Here’s a chart that shows monthly sales for 2011 compared to the 4-year average from 2007-11:

Breaking out median home prices for closed sales per Manhattan Beach neighborhood, or section:

Normalizing the same data by square footage for each property:

Here’s a summary of December, 2011 market stats for all Manhattan Beach 1-4 unit residential properties, including single family residences (SFR’s), townhouses, and condos:

Another way to look at the Manhattan Beach real estate market is to analyze each major neighborhood, or section, separately. Each neighborhood has its own micro-market, so let’s take a look at how they each fared independently.

Manhattan Beach Sand Section

The Sand Section consistently ranks as Manhattan Beach’s most expensive section. In December, 9 homes sold with a median price of $1,675,000, or $629 per square foot, for a total volume of $16,445,000. Listings that sold last month took an average of 119 days on market before closing. The most expensive home to sell in the Sand was a 3+ level, 4 bedroom, 6 bath,  Mediterranean style home with ocean and Catalina Island views at  416 10th St, which closed for $2,975,000. The least expensive Sand Section home sold last month was 527 24th St, which closed for $1,325,000.

Tree Section

Next in line for highest median home price is the Tree Section, which had 5 homes sell for a median price of $1,499,000, or $480 per square foot. Homes in the Tree section took, on average, 114 days on market before closing. The highest priced home to sell last month was 2909 Laurel Ave, which closed at $2,275,000 after 98 days on market. Sitting on a 5,406 square foot lot, this home was marketed as having the “charm and feel of a plantation home in the south.” On the low end of closed sales was 844 12th Ct, which closed at $1,150,000.

Mira Costa Section

Mira Costa had 7 homes close last month with a median price of $1,440,000, or $470 per square foot, and an average of 71 days on market. The big news for Mira Costa was 116 Terraza Pl closing for $4,900,000 after 164 cumulative days on market, and an original list price of $6,650,000. Click on the link above and check out the listings, it’s truly a remarkable home in Manhattan Beach’s “Mansion Area.”

On the other side of the spectrum, a more affordable entry level home at 1761 5th St closed for $805,000.

Manhattan Beach Heights / Liberty Village

Sliding further down the affordability scale, we come to Manhattan Beach Heights, and Liberty Village, which are traditionally lumped together for a single market area. December saw 3 homes sell in this section with a median home price of $865,000, or $470 per square foot. Home took, on average, 116 days on market before they closed. The most expensive home to sell here was 1900 Peck Ave for $1,190,000 – a single-story, traditional home built in 1964 with 2,530 square feet of living space, sitting on a 5,900 square foot lot.

And the winner for least expensive property in Manhattan Beach last month was an 852 square foot condo at 1311 Manhattan Beach Blvd, which closed for $374,000.

Manhattan Village

The Planned Urban Development (PUD) community of Manhattan Village only saw 1 closed sale in December with 1 Evergreen Lane selling for $1,240,000. This beautiful two-level Cape Cod style home built in 1985 has 4 bedrooms, 2 1/2 baths, 2,310 square feet of living area, and sits on a 3,674 square foot lot.

With the last month of the year closed out, we can look back and see that 2011 was a solid, healthy year for the Manhattan Beach real estate market. Prices remained flat, but sales volume increased over the last 4-year average. Let’s see what 2012 brings…

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The total income of the top 1%—or those earning more than $343,000 in 2009—fell by more than 30% from 2007, according to the most recent Internal Revenue Service data. By contrast, the average income of the bottom 90% fell less than 3% during the same period.

The article goes on to cite a study by Jonathan A. Parker and Annette Vissing-Jorgensen of Northwestern University that found that “the beta of the top 1% nearly quadrupled between 1982 and 2007 to 2.39. The top 0.01% had a beta of 3.96, making even the riskiest tech stocks look safe by comparison.”

What this means is that for every 1% fall in the stock market, the richest Americans are seeing a 4% drop in their net worth!

Couple this with a study I published in July on “How Stocks Effect Manhattan Beach Home Prices,” in which I showed that Manhattan Beach home values are 33.3% correlated to the S&P 500, compared to 18.3% for the rest of Los Angeles, and 4.3% for the national market.

The big take away is that wealth is not a guaranteed phenomenon, and affluent Americans are less secure as they increase their portfolios’ risk levels.

Given that Manhattan Beach home values are 670% more correlated to the stock market than national home prices, residents here should adjust their other financial holdings accordingly to account for elevated risk to local real estate exposure.

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The 25 homes closed in November pushed sales volume 16 per cent higher than the last four year November average. Median sales price came in at $1,237,500, which is an 8 per cent jump over October. Here’s a snapshot of monthly sales volume over the last four years:

Here’s a breakout of stats by section:

While it’s still too early to call this a rebound, I’m going to venture to call a bottom to our market. Prices have stabilized, and volume is better than average.

Seasonality of real estate means we likely won’t see appreciable growth in the Manhattan Beach market until Q2 2012, but the worst is behind us.

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Of the 23 sales last month, 15 were single family residences (SFR’s), and 8 were townhouses. Total market median sales price was $1.3 million, compared to $1.15 million last month, and $1.355 million in August. Median price per square foot went up to $612 from a $576 the previous month.

One item of interest is that the homes sold in October were on the market for considerably longer than the homes sold in September, average days on market shooting up to 105 compared to 74 the previous month. Overall, and despite slowing activity compared to the summer, October was a relatively healthy month with longer standing inventory finally clearing, and median prices edging up.

A quick plot of October median home prices by section shows a typical neighborhood profile, with the Sand Section taking the lead, followed by the Tree and Hill sections. Typically, Hill Section homes have higher values than Tree, but we only had one Hill sale in October, so the data is not fully representative of relative section values in that respect.

Another look at prices by square foot:

Looking at the median home price data by square foot helps normalize for better comparison of relative value. In October, the Hill sale came in at a higher price per square foot than the median Sand data. Hill and Sand sections sometimes swap for the #1 priciest location spot, but it’s rare for the ocean views and bigger lots in the Hill to overtake actually being on the ocean in the Sand.

Notable October Sales

2504 The Strand was the big deal of the month, closing at $5,150,000. This contemporary, 3+ level, Strand home is the epitome of Manhattan Beach living. Three ocean-side decks with views from Malibu to Catalina are enough to make any buyer salivate, but the price came down significantly off the original high of $7,190,000 when it was listed in March.

On the low end of the spectrum, 1131 22nd St closed for $600,793, or $350 a square foot. This home is an older short sale that closed after 10 days of being listed for an original amount of $775,000.

Coming Soon to SoCalREA

The only path to improvement is critical self evaluation. On that measure, the monthly market statistics presented on this site can be significantly improved by incorporating time series data, trends over time, and computing moving averages. We’re working on new data analysis to be presented over the next month that should provide much more insight to residents and prospective buyers in all of the Manhattan Beach neighborhoods.

Any and all suggestions are welcome, so please feel free to contact us with any requests on data, or new analysis you’d like to see!

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Take a look at 2011 market activity versus average volume over the last four years:

Sales volume falling below the September monthly average doesn’t, of itself, speak to market weakness. Market activity fluctuates, so a single month falling below an arbitrary benchmark should not raise too many alarms.

What’s troubling is sitting in open houses every weekend, and talking to prospective buyers as they come through what are gorgeous homes selling at prices below what recent closed stats would indicate are “fair” market values. Offers just aren’t coming in at anywhere near what even the most experienced agents in my brokerage would expect.

Searching the MLS for price reductions relative to total listing volume showed that 71 of the 130 active Manhattan Beach residential listings in September showed price reductions. That means that 55% of Manhattan Beach homes came down in price because they weren’t selling.

Manhattan Beach homes are also staying on market for almost a week longer this month compared to last, with cumulative days on market moving up to 74 from 69 as reported in August.

Here’s a look at market volume by section:

Manhattan Beach median home prices came in 15.1% lower than August, showing a value of $1.150m ($575.74 a square foot) versus $1.355m last month. With relatively low volume, these numbers, of themselves, should not be taken definitively to mean that prices are crashing in Manhattan Beach. However, they are indicative that lower value homes are the ones closing, while more expensive inventory remains on market longer. To show a conclusive value reduction for the Manhattan Beach market, we’d have to either do a multi-month moving average calculation, or a housing pair algorithm akin to the Case-Shiller Housing Index.

Since the Manhattan Beach real estate market is relatively complex, we can’t just aggregate all the stats and leave it at that. Let’s dig deeper into each of the 5 major sections:

Sand Section Shocker

The biggest surprise in September was that Sand Section SFR median home prices dropped to $1,388,500, or $629 a square foot. That’s coming off a median of $2.6m in August, and $852 a square foot. Half of the 8 Sand Section SFR’s sold in less than 52 days on market (DOM), for a total market volume of  $13.6 million. Sellers priced their properties somewhat near market, with average sale-to-list of 97.3%, or 93.1% from original list prices.

The best Sand story was a probate listing at 526 W 23rd St that was put on the market for $900,000, but sold for 117% of list price, or $1,050,000. And the Best Negotiating Award goes to the buyer of 1900 Highland Ave, paying only 87% of final list price, which was 20% off the original list ($1.125m closed on an original of $1.4m).

2211 Bayview Dr was the one Sand Section townhouse sale in September, settling at a respectable $2.065m ($776 sqft).

Tree Section For Under A Million

A funny thing happened in the Tree Section last month: About half of the 11 homes closing in September sold for less than $900k! Median sale price actually came in at the lowest I’ve ever seen it – $905k. The saving grace for the Trees is that the median price per square foot came in at a relative high of $750. Half of the homes in this section sold in less than 69 days, and buyers were able to shave off about 4% in negotiations.

The priciest Tree Section home was 1816 Palm Ave that closed at $2.181m, while the least expensive deal came from a 1950′s, 874 sqft, cottage at 730 Rosecrans Ave that sold for $671k.

Hill Section Route

Bloody September took a toll on the Hill Section, with only 3 sales, 1 of which was a townhouse. The stats look terrible: Median SFR price was a paltry $1,674m, or $472 sqft; compare this to August where median sales price was $2.4m ($578 sqft). What killed it was 707 Anderson St, which sold for under $400 sqft at $1.500m after 163 DOM. The lone townhouse that sold at 513 11th Pl for $1.243m ($698 sqft) helped boost Hill Section price per square foot, but couldn’t do much for the overall median home price.

Not surprisingly, 11 of the 13 Hill Section active listings are priced over $2.000m, 8 being at, or above $3.000m – higher end homes just aren’t moving!

Mira Costa Priced Right

Sales volume in the Mira Costa section for SFR’s held completely flat at $8.900m, median home price of $1.235m moved up 5.1% over August,  and half of homes sold in under 42 DOM for less than 2% off of asking price, on average. In terms of market efficiency, Mira Costa came closest to matching homeowner and buyer expectations. With 14 SFR’s, townhouses, and condos still active in the section, September’s 8 sales gives Mira Costa an inventory turnover ratio of about 36%.

Mira Costa shows the same trend of lower priced homes doing better than the higher end of the market. 1420 11th was a probate sale that closed 7% above list price for $854k, the lowest priced SFR closed in Mira Costa last month. On the other side of the spectrum, the highest priced home closed was 1401 2nd St for $1.800m after just over two months on market.

Let’s Not Forget Manhattan Village

Manhattan Beach has a beautiful Planned Urban Development (PUD) community in Manhattan Village, where 3 homes sold last month – 2 being townhouses, the other a SFR. Combined sales volume was $2.337m with a median price of $765k, or $491 sqft. With an average DOM of 128, these homes stayed on market longer than the rest of Manhattan Beach (avg DOM of 74). Homes were priced about right with sales prices coming in, on average, less than 4% of the original list prices.

The lone SFR was a bungalow that sold for $836.5k at 1204 Harness St.

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Here’s a look at historical sales by month over the last 5 years to show how the market fared in August comparatively:

While still off the hot sales volume seen in 2008, current action is well above 2007 lows for August, and well within range of “normal” over the last 5 years.

Here’s a look at median home prices per section in August:

Manhattan Beach Sand Section

The Sand Section came in with the highest dollar sales volume with $27.2 million in closed sales. 5 of those sales, or $9.2 million worth, were townhouses, and 6 were SFR’s for a combined $18 million. Median sale price for SFR’s in the Sand Section was $2.6 million, or $852 per square foot. Sand Section townhouses sold for a median of $1.5 million, or $837 per square foot.

At $7.8 million, 2908 The Strand was the most expensive home sold in August. With 5 bedrooms, 5 baths, and a “white water” view on The Strand, this 4,142 square foot home tops the sales charts with a whopping $1,883 per square foot sell price. For contrast, 217 Seaview came in a the low end of Sand Section sales, with a $900,000 ($647 per square foot) final close as a bank REO.

Manhattan Beach Tree Section

The Tree Section is a Manhattan Beach Realtor’s bread & butter. Most closed sales come from the Tree Section, which sported 13 SFR sales in August, or 32% of the market. Median sale price was $1,244,000 ($622 per square foot), and prices ranged as high as $4.7 million for 533 15th St. Manhattan Beach Confidential wrote up a great summary of this house that they say “could give a pulse to a dead man.” The $887 per square foot sale price-nearly double what you’d expect in the Tree Section-illustrates how there are high variances even within neighborhoods! The American Martyrs neighborhood stands out as one of the Tree Section’s most sought after.

Manhattan Beach Hill Section

The Hill Section has the second highest median sale price at $2,400,000, and an unusual (for the Hill Section) median sale price per square foot in August of $578. Only 3 homes sold in August in the Hill Section, which explains the unusual price statistics. The most expensive of the 3 sales was 907 9th St, a 6 bed / 5 bath home sitting on a 7,500 square foot lot that sold for $3,254,000 ($578 per square foot). On the low end of the Hill sales (if you can call it “low end”) was 910 2nd St, a 5 bed / 4 bath French style two-level home that sold for $2,150,000 ($639 a square foot).

Manhattan Beach Mira Costa

With 8 closed sales and $8.9 million in volume, Mira Costa ranks the third most active Manhattan Beach neighborhood in August. Median sales price was $1,175,000, or $527 a square foot. 1616 Gates Ave ranked as the most expensive hold sold in Mira Costa with a closing price of $2,200,000 ($432 per square foot) for 5 bed/5.5 bath build on a 7,500 square foot lot. The least expensive Mira Costa home sold in August was 460 Chabela Dr for $825,000 ($527 per square foot), a 1955 construction, single level, 3 bed / 1.75 bath “charmer” with what is called a “Peek-A-Boo” view.

Manhattan Beach Heights / Liberty Village Section

There were 4 townhouses sold in Manhattan Village, and 1 SFR sold in Liberty Village for a combined sales volume of $4,403,000, or 13% of the overall market. 1412 Wendy Way was the Liberty Village SFR, with a sale price of $1,055,000 ($301 a square foot). Despite the relatively low price per square foot, this home is one of the section’s newer models, a two-level Mediterranean style home built in 2005. 4 bedrooms, 3.25 baths, and 3,509 square foot structure sit on a relatively large 5,544 square foot lot. 17 Marin Ct fell on the low end of the Manhattan Village market, selling for $690,000 ($471 a square foot) in a gated PUD community.

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So far, so good! Sales volume in dollar terms, and the number of transactions is still well within healthy range, and prices appear to be stable.

Manhattan Beach Home Prices

Zillow charts show a general snapshot of where we stand – nominal median home prices, and median home price per square foot, have nudged higher over the last year.

Mid-August Market Conditions

Over the last month there have been 29 closed single family residence sales worth just over $50 million. The median sale price was $1,410,500, median price per square foot was $646, for an average days on market (DOM) of 92. Here’s a breakdown of sales volume by Manhattan Beach Section:

Median home prices by section:

Looking at the sales data from a price per square foot perspective:

Manhattan Beach Tree Section

The Tree Section was the heavy hitting neighborhood, accounting for 44% of sales volume. The Tree Section had 14 of the City’s 29 sales, with a median sale price of $1,117,500, and a corresponding price per square foot of $635.

The most expensive home sold was 533 15th St for $4,700,000 ($887/SQFT), while 2504 Oak Ave qualified as the least expensive home sold in Manhattan Beach for only $729,000.

Manhattan Beach Sand Section

The Sand Section wins the honor of having the highest price per square foot, $811. Six homes sold in the Sand Section over the last month with a median sales price of $1,987,500. The highest sold price was for 133 6th St for $3,100,000, while the lowest priced Sand Section home closed was a bank owned REO listed at 217 Seaview St that sold for $900,000.

Manhattan Beach Hill Section

Only three homes sold in the Hill Section in the last month, but that was for a relatively high median price of $2,810,000, or $639 per square foot. The highest priced sale was for 907 9th St for $3,254,000, while the least expensive closed sale was 910 2nd St for $2,150,000.

Mira Costa

Four homes sold in Mira Costa for a median sale price of $1,492,750 and a price per square foot of $436. The winner for most expensive closed sale was 1616 Gates Ave for $2,200,000, while 1441 10th St closed for the lowest price at $1,175,000.

Manhattan Beach Heights / Liberty Village Section

Two homes sold in the Manhattan Beach Heights/Liberty Village Section with a median sale price of $922,500, and $485 per square foot. The highest closed price was $1,055,000 for 1412 Wendy Way by Aviation Park, and the lowest closed price was for 2205 Lynngrove Dr at $790,000.

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Here’s a snapshot of how inventory is split between Manhattan Beach’s real estate sections:

Manhattan Beach Sand Section

The sand section, by far, accounts for the bulk of Manhattan Beach real estate listing volume-34 homes for sale, which represents 49 percent of listing dollar volume at $124,500,000. The median listing price for the Sand Section is $2,499,500 with a corresponding price per square foot of $867.

The most expensive listing in the Sand Section is 2020 The Strand, priced at $27,000,000. If the price looks a bit steep, have no fear-the price also includes 2016 The Strand! 2020 The Strand is a corner lot, which the listing agent is suggesting would make a grand palace if the two homes were bought, demolished, and the lots combined. It’s good to have vision! Notably, these lots have 66 feet of Strand real estate.

On the other side of the spectrum, the lowest priced home for sale in the Sand Section is at 462 36th Pl, listed for $898,350. The home is on the northeast corner of the Sand Section, just off Rosecrans, close enough to the beach to qualify for having an ocean view. Boasting $150,000 of recent upgrades, this property is trading for $749 per square foot-well below the median price per square foot for Sand Section listings.

Manhattan Beach Tree Section

The Tree Section is Manhattan Beach’s second largest sales area (24% of market), with 39 homes selling for a total listing volume of $60,879,700. The median list price is $1,575,000, with a corresponding price per square foot of $593. The highest price Tree Section home is 927 27th St, priced at $2,875,000 ($679 per SQFT), while the lowest priced listing is at 2702 N Ardmore Ave for $665,000.

Manhattan Beach Hill Section

The Hill Section has the second highest median price per square foot ($748), as well as the second highest median list price ($2,799,000). Hill Section listings comprise 12% of the Manhattan Beach inventory by dollar volume, which comes to $30,358,000. On the high end you’ve got 704 Pacific Ave listed for $4,895,000; and on the low end there’s 604 Manhattan Beach Blvd listed for $1,195,000.

Mira Costa Section

Mira Costa is among the big four Manhattan Beach neighborhoods, with total inventory dollar value of $31,726,000, and a median listing price of $1,224,475 ($616 per square foot). There are currently 20 homes for sale in Mira Costa, with the highest being the mini-palace of 116 Terraza Pl. Here’s an excerpt from the listing:

Accessed from a tree lined winding road,this private and gated Manhattan Beach estate rests on over a half acre of land.Newly built,this 10,428sqft home is truly one of a kind in the beach cities.Unmatched in size and quality,this 7 bed 10 bath home was built with the finest attention to detail.From the groin vaulted ceilings to the window wall made up of exterior bi fold doors,this Mediterranean inspired home will captivate you immediately.

Not surprisingly, the home has “everything a buyer could want!” But on the surprising side of the ledger, this incredible listing is on the market for only $575 per square foot, which is well below the $616 price per square foot median for Mira Costa.

On the low end of the Mira Costa section there’s 313 S Aviation Blvd priced at $649,900 ($730 per square foot).

Manhattan Beach Village & Liberty Heights

Manhattan Beach Village and Liberty Heights Section has 6 homes listed for sale for a combined dollar volume of $6,158,000. The most expensive home is listed for $1,415,000 at 1600 23rd St, while the least expensive is listed for $790,000 at 1630 22nd.

Manhattan Village Section

The least active section of the Manhattan Beach real estate market is the Village Section with one short sale listing for $1,350,000 at 29 Village Circle.

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The new Obamacare tax will add 3.8% to capital gains over $500,000 for married couples, and $250,000 for singles. Speaking to the class warfare support base President Obama was targeting with the PPACA, this new tax will only apply to couples making over $250,000 a year, and individuals making over $200,000 in adjusted gross income. There are many more poor voters than wealthy ones!

Manhattan Beach has a median household income of $107,750, compared to the rest of Los Angeles County, which is around $48,000. At least half of the residents here don’t have to worry about the new tax, but there are many families that fall into the income brackets targeted by Obamacare.

The median home price in Manhattan Beach is currently $1,148,600, but many homes sell for significantly more than that. But despite high property values, the new tax only applies to capital gains. With the median sale price sitting at only 65 per cent of where it was at the peak of the Manhattan Beach bull market in November of 2008, it’s not likely that there are too many residents with more than $500,000 (or $250,000) in capital gains.

Let’s run through an example to illustrate how the new tax would play out. 222 17th Street is roughly 550 feet from the beach, and about a third of a mile from the Manhattan Beach pier. The location is incredible, and the home, itself, gorgeous. The home sold earlier this month for $4,653,000, with the previous owners selling for $3,705,000 in March, 2007. We’ll assume the seller makes enough income to qualify for the new Obamacare tax.

Obamacare’s toll in this scenario is between $17,000 and $27,000, depending on whether or not the seller is a family man, or a bachelor. To calculate the new tax, we subtract the old sell price from the new to come up with the capital gain, remove the first $500,000 or $250,000, and apply 3.8 percent to the remaining balance. What this really equates to is 1.8% or 2.8% of your equity gain. So despite a bit of public angst over the new Obamacare tax on real estate, the net effect will not be devastating for Manhattan Beach. We have higher than average household incomes, and higher than average home values, but few asset purchase decisions are swayed by a worst case tax burden of 3 percent.

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Simply eye-balling a ten year chart of Manhattan Beach median home prices per square foot and S&P 500 prices isn’t clear one way or another. The period from 1996 to 2007 showed almost constant growth in Manhattan Beach median home prices, while the stock market saw a sharp rise, then crash with the dot-com bust, followed by another relatively sharp rise from 2002 to 2007.

The financial method for measuring sensitivity of one asset to another is to calculate the “beta” of that asset to the benchmark against which you’re comparing. Here’s how beta is calculated:

The subscripts, “a” and “p” reference the “asset” and the “portfolio” against which you’re measuring. In our case, “a” is for Manhattan Beach median home prices, and “p” is for dividend-adjusted S&P stock market prices. Home prices were sourced from Zillow.com and S&P 500 data was sourced from Yahoo Finance, all data being monthly and spanning the last 10-years.

It turns out that home prices, in general, are not very sensitive to stocks. U.S. home prices have a beta of 0.04, meaning they only move about 4.3% with stocks. Los Angeles home prices, on the other hand, show significantly higher stock market correlation, with a beta of 0.18. Manhattan Beach home prices blow both out of the water, with a beta of 0.33!

To keep things in perspective, a beta of 0.33 isn’t earth shattering. It means that for every 1% move in stocks you’ll see, on average, a corresponding 0.33% move in Manhattan Beach median home prices. What’s interesting is how that compares to Los Angeles and to national home prices:

My guess is that Manhattan Beach is more sensitive to the stock market because residents here hold more financial assets, which makes net worth more sensitive to stocks. Los Angeles does significantly better than the broader U.S. market, but still comes in at only about half of Manhattan Beach.

If this relationship continues, we can expect home prices to take a turn for the better in the near future, given a sustained, sharp stock rally off the 2009 lows. Manhattan Beach residents and potential buyers in the area have surely seen their fortunes rise with the market. It’s only a matter of time before that wealth effect overflows into Manhattan Beach real estate.

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