South Bay & Palos Verdes Real Estate Analysis

South Bay & Palos Verdes Real Estate Analysis

3-Month Moving Average Analysis with 12-Month Projections

📊 Current Market Metrics

Current Absorption Rate
52.8%
Current Average Price
$1.60M
12-Month Avg Absorption
63.4%
12-Month Avg Price
$1.51M

📈 Absorption Rate Trends & Projections

Weekly Absorption Rates (Historical vs Projected)
80% 65% 50% 35% 📉 Declining Absorption Trend 📊 Projected Continuation
Historical Data (Last 12 Months)
12-Month Projections

💰 Sale Price Analysis

Monthly Average Sale Prices (Last 6 Months + 12-Month Projections)
$1.49M
Feb '25
$1.52M
Mar '25
$1.55M
Apr '25
$1.58M
May '25
$1.60M
Jun '25
$1.62M
Jul '25
$1.65M
Aug '25
$1.68M
Sep '25
$1.70M
Oct '25
$1.72M
Nov '25
$1.74M
Dec '25
$1.76M
Jan '26

📅 12-Month Detailed Projections

Month Date Projected Absorption Rate Projected Avg Sale Price Market Condition
Month 1 Aug 2025 50.2% $1,650,000 🔥 Strong Seller Market
Month 2 Sep 2025 48.8% $1,680,000 🔥 Strong Seller Market
Month 3 Oct 2025 47.4% $1,710,000 ⚡ Seller Market
Month 4 Nov 2025 46.0% $1,740,000 ⚡ Seller Market
Month 5 Dec 2025 44.6% $1,770,000 ⚖️ Balanced Market
Month 6 Jan 2026 43.2% $1,800,000 ⚖️ Balanced Market
Month 7 Feb 2026 41.8% $1,830,000 ⚖️ Balanced Market
Month 8 Mar 2026 40.4% $1,860,000 ⚖️ Balanced Market
Month 9 Apr 2026 39.0% $1,890,000 📈 Buyer Market Emerging
Month 10 May 2026 37.6% $1,920,000 📈 Buyer Market
Month 11 Jun 2026 36.2% $1,950,000 📈 Buyer Market
Month 12 Jul 2026 34.8% $1,980,000 📈 Strong Buyer Market

🔍 Key Market Insights & Divergence Analysis

🚨 Negative Divergence Identified

Critical Finding: The market is experiencing a significant negative divergence between absorption rates and sale prices:

  • Absorption Rate: Declining by 5.68% over the past year (trending downward)
  • Sale Prices: Increasing by $13,543 monthly (trending upward)
  • Market Implication: This divergence suggests an unsustainable price appreciation that may lead to a market correction

📊 Trend Analysis

  • Current Absorption Rate: 52.8% (down from 68.9% peak in 2024)
  • Price Momentum: Continuous upward pressure despite cooling demand
  • Market Timeline: Transition to buyer's market projected by Q2 2026
  • Price Peak: Expected around $2.0M by July 2026, followed by potential correction

🎯 SWOT Analysis

💪 STRENGTHS

  • Premium location in South Bay & Palos Verdes
  • Strong price appreciation trend (+$13.5K/month)
  • Limited inventory driving price support
  • High-quality housing stock
  • Desirable coastal proximity

⚠️ WEAKNESSES

  • Declining absorption rate (-5.68% annually)
  • Negative divergence creating instability
  • Affordability crisis limiting buyer pool
  • Market overheating indicators present
  • Reduced market liquidity

🚀 OPPORTUNITIES

  • Strategic selling window before correction
  • Investment in affordable housing segments
  • Development of luxury rental properties
  • Infrastructure improvements boosting values
  • Remote work trends sustaining demand

⚡ THREATS

  • Market correction risk by Q2 2026
  • Interest rate volatility
  • Economic recession potential
  • Inventory surge risk
  • Affordability-driven demand destruction

🎯 Strategic Recommendations

For Sellers:

  • Immediate Action: List properties in next 6-9 months to capitalize on peak pricing
  • Pricing Strategy: Price aggressively but fairly - market conditions favor sellers now
  • Timeline: Avoid waiting past Q1 2026 due to projected market shift

For Buyers:

  • Timing Strategy: Wait for absorption rates to drop below 35% (Q2 2026)
  • Negotiation Power: Expect increased leverage starting late 2025
  • Price Expectations: Potential 10-15% corrections after peak

For Investors:

  • Exit Strategy: Liquidate speculative positions before Q2 2026
  • Value Plays: Prepare cash for correction buying opportunities
  • Risk Management: Monitor monthly absorption rates as leading indicator

WARNING!

What is the most well-known adage in real estate? Say it with me …

“Location, Location, Location”

And what does that REALLY mean in the context of the above analysis? What I curated for you above are macro trends for the South Bay. We have to understand that while a $8,000,000 home in the Hill Section of Manhattan Beach and the $500,000 home in San Pedro, both share a common classification as “South Bay Real Estate”, demand/supply patterns are VASTLY different for the two. Therefore to get a more focused analysis for the type of property you’re considering to sell or buy, contact me using the phone number on this page, the “Contact Us” tab at the top of the page (allows you to send me a lengthy message for your questions), or use the blue “Calendly” link below to book time with me. Macro is good, micro is what you REALLY should care about!