The Year in Review
Introduction As 2024 comes to a close, it’s time to reflect on the trends, challenges, and successes that shaped the South Bay real estate market. From Manhattan Beach to Redondo Beach, the market remained dynamic, driven by the unique blend of high-end properties, a vibrant community, and a persistent demand for coastal living. Whether you’re a buyer, seller, or investor, understanding this year’s key market highlights can provide valuable insight as you plan for the year ahead.
Key Market Trends in 2024
- Inventory Levels: 2024 saw a slight uptick in inventory compared to 2023, giving buyers more options, particularly in the luxury market. However, demand remained high, keeping the market competitive.
- Example: Manhattan Beach saw an increase in new listings in Q2, providing more opportunities for buyers seeking ocean-view homes.
- Home Prices: Median home prices across the South Bay continued to hold strong. While the rate of appreciation slowed compared to the rapid gains of previous years, prices remained robust, particularly in sought-after neighborhoods like Hermosa Beach and the Tree Section of Manhattan Beach.
- Interest Rates: With interest rates hovering around 7% for much of the year, affordability became a greater concern for buyers. Despite this, cash buyers and those leveraging creative financing options remained active in the market.
- Luxury Market Activity: The demand for high-end properties—those priced above $3 million—remained steady, driven by a mix of local buyers and out-of-state transplants seeking the quintessential Southern California lifestyle.
Highlights by Neighborhood
- Manhattan Beach:
- The Strand properties continued to command premium prices, with several record-breaking sales this year.
- Family-friendly neighborhoods like the Sand Section saw high turnover as buyers prioritized proximity to schools and the beach.
- Data Highlight: The median home price in Manhattan Beach reached $3.7 million in 2024, with an average of 45 days on market. 303 homes were reported sold in Manhattan Beach in 2024. This does not include off-market activity, of which there were a great number of properties traded off the MLS.
- Redondo Beach:
- North Redondo’s townhomes remained a popular choice for young families and first-time buyers.
- South Redondo experienced an increase in demand for single-family homes, particularly those with ocean views.
- Data Highlight: Redondo Beach recorded over 569 home sales this year, with a median price of $1.6 million and average days on market at 34.
- Hermosa Beach:
- The real estate market here saw a mix of activity, with strong sales in both luxury homes and more affordable condos.
- Hermosa’s small-town vibe combined with easy access to beachside living continued to appeal to both young professionals and families. Homes in Hermosa Beach spent an average of 28 days on the market in 2024, reflecting strong demand and competitive conditions.
- 168 homes were reported sold in Hermosa Beach in 2024 (excluding off-market or “pocket” home sales). A typical Hermosa Beach home sale closed in an average of 36 days.
- Data Highlight: Median sales price in Hermosa Beach reached $2.6 million, with luxury homes exceeding $5 million in the highest-priced transactions.
- Palos Verdes Peninsula:
- Buyers were drawn to the expansive properties and top-rated schools, keeping the market competitive despite higher price points.
- Rolling Hills Estates saw several significant sales of equestrian properties, highlighting the area’s unique appeal.
- Data Highlight: the city of Palos Verdes Estates saw median home prices of $3.2 million across 144 home sales, with properties averaging 42 days on the market.
- San Pedro:
- Homes with ocean views performed the best in San Pedro, as San Pedro still saw large gains in equity for many homeowners. Properties that were great flip candidates were highly sought after.
- South Shores continues to report the highest price points with Vista Del Oro and the Palisades neighborhoods selling quickly and consistently averaging 34 days on market.
- Data Highlight: Market activity was high in San Pedro, resulting in 463 sales with an average price point of $865,000 and the high sale reporting at $2.8M.
Challenges Faced in 2024
- Affordability: Affording a home in Manhattan Beach in 2024 required a combination of high down payments, creative financing, and in many cases, significant equity from prior property sales. Buyers often leveraged strategies such as adjustable-rate mortgages or partnering with family for co-ownership to break into the market. The Klapper Group worked closely with clients to identify off-market opportunities, negotiate favorable terms, and utilize creative financing solutions such as temporary rate buydowns to make ownership more attainable.
- Remaining Competitive as Inventory Increases: Sellers in Manhattan Beach faced the challenge of standing out as inventory levels rose. The Klapper Group advised clients on strategic pricing, curated professional staging, and deployed high-impact marketing campaigns tailored to highlight unique property features. These efforts often resulted in quicker sales and strong offers, even in a more competitive environment.
- Low Days on Market: Homes in desirable neighborhoods often received multiple offers within days, making it difficult for buyers to compete without strong offers or cash. The Klapper Group helped buyers strengthen their positions by preparing pre-approval packages, identifying properties with fewer competing bids, and advising on escalation clauses where appropriate.
- Economic Uncertainty: While the South Bay remained resilient, broader concerns about inflation and economic stability led some buyers and sellers to adopt a wait-and-see approach. The Klapper Group provided clients with up-to-date market data and trend analyses, helping them make informed decisions despite uncertain conditions.
Opportunities Moving into 2025
- Projected Interest Rates: Experts anticipate that interest rates may stabilize or slightly decline in 2025, potentially ranging between 6% and 6.5%, offering some relief to buyers concerned about affordability.
- Home Appreciation Projections: While appreciation rates are expected to moderate further, South Bay properties are projected to see a steady 3-5% increase in value, driven by ongoing demand for coastal living and limited land availability.
- Increased Inventory: As inventory levels are expected to continue improving, buyers may find more options and slightly less competition.
- Creative Financing: From adjustable-rate mortgages to cash buyer programs, innovative solutions are helping buyers navigate affordability challenges.
- Down Payment Assistance Programs: Many first-time homeowners can take advantage of various down payment assistance programs to make homeownership more accessible. For example, the California Housing Finance Agency (CalHFA) offers programs like the MyHome Assistance Program, which provides deferred-payment loans for eligible first-time buyers. Additionally, local grants and programs like the South Bay City Housing Assistance initiative help bridge the affordability gap. Buyers should work with knowledgeable agents to identify programs that fit their unique circumstances.
- School Districts and Job Market: The highly-rated school districts in the South Bay, including Manhattan Beach Unified and Palos Verdes Peninsula Unified, continue to drive demand for family-friendly homes, insulating property values. Additionally, the strong local job market, bolstered by industries such as aerospace, technology, and entertainment, supports steady interest in the area’s housing market.
- Investment Potential: With rental demand remaining high, South Bay properties continue to offer excellent long-term investment opportunities, particularly in multi-family units.
- Will Prices Decline in 2025? While inventory is expected to rise further, experts predict only a slight cooling of prices in Manhattan Beach for 2025. Demand for coastal properties, paired with limited land availability, will likely insulate the area from significant price drops. However, buyers may find modest opportunities for negotiation in certain segments of the market.
The South Bay real estate market in 2024 demonstrated its enduring appeal, characterized by strong demand, vibrant community life, and a mix of opportunities across its diverse neighborhoods. While challenges like affordability and competitive conditions persisted, the market’s resilience remains a testament to the desirability of coastal living in Southern California.
As we head into 2025, whether you’re planning to buy, sell, or invest, having a knowledgeable and experienced real estate team by your side will be key. Let’s connect to discuss how the trends of 2024 and the 2025 market forecast can guide your real estate goals in the new year.