Palos Verdes Homes & South Bay Real Estate
45.0 New Listings per day avg | 26.0 Pending Sales per day avg | 17.9 Closed Sales per day avg | 15.3 Expired & Canceled per day avg | $1,605,491 Avg Sale Price −0.2% vs Aug 2025 | 2.03% Avg Discount list-to-sale spread | 104.2 Total Events daily avg, all categories |
Executive Summary — What 424 Months of Tape Say About Right Now
August closed the summer with a market that is balanced on the surface and quietly softening underneath. The headline: the average South Bay/Palos Verdes sale price came in at $1,605,491 — within $4,000 (−0.2%) of August 2025. Prices have gone flat, not down. But the first and second derivatives of this market — the metrics I track every single day — are telling a richer story.
The monthly Absorption Coefficient (pendings ÷ new listings) printed 0.578: for every 1,000 homes that came to market in August, 578 went under contract. That sits at the 39th percentile of all 424 months and below the 10-year average of 0.742 — demand is real but no longer outrunning supply. Meanwhile the monthly Escrow Fragility reading — failed listings as a share of all monthly exits — hit 37.1%, its fifth consecutive monthly increase and its highest level since January. More than one in three listings leaving the market right now is leaving without a buyer.
Here is the tension every client should understand: sellers as a group have already adjusted — the average new listing in August was priced at $1,593,712, essentially the same as the average sale price. Correctly priced homes are transacting near ask. But the average closed discount widened to 2.03%, the largest negotiating spread in roughly a year, and the smoothed year-over-year price line has now been negative for seven straight months. Historically, that exact signature — flat-to-slightly-negative YoY, mediocre absorption, rising fragility — is what a floor being formed looks like, not a crash. The full statistical case is in the year-over-year section below.
0.578 MONTHLY AC — AUG 2026 39th pctile of 424 months | 37.08% MONTHLY EFI — AUG 2026 5th straight monthly rise | AC 20.000 DAILY SERIES — SESSION 99 (AUG 31) all-time record; EFI 16.67% | AC 1.607 DAILY CUMULATIVE S1–99 EFI 21.67% — anchor values |
Monthly Metrics Table — August 2026
| Metric | August 2026 | What It Means |
|---|---|---|
| New Listings (daily avg) | 45.0 | Down from 49.9 in July — supply is tightening into fall |
| Pending Sales (daily avg) | 26.0 | AC = 0.578: 578 homes going under contract per 1,000 new listings |
| Closed Sales (daily avg) | 17.9 | Steady vs 18.1 in July; pipeline of 26 pendings supports fall closings |
| Expired & Canceled (daily avg) | 15.3 | 37.1% of monthly exits are failed listings — 5th consecutive monthly rise in the fragility reading |
| Average Sale Price | $1,605,491 | Essentially flat year-over-year (−$3,632, −0.2%) |
| Average List Price, New Listings | $1,593,712 | New inventory is being priced AT market — sellers have adjusted |
| Average Discount (list vs sale) | 2.03% | Widest since last fall; buyers are recovering negotiating room |
| Success Ratio (CS+PS)/XK | 2.87 | 2.87 successes per failure — solid, but off the 3.3–3.4 spring pace |
Year-Over-Year Analysis — Do the YoY Columns Predict Future Prices?
Your monthly tape carries two columns most agents never compute: “Month vs Previous Year’s Same Month” (the dollar change vs the same month last year) and “% Change from Same Month Last Year”. I ran the full 400+ month history through a forward-return test: does this year-over-year reading actually correlate with where prices go next?
Finding 1 — YoY is a momentum gauge, not a contrarian signal. The raw YoY% reading correlates +0.33 with price change over the following 12 months. Sorted into quintiles, months in the strongest YoY quintile (~+15%) were followed by an average +11.6% over the next year; months in the weakest quintile (~−10%) were followed by −1.1%. Appreciation persists; deep declines tend to stall rather than compound.
Finding 2 — where we are now. August’s YoY print is −0.2%, and the 12-month smoothed YoY sits at −4.9%, negative for seven consecutive months — the 11th percentile of history. That lands us in the weak quintile. But here is the critical base rate: across the 62 prior months in which smoothed YoY had been negative for six months or longer, the average price change over the following 12 months was +0.1%, with 53% of outcomes positive. Translation: this signature marks the flat part of the cycle — the floor — far more often than it marks the edge of a cliff.
Finding 3 — the derivatives lead better than YoY itself. The 12-month Absorption Coefficient correlates +0.69 with price change two years out, and the fragility reading correlates −0.62. Top-quintile absorption months were followed by +13.7% average 12-month gains; top-quintile fragility months by −4.7%. Today’s combination — AC at the 36th percentile, fragility at the 57th — projects a flat-to-low-single-digit 12-month path, with the upside trigger being AC recovering above ~0.68 (its historical third quintile) and the fragility streak breaking. My separate 1,837-week WEEKTICK model projects exactly that convergence arriving late October–November 2026, with +4–8% appreciation by mid-2027 if it confirms.
Advice for Sellers
- Price at the market, not above it — the tape proves your neighbors already have. August’s new listings averaged $1,593,712 against an average sale of $1,605,491. The sellers succeeding right now are priced within 2–3% of closed comparables from day one. With 37% of monthly exits now ending in expiration or cancellation, an aspirational price is the single biggest predictor of joining the failure pile.
- Your competition is thinning — use it. New listings fell from 49.9/day in July to 45.0/day in August, and fall traditionally cuts supply further. A sharp launch in September–October faces the least competition since spring, while 26 buyers a day are still writing accepted offers.
- Fortify the escrow, because escrows are where deals now die. With the fragility reading at 37.1% and rising five straight months, do the pre-listing inspection, pre-empt the appraisal conversation with a comp package, and vet buyer financing hard before accepting. The closed-to-pending ratio of 0.69 says roughly three in ten contracts are not converting on schedule.
- If you’re planning to sell into 2027, watch my October signal. The weekly model’s demand indicator is projected to cross its strong-market threshold late October–November. If it confirms, spring 2027 likely brings better pricing — but also more competition. I’ll tell my database the week it happens; make sure you’re on the list.
Advice for Buyers
- This is the low-FOMO window the tape rarely gives you. Prices are flat year-over-year, the average discount has widened to 2.03% — the most negotiating room in about a year — and the historical base rate after seven negative smoothed-YoY months is a flat forward year. You can be selective without racing appreciation.
- Hunt the failure pool. 15.3 listings a day expired or canceled in August. These owners already told the market their price was wrong; many still need to sell. A re-approach 30–60 days later, with data, is where the genuine below-market deals in this market live.
- Move before the convergence, not after it. Absorption at the 36th percentile with fragility elevated is precisely the setup that historically precedes recovery — top-quintile absorption regimes delivered +13.7% forward years. If my late-October threshold signal confirms, the leverage you hold today shrinks. The strategic play is a fall 2026 purchase ahead of a projected 2027 upturn.
- Underwrite the escrow like a seller would. In a 37% fragility market, listing agents are prioritizing certainty over the last dollar. Tight contingency windows, verified funds, and a clean lender letter routinely beat a slightly higher but shakier offer — that is a price discount you buy with preparation, not cash.
Strategic Opportunities — Four Plays for Fall 2026
- The Expired Re-Entry Play (buyers & investors): systematically track August–September expirations; approach with closed-comp evidence and a clean offer. The 2.87 success-per-failure ratio means the failures are concentrated among mispriced properties — exactly where negotiated value hides.
- The Supply-Gap Launch (sellers): list into the September–October inventory trough (45.0 new/day and falling) rather than waiting for spring 2027, when the projected demand recovery will also bring back your competition.
- The Flat-Market Trade-Up (move-up owners): when the whole market is flat, the spread between your sale and your purchase is at its cheapest. A $1.6M-to-$2.4M trade costs the same relative gap it will after a broad +5% year — except the bigger home’s 5% is a bigger number. Flat markets subsidize trade-ups.
- The Convergence Front-Run (everyone): two independent models — this monthly tape’s derivative structure and the 1,837-week WEEKTICK series — point to the same late-October–November 2026 inflection window. Position before confirmation; react-to-headlines pricing arrives months later.
First derivative (velocity): Monthly AC = 26.0 pendings ÷ 45.0 new listings = 0.578 — 39th percentile of 424 months, below the 10-year mean of 0.742. Demand velocity is positive but sub-trend. On the daily tape, today’s Session 99 printed an all-time record AC of 20.000 on a supply-collapse single new listing — the daily and monthly lenses agree on the cause: supply is contracting faster than demand.
Second derivative (durability): the monthly fragility reading — expired & canceled as a share of all exits — is 37.1%, rising five consecutive months. Acceleration is negative: each marginal month is converting listings to closings slightly less efficiently. The daily EFI, by contrast, sits at a healthy 16.67% with a cumulative series anchor of 21.67% — short-run escrows are holding; it’s the stale-listing pool doing the failing.
The calculus conclusion: price level flat (f), velocity positive-but-subpar (f′), acceleration mildly negative (f′′) — a decelerating plateau. Historical analogs resolve upward when AC clears ~0.68 and the fragility streak breaks. Watch October.
I have tracked this market every single day for over 45 years. I can run this exact derivative analysis on your specific property, your neighborhood, or the home type you want to own next.
(424) 722-9136 • george.fotion@homeispalosverdes.com
PalosVerdesHomesBest.com • SearchHomesInPrivate.com • calendly.com/george-fotion
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George Fotion • Call Realty • DRE# 00785373 • (424) 722-9136
| Column | Aug 2026 (3-mo MA) | Aug 2028 Projection | 24-Mo Δ | Guardrail |
|---|---|---|---|---|
| New Listings (daily avg) | 48.4 | 58.4 | +20.6% | capped at historical extreme |
| Average List Price — New Listings | $1,613,179 | $1,673,745 | +3.8% | capped at historical extreme |
| Expired & Canceled (daily avg) | 15.0 | 17.0 | +13.3% | within rails |
| Average List Price — Expired & Canceled | $1,603,864 | $1,663,487 | +3.7% | capped at historical extreme |
| Pending Sales (daily avg) | 27.5 | 30.1 | +9.2% | capped at historical extreme |
| Average List Price — Pending Sales | $1,597,529 | $1,751,327 | +9.6% | capped at historical extreme |
| Closed Sales (daily avg) | 17.3 | 19.2 | +11.1% | within rails |
| Average Sale Price — Closed Sales | $1,561,098 | $1,714,683 | +9.8% | within rails |
| Average % Discount (List vs Sale) | 1.13% | 1.16% | +2.2% | capped at historical extreme |
| Absorption Coefficient #PS / #NL | 0.569 | 0.454 | -20.2% | capped at historical extreme |
| Conversion Ratio #CS / #PS | 0.628 | 0.635 | +1.0% | capped at historical extreme |
| Success-per-Failure Ratio (#CS+#PS) / #XK | 2.979 | 2.804 | -5.9% | within rails |
| Supply / Demand Balance | -20.9 | -28.3 | -35.6% | within rails |
Model per column: 3-month moving average → recent slope (OLS, last 36 months) converging exponentially toward the long-run slope (OLS, last 120 months) → month-of-year seasonal factors from the last 10 years → guardrails clipping the path to each column’s own historical extreme 24-month moves. Columns flagged “capped at historical extreme” had raw extrapolations exceeding anything the series has done in 424 months — the rail, not the raw trend, governs.
The one divergence to respect: each column is projected independently, and the mechanics disagree in one place — the sale-price MA projects +9.8% by Aug 2028 (≈+4.8%/yr, consistent with the WEEKTICK model’s +4–8% by mid-2027) while the Absorption Coefficient path drifts down toward 0.45 as projected new listings (+20.6%, rail-capped) outgrow pendings (+9.2%). Both cannot be fully right: sustained sub-0.50 absorption has historically preceded flat, not +5%/yr, pricing. Read the price projection as the upper path, conditional on absorption stabilizing above ~0.55 — which is exactly what the late-October/November convergence signal will confirm or deny. If AC follows its projected path instead, expect the flat-floor scenario from the quintile analysis (≈0 to +2%/yr).
Scale note: the Supply/Demand Balance “−35.6%” is a percentage of a negative level (−20.9 → −28.3 daily deficit) — the meaningful read is a widening supply shortfall of about 7 events/day, well inside historical rails, and structurally supportive of the price floor.
PalosVerdesHomesBest.com • SearchHomesInPrivate.com • calendly.com/george-fotion
