Here is a quick and straightforward look at what we see for the Redondo Beach real estate market in 2020. The local market remained steady in 2019, while still providing great opportunities for homeowners and investors alike. Home prices are still at an all-time high but have recently appreciated at a slower rate over the past 12 months. As we enter 2020 and a new decade altogether, it makes sense to wonder if the local real estate markets will continue to slow, and if there will still be good opportunities in the new year.
Current Conditions for the Redondo Beach Market
The median home value here in Redondo Beach is $1,035,000. From the beginning of 2019 to today (1/2/2020), local home values have risen 4.2%. This appreciation is lower than that of neighboring Manhattan Beach (8.3%) and Hermosa Beach (6.6%). Redondo Beach home values may be appreciating at a slightly slower rate than the values of homes in our bordering beach cities even though they are spending less time on the market. All indicators suggest that the current home sales market in our local area is moderate, but cooling.
The rental market in South Bay is stronger than ever due to the increasing unaffordability of homeownership in our beach cities. This trend favors wealthy investors in the area. The median rent price in Redondo Beach is $3,650 per month. Manhattan Beach has a median rent price of $7,000 and Hermosa Beach is at $5,900. The city of Torrance has a monthly median rent price of $3,200.
According to NeighborhoodScout.com, some of the highest home value appreciation for Redondo Beach is in areas around Grant Avenue & Inglewood Avenue as well as S. Pacific Coast Hwy & Topaz St.
Local, State, and National Factors That Will Affect the Redondo Beach Real Estate Market in 2020
With a strong and well established real estate market like the one we have in South Bay, there are few local and economic factors that would greatly swing things one way or another. The strength of our real estate market and home values is primarily tied to the availability of high paying jobs in Los Angeles County.
A few statewide and national factors are expected to come into play that may affect the landscape of local home sales in 2020 and beyond. With 2020 being an election year, there undoubtedly will be a portion of our local buyers and sellers that feel uncertain about the state of our economy based on how things shake out. These types of post-election trends are not usually sustained for more than four to six months.
One factor on a statewide level that is certain to have an impact on the Redondo Beach real estate market is the now effective (as of January 1st) Assembly Bill (AB1482) that provides ‘rent control’ standards for the entire state of California. This new ‘rent-control’ standard for multi-family units is sure to cause investors to reconsider whether to purchase more multi-unit rental properties or instead put their investments towards **single-family homes that don’t fall under the ‘rent control’ laws of AB1482. We expect to see very quickly how investors choose to behave in our local real estate markets in response to the new laws.
**SFRs under the ownership of a REIT (Real estate investment trust) or corporation or LLC, do fall under rent control under 1482.
Trends to Expect for Redondo Beach Homes Sales in 2020
Very rarely do things change “overnight” in any given real estate market. The housing bubble bursting in 2008 would be the most recent exception to that statement. There is no “bubble” to burst in 2020, although there are affordability challenges that face California residents that aspire to be homeowners. This challenge has been the main factor in the slowdown of our housing markets over the past year. Annual real estate appreciation has slowed along with the sales of new homes and resale homes.
Expect the same trends from 2019 to carry over into 2020 for our housing market in Redondo Beach and the South Bay area. We expect the annual appreciation of single-family homes to dip to around 3% this year. With things continuing to cool off, homes for sale in Redondo Beach will most likely take a little longer to sell than the current average of 50 days on the market (according to Zillow.com). By the end of 2020, the ‘days on market’ will most likely creep up to 60 days.
As mentioned previously, the now effective assembly bill that will impose rent control for Redondo Beach multi-unit rental will almost certainly have an impact. The sales of multi-unit properties will soften greatly during the first six months of this year as investors get their bearings on how the new rent control standards will affect their investments. Homebuyers should expect to have a little more competition from investor buyers when submitting offers on single-family homes.
Considering the current and forecasted trends, it is safe to say that overpriced homes will get even less interest this year. Fairly priced homes will still see a nice pool of interest from potential homebuyers. The decline of interest rates for borrowers will help to keep buyer interest high for appropriately priced homes.
One Bold Prediction for Redondo Beach Home Sales in 202o
We have laid out the trends of the previous year and what we expect throughout 2020. We want to take a bold step further and make a prediction for local real estate in 2020.
2019 was considered to be a ‘corrective’ or ‘normal’ market that would cool off the hot “seller’s market” that we had for the 2017 and 2018. This year will see buyers, sellers, and investors become closer aligned with perceived value. The usually hot spring market will be more mild than normal but will stay steady through the summer months as buyer confidence builds.
With mortgage rates predicted to remain low (according to bankrate.com), more millennial buyers will pursue homeownership as rent prices remain high. Mid-level markets in the South Bay will benefit from this influx of young buyers, will the beach cities will continue to level off into next year.
Tips for South Bay Buyers, Sellers, and Investors in 2020
One of the trends that we have seen over the past 12 months is that luxury markets are being affected the hardest. This will be no different in 2020. Homebuyers should continue to seek affordability in our surrounding mid-level markets and ‘up-and-coming’ areas. Cities such as Hawthorne, Torrance, and Carson will serve as the perfect markets for those wanting to stay near the beach and maintain a manageable monthly payment while taking advantage of historically low interest rates. Don’t be afraid to negotiate aggressively as these areas will still be favorable to buyer leverage.
It will become increasingly important for sellers in Redondo Beach and our surrounding areas to monitor home sales trends fluidly. Pricing and timing will be key in selling your home on terms that you are comfortable with. Sellers that are willing to negotiate aggressively will be best served in a market that is not soaring upward. Hire an experienced real estate agent that has worked in similar market conditions in order to help increase your buyer pool by making your home as attractive as possible to ‘well-leveraged’ buyers.
Not unlike home buyers, it will be important to focus on mid-level markets and to get fully educated about AB1482. If you are considering the purchase of multi-unit property for rentals, the controlled income potential versus the income potential of affordable single-family homes are will not be affected by AB1482. There may be an opportunity out there for those that are well-educated, and fully understand the new financial landscape of the local rental market.
There is an opportunity for everyone in 2020. Redondo Beach has a strong real estate market that will remain steady for the foreseeable future. We will see short-term trends in response to new rent control laws and election results but should see the year-end with a still strong and even more confident housing market. Educated home buying/selling participants that consider all options will be successful as we start off this new decade.