Rancho Palos Verdes, CA

Rancho Palos Verdes Crest Home Sales in 2009

Rancho Palos Verdes homes in the Crest area are coming off a pretty strong year last year given the conditions of the economy and the financial markets. The number of single family home sales rose last year and did so with a median price just shy of the 2008 median price. This would be evidence that the home values here have seen the end of the more difficult days and is climbing back up, but recent sales suggest that pricing is at risk of dropping as we move forward in 2010.

Though there has only been one closed sale this past month, five properties are currently in the escrow process. So sales appear to be moving along at a solid pace. The challenges is that four of the five escrow homes are listed for under $1,000,000. It may be a while before the median price finally settles down.

Most Rancho Palos Verdes homes have been around for a while. In 2008, not one home sold was built after 1980. Last year, all of the single family home sales were built before 1970. The same is true for all of the homes in escrow. So the age of home does not appear to be a factor with respect to price variances from year-to-year.

The real test will be in the current inventory of unsold single family homes here. There are only two. This is the equivalent of a month’s inventory. It is hard to believe that there are so few homes available for sale in the Crest area of Rancho Palos Verdes, but this is the reality here. Sellers may be reticent to list at this time when the sales prices appear to be falling back a bit.

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Rancho Palos Verdes Los Verdes Home Sales in 2009

One of the older, more established areas within Rancho Palos Verdes is referred to as Los Verdes. The sales of single family Los Verdes homes jumped to 30 last year, up from 25 the year before. The median sales price, on the other hand, declined to just under $1,000,000, the first time since 2004. From 2005 through 2008, the median price has been fluctuating between $1,050,000 to $1,133,000, which is a pretty tight range given what happened to the capital markets in late 2007. The recent drop in price appears to not be related to the age of the homes selling here. It turns out that all homes sold in the last two years were built before 1973. Recent sales activity suggests that the number of homes sold may keep rising, but that the median price may continue to drop.

There have been three escrow closings this year-to-date, which is a healthy pace for the year. The challenge is that they are priced below $900,000. Likewise, of the eight homes that are currently in escrow, all but two are priced below $1,000,000. And here is where things get really interesting. As of this writing, there are only three single family homes for sale. This is the equivalent of less than two month’s inventory, which is surprisingly low. It may very well be that sellers are wanting to hold on to their homes now and not let them go for prices commensurate with 2004 levels. So perhaps the torrid pace that Los Verdes homes sales started this year with will adjust downward after all, depending on whether additional homes are put on the market or not.

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Palos Verdes La Cresta Home Sales in 2009

The La Cresta area straddles both Rancho Palos Verdes and Rolling Hills Estates, making it unique as far as home sales go. La Cresta home sales dropped in 2009 as did the median sales price. This makes it one of the few areas on the Palos Verdes peninsula to see a decline in single family home sales from 2008. The median price fell a relatively sharp 20 percent in the past year. There have been no newly built homes sold here for a number of years and only a handful of those since the beginning of 2004, so this was not a factor in the recent price drop. Regardless of this, the values of homes have risen at a solid pace since 2000, when the median price was $988,000. This coming year may be the year that the number of sales and the median prices reverse their downward trend here.

There have been two escrow closings this past month and there are currently three homes in the escrow process. This could be an encouraging sign with respect to the number of sales. In 2009, there were 25 closed escrows. The La Cresta homes in escrow have a median sales price of just under $2,300,000, which is clearly a positive indicator of the market direction for price. All three of the homes in escrow were built before 2000, so it isn’t newly built homes that are skewing the recent results. If this pace continues, 2010 may very well be the year that La Cresta home sales gain altitude and start closing the gap in prices from the peak year of 2007. The number of sales reached a peak in 2002 at 69 single family home sales, therefore, it will be a while before we return to those impressive days of many sales.

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Rancho Palos Verdes Country Club Home Sales in 2009

The Country Club area of Rancho Palos Verdes is one of the older communities within the city. Single family home sales increased here to 21 last year from the 17 sold in 2008. Interestingly, with the exception of one 13 year old home, all of the homes sold here last year were built before 1976. The average age of the homes sold in 2008 was a bit lower. This may partially explain the drop in the median sales price from $1,650,000 to $1,355,000 last year. From 2005 through 2008, the median sales price fluctuated between $1,623,000 to $1,670,000, which is a pattern unlike most areas in the South Bay. In 2000, the median price was $795,000, so home values here have done very well over the course of the past decade, in spite of the recent adjustment.

There have not been any closings through the end of January of this year, but there are currently three homes in escrow with a median price consistent with that of 2008. This is an encouraging start to the year. At this writing, there are only five single family homes for sale. which is the equivalent of just a few month’s inventory. These homes have prices more aligned with this past year and so looking forward, the number of sales may continue to climb, but at a potentially reduced median price. Rancho Palos Verdes homes in other areas tend to be showing a more favorable pricing trend. It will be noteworthy to see how this limited supply of single family homes impacts future pricing.

Looking at home sales over the past five years highlights an interesting trend with building here, or more accurately, the lack of building. There have only been four homes sold here since the beginning of 2005 that were built after 2000. Two were built in 2002 and the others in 2005.

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West Palos Verdes Home Sales in 2009

Rancho Palos Verdes has several sub-areas, including the area known as West Palos Verdes. Sales of single family homes here have held steady for the last few years, which is pretty unusual for the South Bay. What is particularly noteworthy is that the median prices of these sales have had a surprising volatility. Back in 2007, the median price exceeded $2,700,000, but then dropped to $2,100,000 the following year and then again to $1,200,000 this past year. It’s as though there are really two distinct markets within West Palos Verdes. On the one hand, there continue to be several sales below $1,000,000, but on the other hand there are many over $2,000,000. In 2008, more than half of all sales surpassed the $2,000,000 threshold, but less than a quarter did last year. To put this in perspective, back in 2000 the median sales price for a single family home was $645,000.

None of the few homes in escrow closed in January of 2010. There are currently three homes in escrow and all three of them have a list price of over $2,200,000. It appears that the higher price market has been engaged moving into this year and that as a result the median sales price of the year could very well exceed last year’s price.

What is also of interest is that there is about a year worth of inventory of single family homes currently for sale. Of these, the majority are priced over $2,000,000. In fact, nine of the 16 listings are priced over $4,000,000. All of the listings are for homes that were built in 2005 or earlier.

West Palos Verdes home listings are yet another example of how no two sub-areas of the South Bay are experiencing identical sales patterns with respect to both number of sales and price. There may be price reductions on the existing inventory if the sellers are serious about selling their homes.

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