Manhattan Beach Housing Market: May 2010

Manhattan Beach housing prices are anything but clear. Over the last 3 months (from March 1st through May 31st), 113 homes have sold in the city of Manhattan Beach. These homes spent an average of 78 days on the market before closing, and median prices per square foot rose 9% year-over-year to $623.

Prices by neighborhood are all over the place, with the Village Section declining 23% at the same time Mira Costa Section jumped 28%. Given this high variability we need to dig deeper and analyze core prices, excluding closed sales whose prices exceed one standard deviation from the population mean. This is one way of gauging how the core of the market is trending without the effects of distressed property liquidations and the occasional mega-mansion sale that can easily skew statistics.

Despite a general increase in median prices since Q1 2009, we can see a corresponding negative trend in core prices over the same period. In particular, for both core and median prices, Q4 2009 marks a distinct decline in overall price levels.

Comparing To Zillow’s Home Value Index:

Zillow’s Home Value Index for Manhattan Beach shows a decrease in price per square foot of 9% year-over-year, and 14% in nominal home values. Zillow unambiguously believes the Manhattan Beach real estate market to be depreciating.

It is not clear how Zillow calculates its home values. Sales volume has historically varied drastically in Manhattan Beach, particularly because the market is relatively small compared to its municipal neighbors. Our calculations group sales data over the previous 3 months, so that we can compute moving averages and normalize for months of limited volume. Results can vary significantly depending on how you group data, or whether you calculate straight sales from month to month. We believe our methodology is most appropriate to the Manhattan Beach market.

Bull Market Or Bear Market?

Analyzing prices over the past year does not paint a clear picture on whether or not Manhattan Beach real estate is recovering. Results over the past 3 months by neighborhood are so mixed that definitive conclusions cannot be drawn. Instead, we should look to the longer term trend:

Both core and median prices are still well within the negative trends initiated in 2006, with median prices falling at a faster rate than core prices.

Given that both federal and State of California government housing bailout programs are ending, our best guess is that Manhattan Beach home prices will continue to trend downward along the same regression lines presented in the charts above:

Essentially, we are predicting home value decreases anywhere within the 4% to 9% range throughout the remainder of 2010. Until economic fundamental conditions improve we see no reason for Manhattan Beach real estate values to do break above the 2006-2010 downward trend.

For more in depth neighborhood analysis and commentary please visit our Market Stats page. You can also download our raw data set used for all calculations.

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