Palos Verdes Area Market Outlook/Forecast


On Tuesday, I attended a presentation by Robert A. Kleinhenz, Deputy Chief Economist for the Callifornia Association of Realtors, to hear the forecast for Palos Verdes real estate. Although, Kleinhenz did not have information specific to Palos Verdes (because we need a minimum of 30 sales per month for their formulas), the Market Outlook was a good perspective on our overall economy nationally, statewide and then specifically the Los Angeles area. Please click on this link to view the entire Outlook/Forecast.

Here are some highlights: The real estate decline in the 1990s was due to economic reasons. Currently it is due to financial reasons. Unemployment for California in 2008 is estimated to be 6.5% with the largest losses in construction, financing and real estate; other sectors are showing growth. 2007 was the trough for real estate sales in California (-44%); the projection is a 12% gain in 2008 with a 31% decline in median price. Median price declines because low end sales were 76% of 2008 sales. High end sales which require jumbo loans have been difficult to get. “Lenders have cold feet and they are not lending”. For the last 40 years, average real estate appreciation is 12% when held for 5 years (see chart above).

The biggest takeaway for most of us was that the Palos Verdes Peninsula market is so unique that buyers who are looking at cold statistics cannot get an accurate assessment of our market by themselves. Buyers coming into the area who have read statewide or countywide statistics are unprepared for the “cold shoulder” they receive from sellers receiving their low offers. There are 4 different cities on the Peninsula, each with different areas and distinctive neighborhoods. Within those neighborhoods, some homes are new, some have views, some are on large lots, some have pools, etc. It is impossible to successfully use just square foot prices, or average/median prices. Buyers need a local Realtor to accurately interpret all the data and assist them in determining a market price for homes they are considering purchasing.

Chart courtesy of California Association of Realtors

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One thought on “Palos Verdes Area Market Outlook/Forecast”

  • Robin Fenchel

    Elaine: You gave an excellent summary of your local and “unique” real estate market conditions in your area of real estate expertise, i.e., Palos Verdes Real Estate. Buyers and sellers tend to hear/read about the “macro” real estate conditions and numbers from the mass media and input this information into their local real estate markets. The local or “micro” housing markets may be experiencing quite different numbers–often better than the national/regional/city figures indicate. Focussing in on specific neighborhoods within a zip code may render different statistics as you very aptly describe. As realtors immersed in the local real estate markets in which we live and serve, we are much closer to and aware of the details impacting the sales in the neighborhoods on which we focus and offer buyers and sellers specfics on the sales that are occuring in real time.

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