In real estate, sales volume is always a good indicator of market direction, of what buyers are focused on. Looking across this year in the Los Angeles South Bay, with September in the mirror, the number of homes sold each month in comparison to last year, tells a story. The tale starts in January with a healthy 11% increase over January of 2024. In February that number nearly doubled to a 19% increase.
In March the comparison dropped into single digits and through May increases were 2%. 9% and 7%. Buyers were not responding to the homes on the market. Sales were slowing. Then June hit with a zero change and July followed with a -1%—even more slowing. August showed a 10% rebound in sales, frequently attributed to the ‘back to school’ rush of sales closures. For September homes sales dropped back to 0% versus September of 2024.
Essentially much of the annualized increase in the first quarter of the year has evaporated. What was a 30% annual growth is now a 6% growth rate. Delving a little deeper into where in the South Bay changes are occurring shows sales declining in the Beach area (detail below) as well as in the Harbor and Inland areas. Last month sales on the Hill were the only positive influence on the broader South Bay sales statistics (detail below).
The impact of the slowing homes sales across the South Bay can be seen in the falling prices across the region. September is the first month since January where median prices rose in all four areas. The year started with increases across the board and immediately started losing ground in February with a price decline in the Harbor area. For the next six months median prices slid in more than half the sales recorded, see-sawing back and forth across the four areas.
As of now, with the third quarter of the year complete, median prices are up appreciably only at the Beach. Year to date, compared to the same period in 2024, prices of Beach area homes were 9% higher than last year. However, keep in mind, the other three areas are essentially at zero growth versus 2024. Price appreciation at the Beach has remained stronger than the rest of the South Bay, but appears to be faltering as the year goes on.
So, what should one expect for the balance of the year? Sales are 15%-20% below pre-pandemic levels, while median prices are 30%-50% above. Based on the supposed ideal of 2% inflation, those prices should be around 12.5%, or roughly one third of the increase we’re seeing. At least a few financial CEOs are referring to the current environment as an “asset bubble” in the nature of the 2008 collapse.
A good deal of the price appreciation is a result of lower inventory levels which are not expected to recover until the end of the decade. It remains as a reminder of when interest rates were hovering around 3% and home prices were easily inflated. While many are still riding the wave of inflationary increases, many buyers are balking.
At the same time the economy in general is squeezing the typical home buyer with stubborn mortgage interest rates, an increasing cost of living and shrinking paychecks. It seems apparent something is going to give. Jamie Dimon, of JP Morgan Chase, is reported to have said the market could implode within six months, or could last another two years.
Confining the discussion to local real estate, the market appears to be on course to a point where price resistance causes inventory levels to drop enough to compel sellers to lower prices. Extending the spreadsheet out to the end of the year, while continuing the current trend shows homes sales continuing to decline, slipping to about 4% over 2024 levels for the South Bay as a whole. Median prices at the end of 2025 should be slightly lower than they were in 2024. Probably not by a statistically significant margin, but lower.
Beach:
Monthly home sales at the Beach took a 9% hit in September, dropping to 98 units sold. Month to month sales volume has been up and down throughout the first three quarters. While there have been some dramatic swings—like a 40% drop in January, followed by a 70% increase in February—most of the ups and downs have been confined to a much narrower range.
Looking at monthly median prices, September was $1,962,915, up from last month by 5%, the highest gain since it rose 30% in January. Six of the seven intervening months were negative with August being the only other positive month, and that with only a 1% increase.
On an annual basis, September is the first time in 2025 the number of homes sold in the Beach Cities has dropped below same month sales for 2024. Sales volume has dropped several times in month to prior month sales, but this is the first annual decline.
The Beach had been having an unbelievable year, with sales volume increases in the double digits most months. Then, September plummeted from a 15% increase in August to a 14% decline in annual sales. At the same time, median prices repeated the 10% increase experienced in August.
Year to date, through the third quarter, the number of sales stands dramatically higher than the rest of the South Bay. The 17% increase in volume is nearly three times the 6% found across the region. Similarly, the median price at the Beach came in with a 9% increase, while the median across rest of South Bay was 0%. Will the Beach cities continue the out-size performance seen to date? Probably not, but we have three more months to find out.
Harbor:
Monthly sales in the Harbor area dropped 1% in September, falling to 308 homes sold. This follows a 1% increase the prior month. These small monthly swings indicate a stable market, as opposed to the broad double digit sweeps during the early months of the year.
The median price last month was $795,000 up 2% from August. Since the beginning of the year the month to month price changes have all been in single digits and mostly positive. This contrasts sharply with the Beach area, where monthly prices have fallen nearly every month this year.
Year over year, September home sales in the Harbor area dropped 3%. This is effectively a return to the pattern started in June when sales volume began to slide. August was the outlier, up by 7%, similar to the rest of the South Bay in the month before school starts.
Median prices for this September were 5% above last September. It was also the first increase in the median price since June. The median is beginning to look rather flat at the Harbor.
With three fourths of the year gone, the Harbor area appears to be setting the pace for the South Bay. Sales volume has been shifting down since before the summer buying season and currently rests at a 3% increase in the number of homes sold compared to the same period in 2024. Median prices have been moderating, with a year to date increase of 1% over last year at the third quarter.
As an interesting side note, compared to the same period in 2019, sales volume is down 21% (that ten year Covid deficit), and median prices are up 41% (the Covid bubble?).
Hill:
Any conversation about statistics and the Palos Verdes Peninsula needs to start with an understanding that this is a statistically tiny sample and one or two unusual sales can dramatically skew the results. September of this year is a classic example.
Contravening the direction of the rest of the region, September sales on the Hill skyrocketed 36% over August for a total of 80 homes sold. The median price likewise showed a significant increase, jumping 19% to hit $2,143,000.
Comparing this year to last September shows a phenomenal sales volume increase of 70%. This is nearly three times any similar percentage recorded this year. That same upward leap carried across to the median price which came in at a 26% increase; nearly three times any other increase in the region.
Looking at the detail of this anomaly one finds that in a typical September there are somewhere around 60 units sold on the PV Peninsula. Last year there were only 47 homes sold—this year there were 80. Nothing special, just two successive years going opposite directions in a tiny sample.
Despite the scorching monthly numbers, for the first nine months of the the year, Palos Verdes shows a 10% increase over 2024 sales volume. Still a healthy increase, but much more in line with reality. Median price for the year to date is actually a 1% decrease even though the September statistics show increases in the median. Out of nine months, four have been increases while five have been decreases.
Looking back at 2019, the last ‘normal’ year before the pandemic, reveals sales volume is currently 11% above that of 2019 and the median price is up 45%.
Inland:
The Inland cities experienced an 11% sales decline in September, falling to 188 homes sold, after an anemic August increase of only 2%. Yet another indication the residential real estate market is on a downward trajectory. That fall was accompanied by a surprisingly strong 14% increase in the median price, jumping up to $1,006,000. Month to month sales data for the Inland has been relatively consistent so far this year, with ranges often in the double digits.
Looking back to the same month last year shows an 8% drop in the number of Inland area homes sold. This is consistent with the rest of the South Bay, excepting the fluctuating numbers on the hill (see above). The median price, like the South Bay overall, was strongly positive with a 14% increase.
Looking at the Inland area longer term, comparing the first three quarters of 2024 to the first three of 2025 shows a modest increase of 1% in the number of home sales. This is the lowest increase of the four areas in LA’s South Bay. Year to date across the region is a 6% increase in volume. Sjifting focus to the median price, the record shows 0% change, or at best a rounding error in the 2024 versus 2025 median prices.
Once again, looking back to the 2019 baseline, Inland area home sales volume in down 18% from 2019 and the median price is up 33% from 2019.
Beach=Manhattan Beach, Hermosa Beach, Redondo Beach, El Segundo
Harbor=Carson, Long Beach, San Pedro, Wilmington, Harbor City
PV Hill=Palos Verdes Estates, Rancho Palos Verdes, Rolling Hills, Rolling Hills Estates
Inland=Torrance, Lomita, Gardena
Photo by Paul Hanaoka on Unsplash
