Happy New Year! With 2016 in the record books and the new year here, I would like to take this opportunity to thank you for your trust and confidence this past year. In many respects, 2016 was a year of great change. Donald Trump will soon be our president, the Dow is on the cusp of hitting 20,000, and the Cubs are World Series Champs (finally!). We said farewell to Mohamed Ali, Arnold Palmer, and John Glenn among many others; and Vin Scully called his last Dodgers game. On a personal level, I have joined the South Bay office of Teles Properties, the fastest growing real estate firm in California. As for real estate, the most significant change we saw was the ½ point jump in interest rates over the last 2 months. I’ve highlighted what we know from 2016, and where I think the real estate market is headed in 2017.
- The median South Bay/PV home price increased 6.7% year-over-year
- High end homes took longer to sell, while entry level homes in each neighborhood saw bidding wars
- Sales were up 3%, while inventory declined slightly
- On average, homes sold within 98.2% of the asking price
- 30 year mortgage rates are hovering around 4.375% (late-December)
We have enjoyed over a 40% increase in home prices over the last 4 years, especially at the median price level. While it’s hard to repeat that growth for the year ahead, here are my predictions:
- Overall 3-5% increase in home values throughout the South Bay and Palos Verdes
- Limited inventory continuing at entry level price points
- Rising inventory at the high end and slowly increasing in the median price ranges into the Summer months
- Buyer strength improving slightly with increases in inventory later in the year, but threatened by rising interest rates
- Investors will continue to add cash flowing assets as a hedge against inflation with a focus on properties with upside potential
- The Toyota Effect: many employees are making the move to Texas this summer and could increase inventory as a result, adding downward pressure on local prices
- Hot Neighborhoods for 2017: Valmonte and Lunada Bay, South Redondo Beach, West and South Torrance, Hermosa Hills, Walteria, Old Torrance, Hawthorne, and San Pedro (Vista del Oro, Miraleste Pines, Point Fermin, and South Shores)
Thanks to your business and support, we were able to contribute to the Palos Verdes Peninsula Land Conservancy, Habitat for Humanity LA, and several other local charities this year. We hope to continue to support these great organizations in the year ahead!
Here’s to a good start in 2017 and thank you for allowing me to be your real estate advisor.
Happy New Year, Kyle