Average Sales Price of Single Family Homes in El Segundo
I noticed in the most recent Digs Magazine that the average sale price had increased from ~$975 in 2012 to the current ~$1.375 million. I went back to a data set I had made and to get a better sense of the numbers.
Average Sale Price of SFH in 2008 was $1.02 mil. I choose 2008 because other than 2005 that was the high point of the previous bubble. ($1.071 in 2005 was the peak). Year-to-date average sale price is $1.33 mil. That run is 25%. So from peak to trough to peak you are still up 25%. If we look back to what I saw in Digs Magazine Average sale price was 2012 was $926k to the current $1.33 and you have an astronomical 44% increase in average sale price.
Do you make 44% more money than you did in 2012?
Did average hourly wages increase 44%?
Did salaries increase 44%? Think about teachers, fire and police, engineers…
The demographics in El Segundo has become more diversified over that past couple years but let’s be honest other than a bit more color the economic demographics is about the same. A large amount of blue collar (i.e. Chevron and some aerospace) a fair amount of wealthy (real estate based) families and a smattering of new wealth. When we compare demographics to Manhattan Beach you’ll see the disparity. Manhattan Beach has managed to run off all blue collar and millennials. In order to feel like you should move to and belong in Manhattan Beach household income should probably be in the $300k range. A google search brought me to a statistic that stated the average household income is $218K.
Let’s pretend someone makes $114K has $200K in the bank and has a monthly car payment at $400 and no other debt.
That person can qualify for a $515K home. That’s a family of four living in a one bedroom condo. There’s nothing that makes sense in that equation.
Even with the $218K average Manhattan Beach income a person could only qualify for a $1.2 million home.
Yes I know there are ways to eek out more loan and qualify for a bigger loan but on paper passed on 38% back-end ratios this is where the number fall.
Everything is very very wrong.
But I could be wrong, maybe it’s different this time.