We enjoy this time of year for many reasons. It’s the perfect opportunity to reflect on the many things we have to be grateful for in our lives. It’s also an ideal time to reflect on the past year to gauge how we performed in various areas of our life, both personally and professionally. For us, it’s also an opportunity to look back at how our local real estate market performed the previous year and what we can expect in the upcoming year.
To give a broader historical picture of how our local market fared, we like to look back at the previous two years. According to local MLS statistics (2022 vs. 2021), there were 313 single-family residences sold in San Pedro compared to 411 sold in 2021 (-23.5%). The average sales price was $950,000 (+9.1%) with average days on market (DOM) of 11 vs. 10 days the year prior. In neighboring Rancho Palos Verdes, there were 360 SFR’s sold (-26.2%) with an average sales price of $1,858MM (+8.1%) and average DOM of 11 vs. 8 days the year prior. Overall, there were 3,603 SFR’s sold (-22.5%) in the Greater South Bay with an average sales price of $1,175MM (+16.8%) and average DOM of 10 vs. 8 days in 2021. The overall trend across the Greater South Bay was an increase in prices, substantially lower sales volume, and a slight increase in days on market.
Heading into 2023, we noted in last year’s annual review that “while sales volume is expected to continue to soften, housing prices in our local market should remain relatively stable to down slightly as long as people have jobs, the unemployment rate does not increase significantly, and inventory remains low.” The California Association of Realtors® also projected that “the average for 30-year, fixed mortgage interest rates should remain elevated at 6.6% in 2023, up from 5.2% in 2022 and from 3% in 2021.” Let’s examine how the year played out.
According to MLS statistics (2023 vs. 2022) at the time of our column submission (12/17/2023), there were 240 SFRs sold in San Pedro, which was down -19.5% (approx. 58 fewer homes) compared to the same period in 2022. The average sales price was $925,000, which decreased slightly (-3.1%) from the previous year. DOM remained similar at 12 days compared to 10 in 2022. In Rancho Palos Verdes, there were 277 homes sold, which was down (-21.8%) from 354 homes sold in 2022. Average sales prices declined slightly (-2.3%) from $1,858MM to $1,820MM in 2023. DOM went from 10 to 13 days in 2023. Overall, there were 2,941 SFR’s sold in the Greater South Bay, which was down (-16.2%) from 3,509 homes sold in 2022. The average sales price declined (-5.9%) from $1,185M to $1,115MM in 2023. DOM increased from 10 days to 13 days in 2023.
2023 played out as predicted with significantly lower sales volume and modest price softening. The tight inventory climate helped to keep housing prices stable. The biggest surprise were mortgage rates reaching nearly 8%, which was considerably higher than predicted.
What can we expect in 2024? The California Association of Realtors® projects “an increase in existing SFR home sales of +22.9% next year to reach 327,100 units, up from the projected 2023 sales figure of 266,200. The 2023 figure is -22.2% lower compared with the pace of 342,000 homes sold in 2022. The California median home price is forecast to rise +6.2% to $860,300 in 2024, following a projected -1.5% dip to $810,000 in 2023 from $822,300 in 2022. A persistent housing shortage and a competitive housing market will continue to put upward pressure on home prices next year. With the economy expected to soften in 2024, the Federal Reserve Bank will begin loosening its monetary policy next year. Mortgage rates will trend down throughout 2024, and the average 30-year fixed rate mortgage could reach the mid -5% range by the end of next year,” said C.A.R. Senior Vice President and Chief Economist Jordan Levine.
Housing supply will continue to remain tight in the Greater South Bay. With rates expected to decline, we anticipate local home prices to remain stable with modest increases next year. We look forward to keeping you informed in 2024. Wishing you all a Happy New Year!
Mike Harper and Peter Hazdovac are both licensed Realtors® and co-owners of HH Coastal Real Estate, an independent local brokerage. For more info, visit www.hhcoastal.com
