Something's happening in the Sand Section this year, but what?
Half of Dave's sales for the first part of the year were in the Manhattan Beach Sand Section, with both buyer and seller clients. So we've had a front-row seat, of sorts.
There are inventory, sales and price issues to look at. We'll focus today…
Something's happening in the Sand Section this year, but what?
Half of Dave's sales for the first part of the year were in the Manhattan Beach Sand Section, with both buyer and seller clients. So we've had a front-row seat, of sorts.
There are inventory, sales and price issues to look at. We'll focus today on the data related to the first two.
Today won't be the first time we've referenced the problem of bulging inventory by the beach. But it's really notable in our chart here.
The data show a 2-year-long cycle with a much higher overhang of homes for sale in the Sand compared with the prior 3 years. (We're focused here on the first half of each year.)
As an example, in May 2017, inventory in the Sand Section hit 59 listings. Just 2 years prior, in 2015, it was at 17, making this year's total more than triple the inventory from that time.
Thankfully, that was just about the worst gap. Still, you do see inventory this year often running more than double, even two-and-a-half-times, the 2015 inventory levels. It has run three to four times the much lower levels from 2013-14 consistently.
We've been at or over 50 for several weeks. And this year has always had higher inventory levels than 2016, month by month.
So, what happens when there's too much inventory?
It certainly raises the risk of lower prices. If buyers have lots of choices, they'll be both choosier and more price-sensitive. Homes should take longer to sell, and go lower. A comparable home with a lower price will get the buyers first. A listing that gets stuck on the market can get caught in a bad cycle.
That's basic economics, and you do see evidence of softening prices around the Sand.
At the same time, there are some new record high sales at the higher end, and among newer homes. We'll take another look at prices in a separate post.
Something else can happen, too, with more inventory: More sales.
More choices, more sales.
With 50 sales in the first half of the year, 2017 had 10 more sales than last year.
We were more or less even with the sales pace in 2014-15, all around 50.
Of course, if you want to see really busy years, look at 2011-13, where the sales pace was 50% hotter. That was the "can't get enough of these hotcakes" period, right as the market was first taking off again.
Obviously, this year, the sales pace didn't grow enough to eat into the extra inventory, but we did better than last year, the first year of really swelling numbers of homes for sale in the Sand Section.
This is a long way of saying that demand has been strong and relatively normal in 2017, and better than last year. Imagine that: People want to move to the beach... at about the same pace each year.
Still, constant demand plus extra inventory isn't an optimistic formula for the Sand Section as a whole. Better to get in front of understanding that now, rather than being surprised.
As a buyer, you might look at the data and see the chance to make your best deal, wherever you're looking.
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Listings presented above are supplied via the MLS and are brokered by a variety of agents and firms, not Dave Fratello or Edge Real Estate Agency, unless so stated with the listing. Images and links to properties above lead to a full MLS display of information, including home details, lot size, all photos, and listing broker and agent information and contact information.