Why South Bay Property Is Still a Smart Bet in 2025
In April 2025, the U.S. administration implemented sweeping tariffs on imported goods in an effort to bolster domestic manufacturing. While these moves may aim to strengthen the national economy, they also introduce new volatility into global markets. For high-end buyers and sellers in South Bay beach cities like Manhattan Beach, Hermosa Beach, and Redondo Beach, this raises important questions about where to put their money—and how to preserve long-term value.
The short answer? South Bay real estate continues to be one of the most resilient and strategically sound investments available, even when economic headlines get a little shaky.
Tariffs Are Driving Up Building Costs
New tariffs are hitting construction materials hard. According to the National Association of Home Builders, tariffs have added approximately $9,200 to the cost of constructing a new home. Lumber, steel, and aluminum are particularly affected. While Canadian lumber was recently exempt from the latest round of tariffs, it still faces a 14.5% duty from prior regulations. In a region like the South Bay—where custom new builds and luxury renovations are common—these increased costs can squeeze developer margins and raise the asking price of new homes.
Higher Prices, Less Inventory, and Stronger Demand
South Bay inventory has always been tight, and construction delays due to tariff-driven material shortages will only make that worse. Fewer homes on the market—especially newly built ones—means higher competition among buyers. This keeps prices strong and demand steady, even in uncertain times. For sellers, it’s an opportunity to list in a market that still heavily favors well-priced, well-presented homes.
Stock Market Slumps? Real Estate Stays Solid
Historically, when the stock market takes a dip, real estate becomes the safe haven. Why? Because it’s tangible. You can live in it, rent it, improve it, and sell it when the timing’s right. Even amid economic downturns, luxury real estate in high-demand, low-inventory areas like Manhattan Beach tends to hold its value far better than speculative stocks or volatile sectors.
That said, real estate isn’t immune to all downturns. During the 2008 financial crisis—driven largely by the collapse of the mortgage industry—real estate took a major hit across the country, including high-end areas. But that was an anomaly fueled by faulty lending practices and unchecked speculation.
In contrast, the 2020 COVID-19 pandemic saw stock markets plunge, while real estate—especially in lifestyle-rich suburbs and coastal cities—surged soon after. Historic lows in interest rates, combined with a renewed desire for space and flexibility, drove demand sharply upward.
Go further back to the dot-com crash of 2000–2001, and you’ll see that while tech stocks collapsed, many real estate markets stayed relatively stable. And during the inflationary period of the 1970s, home values rose dramatically, as housing was viewed as a hedge against inflation.
So, is real estate always a safe haven? Not always—but in low-inventory, high-demand, lifestyle-driven markets like the South Bay, it often proves to be one of the best places to preserve and grow wealth over time.
Investors and high-net-worth individuals often reallocate funds to real estate during times of global uncertainty. It’s not just about preserving value—it’s about diversifying in ways that feel rooted and strategic. And South Bay real estate checks all those boxes.
What Buyers and Sellers Should Do Now
For Buyers: While materials and mortgage markets may fluctuate, long-term value in beach cities remains strong. To navigate this market effectively, consider these smart buyer strategies:
- Secure Financing Early: Interest rates remain unpredictable. Get pre-approved before you shop, so you’re ready to act when the right property comes along.
- Think Long-Term: Don’t try to time the market—think in terms of where you’ll be in five to ten years. Equity builds over time, and coastal property tends to appreciate well.
- Know Your Micro-Market: The South Bay is full of pocket neighborhoods, each with its own character and pricing trends. Work with an agent who understands these nuances.
- Be Ready to Compete: Desirable homes in great school districts or walkable areas may still attract multiple offers. Be strategic and prepared to move fast.
- Factor in Renovation Costs: With tariffs increasing the price of materials, homes needing work might not offer the value they once did. Weigh the cost of upgrades realistically.
For Sellers: This is a great moment to list. Demand is high, and uncertainty in other markets may actually push more eyes toward real estate. But with the 2025 market already showing signs of shift—from wildfires to rising inventory—sellers need to be agile. Here’s how:
- Price with Precision: Overpricing is a fast track to long DOM (days on market). Use hyperlocal data and work with an agent who understands subtle shifts in neighborhood value.
- Highlight Energy Efficiency and Resiliency: Post-wildfire, buyers are more conscious of air quality systems, defensible landscaping, and insurance rates. Promote upgrades that support safety and sustainability.
- Stay Flexible: With higher mortgage rates affecting affordability, expect more negotiation around credits, repairs, and closing timelines. Go in with a collaborative mindset.
- Invest in Presentation: In a more competitive listing landscape, quality staging, lifestyle-driven photography, and standout listing copy are non-negotiable.
- Leverage Digital Strategy: Your agent should be targeting social media ads, video tours, and SEO-rich online listings. This isn’t the market for passive promotion.
Bottom Line
The world may be shifting, but real estate in South Bay remains a strategic and desirable investment. In times of economic noise, it’s the quiet strength of location, lifestyle, and long-term demand that wins out.
Looking to make your next move with clarity and confidence? The Klapper Group is here to help you navigate every step of the process—no matter what the headlines say.