Houses in Manhattan Beach Archives - Southern California Luxury Homes

Good Time to Buy Houses in Manhattan Beach

If you have purveyed the Southern California coastal real estate market, you might have noticed the growing number of listings for houses in Manhattan Beach. So notice the good time to buy. Prices are being cut here in Manhattan Beach.

Prices had been surging since 2012. We remember some articles from not so long ago:

“Prices continue to climb”
“Manhattan Beach real estate prices go wild”
“Real estate prices up in all beach cities last year”
“Manhattan Beach leads rebound of California’s million-dollar housing market”

Sales have dropped slightly. We are seeing some Manhattan Beach property sitting on the market for more days and months. Owners are cutting prices trying to find the market. We see a couple of dozen recent cuts as we enter the summer season. The exclusive Manhattan Beach market may be in the process of self-correcting.

Sales in Q1 2016 as compared to say 5-6 years ago are down about 14 percent. The beginning of this year is the slowest of the past 5 years, in fact. If we look at the Q4 and Q1 comparison, sales are slower. During those times, sales averaged 171 per year but there were only 152 sales in the most recent 6 months.

Interest Rate Impacts

Combined, Buyers and Sellers may be banking on those supposed interest rate hikes. Rate hikes will definitely send non-cash buyers back to the drawing board. They will need to allocate more money to interest. This adjusts the affordable price range down pretty substantially for $2.2 million homes. Some of those buyers will go to the less-expensive beach communities nearby.

As a case in point, the Median Income in Manhattan Beach is approximately $130,000. A 30-year-fixed mortgage on the $2.2 million house with 20-percent down, brings the principal down to $1,760,000. Check out the difference in monthly payment differences with just 2 percent differences in interest rates.

3 percent interest: $7,420.23 per month
4 percent interest: $8,402.51 per month
5 percent interest: $9,448.06 per month

If the Buyers puts 50-percent down at 4 percent interest, then the monthly payment can be reduced to $5,251.57. That is getting more affordable for a family in the Medium Income bracket.

Sellers do not want to get stuck in that scenario. They are anticipating difficulties down the road. Some baby boomers are retiring to less expensive areas and want to liquidate their primary homes and vacation properties while the going is good.