Over the last 8 weeks I have been watching the market like a hawk. One thing that continues to surprise me is the high end of the beach cities. Not only is it selling, but it’s selling surprisingly really well!
In this post I am referring to the “high end market” as anything that’s sold at $4,000,000 or above. Our local market tends to top out in the $7M-$8M range, but we do occasionally get sales above that, just not very many. However, there are more and more happening.
In 2019, during this same time period (March 15, 2019 – May 10, 2019) there were 8 sales in the “high end” and 7 of those sales were in Manhattan Beach. The average price of these homes was just under $7.5M.
In 2020, during the first 7 weeks of “stay at home” Corona virus (March 15, 2020 – May 10, 2020) there were 11 sales in the “high end” and 7 of those sales were in Manhattan beach (same as the year before) but the rest were in Hermosa Beach. The average sales price of these sales were just under $5.9M.
So what does this all mean?
To my surprise, the high market is not only still moving/selling, it’s out-performing (on a transaction basis) the market from the previous year when there was no economic effect by a virus like there is today. Not to mention, there are 11 pending sales in this category right now.
One thing it’s telling me is these buyers definitely seem to be buying for the long-term. They purchased this property not because it’s a good time, or a great deal, but because it’s hard to find. A lot of these sales are happening in A+ locations for their specific sub-market and those type of locations or lot sizes or opportunities in general don’t come up every day so these buyers are jumping on them regardless of the world we are in right now.
It also seems to signal that the upper economic class buyer doesn’t seem to be as affected financially as most people in this economic environment. They are willing to part with cash or take on a large debt for the opportunity to buy this property.
Lastly, debt (loans) are available to people. This is the biggest difference today versus the recession in 2008 when the housing market was in the tank and banks were on the verge of collapse. That’s just not the case this time around, and that’s why we are seeing more transactions in this class of property for this area.
Watching the high-end movement has been interesting, but I will continue to say that the true indicator of where the market is going is inventory, the amount of active homes for sale. We won’t see true distress in this market unless we see a lot more homes come on the market.
