2019 Real Estate Market – Mid-Year Review
By Mike Harper & Peter Hazdovac
It seems like only yesterday we were sitting down to write our 2018 Real Estate Year in Review for the SPT. Believe it or not, we are nearing the close of summer and headed toward the tail end of 2019. Did we actually just write that! Yikes! With this in mind, we thought it would be helpful to give readers a mid-year review of our local real estate markets and take a closer look at how they compare to last year.
It’s no secret that our real estate markets have experienced a major comeback since the ultimate collapse of our financial markets in 2008 due to the failure of the largest financial institutions in the United States. At the end of 2018 we reported that home prices in San Pedro had reached all-time highs but that continued growth may be a challenge due to two primary factors: 1) Rising mortgage rates were anticipated to exceed 5% by the end of 2019 and, 2) Housing affordability was becoming a major concern.
In San Pedro through the first six months (Jan-June) of 2019, according to our local MLS statistics, there were 132 single-family residences (SFR) sold. This was 22% less than the 170 SFR sales during the same period the year prior. However, the average sales price for a SFR in San Pedro had increased by 1%, up from $703,000 to $707,000. Average Days on Market (DOM) had increased from 31 to 35 days (+11%).
In neighboring Rancho Palos Verdes there were 163 SFR’s sold in the first half of 2019, which was down 17% compared to the 196 sold during the same period in 2018. Average sales prices also dipped by 4% during the same period, from $1,610MM in 2018 to $1,544MM in 2019. Average DOM was at 47 days, which was a 6% increase from the year prior.
The South Bay as a whole saw the number of SFR sales decrease 7% during the first six months of the year from 2,006 in 2018 to 1,856 in 2019. However, the average sales price for a SFR increased 1.5% from $1.186MM to $1.203MM. Average DOM also increased 16% from 32 to 38 days during the first half of 2019.
What about mortgage rates? In our 2018 review we reported that mortgage rates had increased from 4% in 2017 to a high of 4.7% in 2018. The Chief Economist for the California Association or Realtors®, Leslie Appleton-Young, had projected mortgage rates rising to approx. 5.2% in 2019. So far that hasn’t happened. Freddie Mac recently released results of its Primary Mortgage Market Survey (PMMS) showing that the 30-year fixed-rate mortgage (FRM) rate averaged 3.6%, the lowest it has been since November of 2016. This has been the biggest surprise so far this year and has helped to propel our real estate market.
So what’s next? With current mortgage rates under 4%, unemployment decreasing and a continued high demand for housing in the South Bay, our local real estate market appears to be headed down a similar path to 2018.
We hope you have enjoyed reading our real estate column and are always looking for real estate related topics that interest the community. We appreciate any topic suggestions you may have for future columns. We would also like to open up future columns to a Q & A format from our readers looking for answers to their real estate questions. If you would like to participate, please e-mail your questions and/or suggestions to: Peter@hhcoastal.com. We look forward to hearing from you!
Mike Harper and Peter Hazdovac are both licensed Realtors® with Keller Williams Realty. For more info, visit www.hhcoastal.com