As we welcome the new year, we can now take a complete look at what the real estate market did in Rancho Palos Verdes (RPV) for 2022. Last year we saw interest rates double and home prices actually did end lower than a year ago, but not before hitting new highs in the summer months! Although homes did not sell as fast as they were a few years ago, sellers are still moving, buyers are still looking to buy, and prices are still increasing in San Pedro. Read below for an in-depth look!
In 2022, interest rates increased tremendously, going from 3.2% in January to 6.5% or more by December. The increase caused many potential buyers’ estimated monthly payments to increase dramatically, in some cases so much so that they were forced to downsize their search or put their house hunt on hold. As a result, the drop in buyers caused properties to sit on the market for longer periods:
Interest rates, shown in red, began the year in the low 3% range, but quickly got to over 6%. Average Days on Market (DOM), which is the time a home sits on the market before being sold, started the year around 30 days and decreased to only 10 days in May. However, once the rates went above 5%, DOM began to increase steadily, increasing steadily as rates went above 6%. By December, DOM for homes sold was averaging over 50 days.
As mentioned previously, RPV saw home sale prices decrease for 2022. However, sale prices for homes sold at the beginning of the year and through August averaged above $1.9M, trending upwards as seen in the bar graph above. However, once the rates went above 5.5% the market struggled and prices began to drop.
Average sale prices for single-family homes and condos/townhomes in RPV have decreased slightly, but are still averaging well over $1.8M per unit since the beginning of 2022. See single-family and condo stats below for more details.
Single-family home sales in RPV were pretty consistent throughout 2022, though they were inevitably affected by rates. Although rates quickly went from 3 to 5 percent from March to May, the number of homes sold rarely dipped below 25 units per month until September, when rates went over 5.5%. DOM also stayed relatively steady, averaging about 20 days for much of the year until the last quarter, when DOM averaged 40+ days for sold homes!
Despite the increasing rates and DOM, average home prices remained steady, averaging about $2.050M through August. However, the last quarter saw a considerable drop in sale price and units sold.
Overall, single-family homes in RPV saw a slight decrease in sale prices for 2022, but look to be leveling off, with the average sold price in December 2022 coming in at $2,147,849.
The real estate market experienced a ‘soft decent’ for condos and townhomes in RPV for 2022. DOM was consistent, averaging around 20 days or so up until December when it shot up to 40 days. Similarly, the number of units sold stayed consistent, starting the year with about 10 units per month until rates went above 5%, significantly dampening the number of units sold. Again, you can see the bars in the “Count of Sale Price” column steadily decreasing as the year went on and rates continued to increase.
The most dramatic changes to price and DOM were again likely caused by a sharp change in interest rates. Months with lower rates sold the most units for the highest average prices. Also, the number of units sold dropped drastically when rates went above 5%. However, even when rates went above 6.5% in the last quarter of the year, condos were still selling relatively quickly, especially in October and November.
Similar to single-family homes, condos and townhouses in RPV saw a slight DECREASE in sale prices for 2022, with the average sold price in December coming in at $817,417.
Even with interest rates in the mid and high 6% range, buyer interest seems to be ramping up for 2023. Both condo and home sale prices are trending slightly downwards for RPV, but we expect to see them level off or even increase slightly as long as rates do not get overly volatile.
Buyers still have plenty of leverage to negotiate with in 2023. Asking for repairs, closing cost credits, and other items are much more likely to lead to concessions compared to only a year ago. There simply are not the same amount of buyers in the market today as there have been in recent years, so buyers have fewer buyers to compete with. The challenge will be committing to a property and coming to terms with a seller.
If you are selling in 2023, you can expect to be on the market for at least three to four weeks. Great listings will always sell fast, but every component must work in unison: presentation, price, and promotion. Even then, we are seeing some listings sit for several weeks, so patience is key. Although prices are increasing, be cautious when setting a price. It is important not to over-price in changing markets, such as the one we are in. The market can be intimidating to some buyers, and potentially scaring away the few that are left with a high sale price may not be a wise decision if you really need to sell. Properly presented listings will always command a higher sale price and sell faster than unprepared homes. In other words, this is not the market to cut corners! Make sure your home looks as good as it can if you are selling.
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