Home prices in Manhattan Beach spiked 17 percent in 2014, hitting an all-time high for the median home prices by topping out at just less than $2 million in the beach city.
Median home prices in 2013 were at $1,628,250, up from $1,414,750 in 2012. However, that number increased to a whopping $1.9 million in 2014. Experts all point in the same direction when they are asked about the cause—the high quality school system.
“Everybody wants to live in Manhattan Beach. A switch has been flipped in Manhattan Beach,” said Realtor Dave Fratello of Confidential Realty in M.B. “The school system has put Manhattan Beach real estate on the map. People have found out about us. The word is out. Now we are bigger on the map and people want to be here in a big way.”
He explained that wealthy families are flocking to Manhattan Beach, mainly from elsewhere in the region, because they are unhappy with other school districts and they want to avoid paying to send their children to pricey private schools.
According to Manhattan Beach Unified School District Superintendent Michael Matthews, this is true. After speaking with parents of new students, Matthews said the common theme was they moved to Manhattan Beach primarily for the excellent school system. He said last year MBUSD ranked third in the state for the highest test scores. Matthews said these are pro-education parents who have high expectations for the quality of education their children receive. He said these types of parents are assets to the schools.
“It is rather amazing to me that in spite of housing prices that held steady during the recession, and prices that continue to climb to even higher levels, that parents continue to find ways to move here to attend our schools,” Matthews said.
Several factors play into the sky-rocketing home prices. According to Fratello, the limited supply of real estate and the cash transactions that have become a phenomenon in Manhattan Beach are the driving forces of the spiking home prices, but he said cash doesn’t win every time.
“Since there typically is competition for offers, people who are financing know there are cash offers on the table, so they make higher offers and some times win,” he said. “This is gushing up the home prices. It seems like Manhattan Beach is the last market to crash and the first to recover.”
Fratello said the 2014 statistics are a new substantial peak. Typically the purchasing market heats up in the beach cities between February and May. While Realtors in Manhattan Beach are looking for this trend to continue into this year, he is hesitant to speculate how much longer it will continue to increase at this rate.
“It’s a little scary when I represent the home purchases in many cases and often they are out bid and become frustrated,” he said.
In order for the trend to slow down or reverse, there would have to be a major shift in the market. He believes it would take a significant increase in available homes and a steep shift in interest rates for the market to cool down.
“I think we have a few years of this spiking of home prices left,” he said. “What is driving the market isn’t changing. Something major would have to change.”
While the dramatic increase in home prices is impressive to Councilmember Mark Burton, he is not surprised.
“Manhattan Beach is one of the best towns in the United States to raise your family … with its great schools, family values and exemplary city services,” Burton said. “For these reasons, families will continue to pay ‘top dollar’ to move into our community, one that is safe and provides all the amenities a family could want in a community.”
Not only does the spike in home prices demonstrate the desirability of Manhattan Beach, it is also beneficial for the city’s budget, according to finance director Bruce Moe.
“When homes are sold, they are reaccessed for property taxes based on the selling price. So when you have a home that someone bought for $250,000 30 years ago and it sells for $2 million, that will benefit the city’s budget. Property taxes account for 40 percent of our city’s budget,” he said.