Stuart Chaussee

South Bay real estate professionals weigh in home prices and trends

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Chris Adlam is a principal at Peninsula Sotheby’s International Realty and has been selling “Palos Verdes’ Finest Homes” for 25 years.

Gerard Bisignano is a principal at Peninsula Sotheby’s International Realty and has been selling real estate for 21 years. He specializes in luxury and architectural estates and has the distinction of selling the highest priced home on record in Manhattan Beach, representing buyer and seller in a Strand home designed by Ray Kappe.

Stephen Haw is a member of the Re/Max Hall of Fame and has received the “Lifetime Achievement” Award. His team is consistently ranked among the top sales teams at Re/Max.

Lily Liang of Peninsula Sotheby’s International Realty, has been a top agent in high-end residential real estate since 1981. She was named “2009 Business Woman of the Year” by the South Bay Chinese Women’s Association.

Chaussee: Chris, give us a brief history of the real estate market on the peninsula over the past few years?
Adlam: Well, the market is certainly better than where we were the past few years. There is more confidence out there. I think low interest rates have certainly helped. Still, the market seems to have been quite volatile. We go through spells where we are very busy and then it’s very quiet again.

Chaussee: Is that from seasonal demand?
Adlam: Typically it is not seasonal demand and I’m not sure what drives the volatility. We were very quiet at a certain point in 2011 and then the market heated up nicely near the end of the year.

Chaussee: If the market peaked in 2006, how far did we drop off?
Adlam: I would say we dropped off up to 30 percent on some homes, but on others, not nearly as much.

Chaussee: Would you have had the same answer this time a year ago? Has the market improved in 2011?
Adlam: I believe the market was basically flat for 2011. Based on the statistics we have seen, the median sales prices are roughly the same this past year.

Chaussee: What do your statistics show for the various markets on the peninsula in 2011?
Adlam: I looked at Palos Verdes Estates, Rolling Hills and the rest of the peninsula. In Palos Verdes Estates, for example, we had 165 closings and they ranged from $600,000 to $9 million. In 2010 we had 163 closings – very similar. Most of 2011’s sales were between $725,000 and $4.8 million. Again, this was basically the same in 2010. In Rolling Hills we had 18 sales close in 2011 and the same amount in 2010. The rest of the peninsula had 326 closings in 2011 and 308 in 2010. So, both demand and price have been relatively stable over the past year.

Chaussee: So, how does the inventory look at this point?
Adlam: As of this morning there were 48 homes in Palos Verdes Estates on the market. That is low. In a normal market you would see anywhere from 60 to 90 homes on the market in the Estates.

Chaussee: Do you have a number for the entire peninsula, as far as inventory?
Adlam: Yes, on the peninsula we have approximately 180 homes on the market, which is still below average.

Chaussee: What is the reason for this declining trend?
Adlam: What’s interesting is there are fewer homes for sale, but there are actually more closed sales taking place. People are deciding that if they don’t have to sell they are not putting the home on the market. I think in the past people were “fishing” to see what they could get. Those who are now putting their homes on the market are pricing it realistically to get sold. And, they are selling. If they are not priced correctly they will sit on the market.

Chaussee: What would you say is the average amount of time it takes to sell a home?
Adlam: If a home is priced correctly it will be sold relatively close to asking price and perhaps over asking price in a short period of time. We could get multiple offers. Buyers are certainly more educated than in the past and they recognize when something is priced well or is a value and they will move on it. The demand is there, across the board, but there is not enough supply. Regarding the average amount of time to sell a home, my guess is it’s probably between 60 to 90 days – again, assuming it is priced somewhat close to fair value. The homes that are sitting are typically not being sold because they are not priced correctly. Or, the home could have a flaw to it or something going on that makes it less desirable.

Chaussee: What do you think as far as price appreciation for this year?
Adlam: I would think we are in for a flat year with perhaps a slight uptick. I do not think we will see a decline. There is good interest out there, but not enough to push prices significantly higher.

Chaussee: So you don’t see much downside for the market from here?
Adlam: No I don’t, especially if it is going to be the buyer’s primary residence. With interest rates this low, it’s a tremendous time to buy property. You can get 4 percent interest rates with even 10 percent down. It is typically 20 percent down, but lenders are getting more creative.

Chaussee: Lily, what do you think as far as where we have come in the last few years and do you see an improvement going forward?
Liang: Yes, I definitely see an improvement for the coming years. I think the difficult part right now is the expectations of the sellers. It is very difficult for the realtor to meet the expectations of both buyer and seller. Each seller, for example, feels as if his or her home is unique and should be worth more than the neighbor’s home. On the other side of the transaction the buyer feels it’s a buyer’s market, and if it is, and prices have declined some 35 percent, then that is the price the buyer expects to get.

Chaussee: So sellers are still looking at the old price peak of more than five years ago and hoping to get near that price for a sale and the buyers are looking to get a bargain. Who’s winning the battle?
Liang: You have to create a win-win situation to close the escrow. If one party is unhappy, even if the home is in escrow, it will not close. Both parties must be satisfied.

Chaussee: How has your personal business been during the past few years?
Liang: Well, I specialize as a listing agent and listings have declined tremendously. They have dropped perhaps in half.

Chaussee: Why have we seen such a drop off in listings?
Liang: Well, if the seller is not in a position where they have to sell, they will probably keep the home off the market. Most of the people on the peninsula are conservative, so they are not highly leveraged in their homes. So, if they see a market like this, they will not even bother trying to sell.

Chaussee: For those who will list, as a listing agent, will you typically go in and suggest sellers price their property above fair market value, and, if so, what percentage above?
Liang: It depends on what the seller wants. I will usually give them my honest opinion as to where their property should be priced and then they will tell me what they feel comfortable with. True, what they are comfortable with is usually a higher price, but they will often take my advice and price it exactly as I suggest. If they do that it will typically sell very fast.

Chaussee: So, for those sellers who don’t take your advice as far as listing price, how many times do they have to drop their price to finally get the home sold?
Liang: It really depends on how far they are away from the “realistic” price that I suggested at the outset.

Chaussee: Are there some properties here on the peninsula where it is wise to actually price the home at a premium and simply wait for that one buyer to emerge who will pay a substantial premium for it?
Liang: There are some homes that are truly unique and have an unbelievable view with flat land. These unique homes can attract that one buyer and you could argue to list the property at a premium. The property has to be unique. If the seller is in no hurry to sell you have a much better chance to find that buyer. It will depend on your marketing of the property too.

Chaussee: And, how do you feel the market will do going forward?
Liang: In my mind, when you buy a home it is not purely an investment. You are buying it for your enjoyment and for your quality of life. If you make money when you turn around some years later and sell the home, that is great, but if your family is happy while it is in this home, that alone is very worthwhile.

Chaussee: Fine, but what if a client views the purchase as an investment also? Do you think they will see some price appreciation in coming years? Or, perhaps they are better off renting?
Liang: I think if they are looking at the property as purely an investment then they shouldn’t make a purchase until they find the home they truly love. If they don’t find it they should simply keep looking and not settle. Even the investors should still love the property they buy. Still, I am optimistic that home prices over the coming five years or more should do quite well. Interest rates are low and the prices have already declined some 30 percent or more. What could be a better time to buy than now? The buyer cannot pinpoint the absolute bottom, but I feel we are probably already very close to the bottom.

Chaussee: Gerard, what are your thoughts regarding the local real estate market and present trends?
Bisignano: I agree with much of what I’ve heard from Chris and Lily but we all have our unique markets and our perspective is based on the clients we serve and in what market. I do a lot of work in Palos Verdes but most of my business is down at the beach. So, perhaps I see a different perspective from what you might see if you focused exclusively on Rolling Hills, or Palos Verdes Estates, for example.

Chaussee: What is the difference in the beach markets right now and the peninsula?
Bisignano: I’ll start with some thoughts from Robert Shiller, co-founder of the Case-Shiller Home Price Index, who recently left his post as a professor at Yale University for USC. In mid 2011, Mr. Shiller said that there are four communities where we see there is strength in the market – Washington DC and the coastal communities of California, San Francisco, Los Angeles and San Diego County. He said those communities will be the engines that will get us out of this real estate recession. Recently Mr. Shiller purchased a home in Manhattan Beach. So, the coastal communities have been affected, but there is always demand and potential buyers have been looking. I think we hit the skids in mid 2007 and I think, as Chris mentioned earlier, that 2011 was a schizophrenic year. The first quarter of last year was pretty good, but the second quarter was on fire. We saw inventory at the high end, that had been sitting for two years, start clearing.

Chaussee: You’re talking about the beach cities?
Bisignano: Yes, mainly Manhattan and Hermosa Beach.

Chaussee: Who is buying at the beach?
Bisignano: The buyers come from all over. It’s interesting that the money we see coming into the beach cities, some foreign money for sure, but most of it is more local. Basically Southern California money – even people on the West Side have always been attracted to the beach cities. They discovered Manhattan Beach – schools are great, crime is low, values are firm and it is still thirty minutes from Beverly Hills. It’s not far from the West Side, is my point.

Chaussee: Why would the Manhattan Beach buyer not want to buy in Palos Verdes?
Bisignano: The Manhattan Beach buyer does eventually buy on the peninsula. Here is what we typically see – a young couple has gotten married. They have two incomes and love the beach lifestyle and they buy at the beach. They have kids and as the kids start to get older the couple rethinks and starts thinking about schools and they move to Palos Verdes, typically Palos Verdes Estates – typically, not always. Then, they become empty-nesters and they move back down to the beach..
Adlam: I just had clients move from PV Estates back to the sand section in Manhattan Beach.
Bisignano: It happens all the time. It is remarkable.

Chaussee: Can you pretty much do a straight swap of the home in PVE and the home at the beach, as far as price and quality?
Bisignano: Well, here’s an example, I recently had a couple who sold a townhome in Manhattan Beach, for around $1.7 million. They bought a house in Palos Verdes Estates for the same price. My clients in Palos Verdes Estates then bought a townhome in the beach cities for close to the same price. In this case there was parity.

Chaussee: What about the price of beach cities properties vs. the peninsula, peak-to-valley? And, is there a difference in any recovery that we are seeing.
Bisignano: I think if you compare it to the recession back in the 1990s, the beach cities then, and this most recent recession too, they tended to enter the recession last. They held values longer and entered last and they will tend to come out of it sooner too. It can drive the whole recovery. I sold a home for just under $11 million in April last year. We were listed at $12.5 million, and on a percentage basis, that is not a substantial drop in price.

Chaussee: So, do you think we are in a recovery now with prices improving?
Bisignano: I would say we are stabilizing. Let me give you a quick example – in 2010, in Manhattan Beach, there were 311 sales. In 2011 there were 321 sales, so there was not substantial growth in volume. However, the average price in the sand section went from $2.1 million to almost $2.4 million. Now, the sand section is a high demand area obviously, so this appreciation has not been apparent across the board, but we did see some price improvement in the sand section.

Chaussee: Why are we seeing improvement now?
Bisignano: Pent-up demand. I think people sense we are near the bottom. If not, we are awfully darn close. You cannot wait for the absolute bottom because you will miss it. You only know that we have hit bottom after it has past. So, people think we have dropped 15 to 25 percent and how much more can it drop? 5 percent? I believe the bulk of the depreciation has already taken place.

Chaussee: Where do you think the best values are right now, if you’re hoping for price appreciation over the next five years or so?
Bisignano: When we have gone into recovery mode the community that has shown the most price appreciation has been Manhattan Beach.

Chaussee: Well, that market sounds ideal. You said it held up better during the decline and now you’re telling us that it also offers better recovery potential?
Bisignano: Yes, probably. It is hard to predict because the dynamic changes and in some ways our market is being driven by some foreign demand. If I had to guess, during this recovery, I would say both the peninsula and the beach cities will see comparable appreciation during this recovery.

Chaussee: What type of appreciation do you think we will see looking out a decade?
Bisignano: Once we stabilize, and that could take one to three years, I think we will get back to normal price appreciation, which would be 5 percent to 7 percent annually. I look for normal appreciation after the stabilization period.

Chaussee: So, if it takes the market a year or two to stabilize, it seems like that would be a great advantage to the buyer?
Bisignano: Well, the sophisticated seller here is saying “I would like to sell, but I don’t have to sell.” If they don’t think they will get the price they want they won’t even put it on the market. So, that has helped the market – we haven’t flooded the market with inventory. Thankfully the inventory has been maintained very close to demand and, for the most part, that has helped stabilize the market. A housing recovery is very much like the house itself, you could knock it down in a day, but it will take you a year to rebuild. The housing market typically has a slow recovery.

Chaussee: Stephen, thank you for your patience. How do you view the local housing market right now?
Haw: Overall I definitely think the worst is over for the market. If you look back over the past decade, right after September 11, 2001, and beginning in 2002, everything pretty much doubled in price on the peninsula over the next five years or so. A home on the peninsula for $1 million in 2001-’02 could often be sold for $2 million. So in those four years we basically doubled in price. I think we probably peaked in 2005 or 2006. I have always thought the market had come down around 15 percent or so from the highs so I decided to run some numbers to see if I was right or if it was more pronounced than that, as some of the others have mentioned.

Chaussee: What did you find?
Haw: For the entire South Bay, the number of transactions declined about 25 percent from peak-to-valley. However, the price only declined about 15 percent overall. If we break down Palos Verdes Peninsula, in 2005 there were 612 transactions and in 2011 there were 507. So, transactions declined about 17% on the peninsula. The average purchase price per square foot in 2005 was $558 and in 2011 it was $483, so the price came down around 12 percent or so during that period. In Torrance it declined more – about 18 percent from the peak. In the beach cities the number of transactions dropped off about 30% but the price decline was only 7 percent. It’s at $579 per square foot.

Chaussee: The price decline you quote in these areas seems too shallow to me.
Adlam: I agree. I remember a time on the peninsula when you could not find a single family residence under $1 million – it didn’t exist – that was back in 2006. Today you can find something in the $600,000s. While I think the statistics may show that the price per square foot hasn’t dropped that much, I think the reality is that today you can find something in the $600,000s that you couldn’t find for $1 million at the top of the market.

Chaussee: What do you think Stephen?
Haw: I personally have a lot of confidence in real estate on the peninsula. I agree with Chris that you couldn’t find anything under $1 million back in 2006. But, now you can occasionally find something in the $600,000 or $700,000 range, but in these properties you’re still going to end up spending over $800,000. Even where you have an agent list a property as a short sale, in such a low range, you will probably get multiple offers on the property. So, the short sale may end up getting unloaded for the very low price ($600,000s), but it is more likely the price is negotiated higher. So, my guess is you are still going to end up paying at least $800,000 to get a decent single-family residence on the peninsula.

Chaussee: So, if you have a client who wants to buy now and asks you how much lower are homes selling relative to the peak, what is your answer?
Haw: I think the correct number is somewhere between 15 percent and 20 percent. You cannot use the extreme cases. It is unfair. So, we are talking about the averages here. Sure, maybe you can find something that came down more than 30 percent or a home that only declined 5 percent, but again, these are the extremes. I will stick with my numbers.

Chaussee: If you are in a conversation with a buyer and seller, who is in control of the transaction at this point? Who has the power, is it still the buyer?
Haw: I would say neither is really in control at this point. An obvious example of a seller being in control is if a property is priced at a certain level and all of a sudden multiple offers come in. At that point the seller has control. An example on the other side is if a seller has priced a property too high and it sits on the market for several months and then an offer comes in – obviously the buyer is in control of the transaction at that point.

Chaussee: Are buyers coming in now trying to get extremely low prices regardless of the asking price? Or, have they gotten more realistic.
Haw: I think the buyers have become very sophisticated and prior to making an offer they know exactly where they stand – in terms of an appropriate offer or not, given the market. They often do their own research. If they really love one particular house they are certainly going to try to negotiate. But, if the seller is stubborn and the buyer is really in love with the property, you may see the buyer budge and raise the price. It all really depends on the price and how attached the buyer is to the property. Still, I would say that the buyer today is no longer thinking along the same terms as he or she was a couple years ago – as far as low balling the seller. We are in a much more stable market. In general, I think you can say that prices on the peninsula are typically much more stable because the homeowners here are more affluent and they have a lot of equity in their homes.

Chaussee: As you mentioned earlier, you are optimistic that the decline is over?
Haw: Oh definitely. I think we have stabilized over the past couple of years and we are done declining. I think in the next couple of years we will be close to the same number of transactions as last year and price stabilization too. But, there are some very good signs out there. For example, in the last quarter of 2011 the market was tremendous. We cleaned out some great inventory and this is a really good sign of an improving market. Buyers now have more confidence and the worst is over. The majority of them think we are now going to be very stable.

Chaussee: If you bought a home on the peninsula today for $1 million, what is your best guess as to what that home would be worth 10 years from now?
Haw: I don’t have a crystal ball, but if you look back at home price history in our market, the market, after stabilizing now, should provide a return of between 50 to 100 percent over the next 10 years. I think we will get back to at least the recent highs within 5 to 7 years. Definitely.

The opinions of the participants in this Roundtable discussion are their own and not those of the companies they represent. Under no circumstances does the information in this column represent investment advice. Stuart Chaussee is a Palos Verdes-based fee-only Registered Investment Advisor. He is the author of three financial books, including the award-winning Advanced Portfolio Management; Strategies for the Affluent. He is also a former contributing writer for the He welcomes your feedback and can be reached through or email him directly at


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