RB zip code hold up better than the other? Well, I guess it depends on whether you think that -35.9% YOY (north Redondo - 90278) is "doing better" than -66.4% YOY (south Redondo - 90277). Affluent buyers are snubbing these two cities and for the moment are turning their attention toward Hermosa Beach (90254), where dollar volume is up +34.9%, on a sales volume change of 18 properties in 2007 to 23 in 2008. El Segundo ends up being the winner among the weak markets, with dollar volume down "only" -14.9% YOY.

It's clear that the government supplied bong hits in the form of higher conforming loan limits and shameful FHA loan terms (which I call "subprime + 5%") have not yet shifted this market out of its slump in any meaningful way. There is a pulse, but not much else.

There is a large very old condo complex a few doors down from us, and I am amused to see what may be a price war developing between two different units for sale. One unit, #2, sold for $587,000 in July 2006. It was remodeled and last June (yes, almost a year ago) it was put on the market for $609,000. Its price history has subsequently been:

$599,000 08/14/07
$579,000 08/22/07
$569,000 09/23/07
$549,000 09/28/07
$539,000 10/08/07
$571,000 11/16/07
$550,000 12/03/07
$535,000 01/16/08

Then a few weeks ago a different unit in this same complex went up for sale with an asking price of $545,000. So #2 knocked down its asking price to $499,000. As my significant other said, "Maybe they will race to the bottom."

By the way, these units when they rent out typically go for about $2,300 a month. According to Zip Realty, an estimated mortgage payment right now for Unit #2 (which I don't think includes taxes and insurance) is $3,236 a month. Assuming rents provide a price support level, and that rents remain stable, I think either Unit #2 or other comparable units in this building would have to be selling around $276,000 before we see some sort of bottom in place. In other words, prices could drop by 45% (looking at the difference between $499,000 and $276,000) before rent-mortgage equilibrium is reached.

But I am more bearish than that. I think the rental market will eventually start to feel downward pressures as households either start doubling up in bloataminiums for rent or start living out of their SUVs or pack up and leave the area. I am more inclined to think the latter two options because renters who have been trying to avoid this whole market mess nevertheless have gotten caught up in it as their landlords have foreclosed on their properties - ultimately leaving renters homeless anyway. And if rents don't come down, I think that will motivate people even more to leave the area.

Most people don't know yet what it means to really cut back and alter one's lifestyle without resorting to piling up expenses on credit cards. They think that a recession means the gardener can only come once a month or you can only have your nails done once a month instead of twice a month because the cost of gasoline is higher. They are tweaking the edges of their lifestyle but still basically keeping the same lifestyle. When people finally switch over their brains and get into the expense-cutting zone and start taking a machete to the monthly expenditures and start seriously questioning everything, what they pay for rent will be one of the things they question. And it may mean they start thinking about leaving the area.

YOY Comparisons

These numbers are a YOY comparison of the doubly smooth moving average (not raw data) of dollar volume charts. I think of them as "recent pain" (or recent gain) indicators.

By the way, I am going strictly by the numbers MelissaData tells me. If anybody can enlighten me on sales volume in Playa Vista, please do so. Other than Playa Vista, everything else looks weak YOY.

90094         128.5% Playa Vista
90254          -5.2% Hermosa Beach
90501         -13.7% Torrance
90245         -14.6% El Segundo
90064         -16.1% Rancho Park/Cheviot Hills
90045         -17.4% Westchester
90034         -25.1% Palms
90292       -26.8% Marina del Rey
90275         -29.0% Palos Verdes Estates
90291         -32.7% Venice
90505         -33.3% Torrance
90504         -34.8% Torrance
90293         -35.8% Playa del Rey
90501-90505   -35.9% Torrance Combined
90401-90405   -38.1% Santa Monica combined
90066         -38.8% Mar Vista
90056         -40.3% Ladera Heights
90016         -40.9% West Adams
beach cities  -44.6% 4 Beach Cities combined
SW county     -45.1% Southwest L.A. County
90036         -45.8% Park La Brea
90035         -47.5% West Fairfax
90008         -47.6% Baldwin Hills / Leimart Park
90502         -47.6% Torrance
90277         -48.0% Redondo Beach (south)
90717         -49.1% Lomita
90732         -49.4% San Pedro/Rancho PV
90232         -51.0% Culver City
90277-90278   -53.0% Redondo Beach combined
90266         -54.4% Manhattan Beach
90302         -54.7% Inglewood
90249         -55.0% Gardena
90260         -55.0% Lawndale
90019         -55.9% Country Club Park/Mid City
90301         -55.9% Inglewood
90278         -56.2% Redondo Beach (north)
90230         -57.1% Culver City
90250         -57.5% Hawthorne
90746         -58.0% Carson
90043         -59.3% Hyde Park, Windsor Hills
90007         -59.4% South Central
90745         -60.2% Carson
90247         -62.7% Gardena
90503         -62.9% Torrance
90044         -63.5% Athens
90018         -64.3% Jefferson Park
90047         -66.6% South Central
90037         -67.9% South Central
90062         -68.6% South Central
90301-90305   -68.7% Inglewood/Lennox combined
90731         -70.1% San Pedro
90305         -75.1% Inglewood
90304         -80.3% Lennox
90303         -86.6% Inglewood
90744        -139.7% Wilmington

Relative Strength

This is a longer-term view of the strength of dollar volume in a given zip code. For this month 5.4 is the strongest (suffering the least amount of chronic pain) and -1.1 being the weakest (suffering the most chronic pain). Think of it is as the area above 0 on the YOY graph with the area below 0 of the YOY graph subtracted out.

90094        5.4 Playa Vista
90247        3.1 Gardena
90305        2.6 Inglewood
90034        1.7 Palms
90044        1.6 Athens
90292        1.4 Marina del Rey
90746        1.4 Carson
90047        0.9 South Central
90062        0.9 South Central
90301-90305  0.8 Inglewood/Lennox combined
90502        0.8 Torrance
90007        0.8 South Central
90304        0.8 Lennox
90018        0.7 Jefferson Park
90293        0.7 Playa del Rey
90016        0.7 West Adams
90501        0.7 Torrance
90301        0.7 Inglewood
90745        0.7 Carson
90250        0.6 Hawthorne
90302        0.6 Inglewood
90303        0.6 Inglewood
90732        0.6 San Pedro/Rancho PV
90064        0.5 Rancho Park/Cheviot Hills
90043        0.5 Hyde Park, Windsor Hills
90254        0.5 Hermosa Beach
90019        0.5 Country Club Park/Mid City
90037        0.5 South Central
90008        0.5 Baldwin Hills / Leimart Park
90291        0.4 Venice
90045        0.4 Westchester
90230        0.4 Culver City
90503        0.4 Torrance
90249        0.3 Gardena
90036        0.3 Park La Brea
90245        0.3 El Segundo
SW county    0.3 Southwest L.A. County
90501-90505  0.3 Torrance Combined
90260        0.3 Lawndale
90232        0.2 Culver City
90278        0.2 Redondo Beach (north)
90066        0.2 Mar Vista
90731        0.2 San Pedro
90505        0.2 Torrance
90401-90405  0.2 Santa Monica combined
90277-90278  0.1 Redondo Beach combined
beach cities 0.1 4 Beach Cities combined
90056        0.1 Ladera Heights
90035        0.1 West Fairfax
90266        0.1 Manhattan Beach
90717        0.1 Lomita
90277        0.1 Redondo Beach (south)
90504        0.0 Torrance
90275       -0.1 Palos Verdes Estates
90744       -1.1 Wilmington

The beach cities charts look as weak as those for SW Los Angeles County in general. It astounds me to read straight-faced press releases by local realtors suggesting that the beach cities markets are somehow immune to the problems besieging other areas. That is simply not true. While the bong hits may ultimately boost the local area in the coming months, underlying fundamental problems remain.

You can view home sale dollar volume history for a particular zip code through my regional tracker, and also my Google map tool.