Are you wondering which beach city has seen the biggest rise in prices in the last 5 years? My first guess was going to be Manhattan Beach with all the news, reality show appearances, and athletes and celebrities moving to town recently. Well, I was wrong, Hermosa Beach, the once quiet little beach town has risen to the top of price appreciation since the market rebounded off the bottom in 2012. The median price for a single family home in Hermosa has risen 59% to $1.815m, while Manhattan Beach “only” saw a 47% increase to $2.15m. Redondo Beach was just behind Manhattan with a 46% rise to $1.273m over the same period.
Overall it has been a good 5 years for all real estate in the South Bay. If you have been a buyer sitting on the sidelines, you might not agree that it has been all good news, as your rents have likely risen over that same period, while the dream of owning your own little slice of beach real estate has grown dimmer. As a homeowner, you may be asking yourself how long this run can continue? After listening to the economists and financial experts, I have concluded that we still have some room to grow in the next 18 months. Beyond that, it’s anyone’s guess. It’s likely that we will see interest rates continue to rise over that same period, making it more expensive to own a home if you are not an all cash buyer. On the other hand, inventory still remains low with a 2 month supply, so sellers are still largely in command of the local housing market.
Where can a buyer find a deal? If you have been priced out of Hermosa or Manhattan Beach, the next best place to look if you want an ocean view or quick walk to the beach is going to be Redondo Beach. Redondo offers many options including more townhomes and smaller beach cottages. I expect the prices in Redondo to outpace its cousins to the the north over the next 18 months as buyers continue to spill-over to more affordable options. In addition, Redondo schools are continuing to rank highly so families looking for a solid public school option will naturally be attracted to areas with strong school districts like Redondo’s. El Segundo, Torrance, and Palos Verdes all offer great options as well depending on your budget and needs.
In general, it has been a great run for real estate over the last 3 1/2 years. History tells us these bull markets won’t go on forever, but I am optimistic that we still have more time left and that when the market turns, it won’t be as catastrophic as the last bear market.