The real estate market activity for the Palos Verdes Peninsula continued to stabilize during the 3rd quarter 2011, with overall sales volume up about 6% and the inventory of homes for sale down 18% compared to the third quarter 2010 sales. Buyers who can get financing are actively looking and aggressively offering where they see a deal. Sellers who are motivated to move are pricing their homes to sell. Buyers are taking advantage of significant discounts and continuing record low interest rates.
Properties, on average, on the Palos Verdes Peninsula are selling for approx. 95% of list price. The average price per sq. ft. for Palos Verdes homes sold in the third quarter 2011 compared to the third quarter 2010, decreased approx. 4% overall, but varied city by city. Prices per sq. ft. are down approx. 18% on the Palos Verdes Peninsula from their peak in 2006. Prices in the South Bay, however, have decreased much less than other areas in Southern California due to the relative few number of foreclosures compared to other inland areas. This market is now considered a stabile market by loan underwriters.
The following is a chart of the sales price per sq. ft. for homes on the Palos Verdes Peninsula. Prices do seem to have stabilized. ( Note: I prefer to analyze average price per sq. ft. trends as the more often quoted “median” sales price is highly dependent on the mix of homes sold between less expensive homes and higher-end homes):
The following is a chart of the number of single family homes for sale, sold, and currently in escrow ( Pended) on the Palos Verdes Peninsula. The number of homes for sale on the Palos Verdes Peninsula is down approx. 8 % compared to this time last year. Sales volume appears to have stabilized however pending sales ( properties in escrow ) are up.
INVENTORY – The total inventory of single family homes for sale in the cities listed above is down approx. 25% compared to the prior year, the sales activity is up 6%, and there is only 4 months of inventory. For most of the last two decades, L.A. County has averaged an 8 month inventory. Homes in the lower end of the price range have also been selling faster than the higher priced homes.
FINANCING (See our web blog at http://mmegowan.activerain.com/ for rate updates):
Interest rates for Conforming Loans ($417,000 and below) are at approx. 4.4%, approx. .4% lower that at the end of last quarter. Rates for loans between $417,000 and $625,500 (conforming jumbos) are approx. 4.5% ( a reduction of about .4% from last quarter end. Conforming loans generally require a 20% down payment (less for FHA or VA loans). Interest rates on Jumbo 30 year fixed rate mortgages (loans in excess of $625,500) have an average rate of approx. 4.75%, a decrease of about .5% over the prior quarter. The spread in interest rates between conforming loans and jumbo loans has narrowed considerably over the last year or so as more banks are participating in making jumbo loans. Jumbo loans require a higher down payment of 25 to 30%. All rates above are APR rates as of 10/15/2011, and assume a 20% down payment, no points and a FICO score of at least 740.
Third Quarter 2011 Market Analysis for Palos Verdes Peninsula Condos and Townhomes
The average price per sq. ft. for townhomes and condos on the Palos Verdes Peninsula has fallen approx. 7% compared to the third quarter of last year. Prices in a few projects , such as the Palos Verdes Bay Club have fallen more than this. Pricing has improved for condos and townhomes during the third quarter of 2011 after dropping significantly during the prior quarter.
As far as picking up condos in this market for less than construction costs, the average price per sq. ft. paid recently for condos and townhomes in Palos Verdes has been approx. $327 per sq. ft. I would not consider this price to be significantly less than replacement cost including the cost of the land.
The following is a chart of Palos Verdes Peninsula condos and townhomes for sale and sold over the last year
The inventory of condos and townhomes for sale continues to fall dramatically from its peak in March 2011 ( a 37% decrease) and is 24% lower than a year ago. Sales volume is also 30% higher than last year, which has resulted in a reduction to only a 4 month inventory of condos and townhomes for sale.
I have been very involved in the condo and townhome market on the Palos Verdes Peninsula. You can see that by “Googling” the search term ” Palos Verdes Condos” and you will see that my website is the first listing on page one of the search results. To check out the various condo and townhome projects on the Palos Verdes Peninsula, see the following link on my website: PV Condos & Townhomes / Townhouses. Each of these project descriptions have an analysis of recent prices paid for sales in each project. You can also see the latest listings for condos and townhomes in Palos Verdes on my website at the following link: MLS Listings – South Bay and PV