![\"\"](\"https:\/\/www.newsbeep.com\/us-ny\/wp-content\/uploads\/2026\/02\/mb-oaks.jpg\")
This home on Oak Street in Manhattan Beach garnered 18 offers in January. Photo courtesy Amy Pearce\/Sotheby<\/p>\nby Mark McDermott<\/p>\n
Local Realtors did not enter 2026 with outsized expectations.<\/p>\n
Last January was very different. A stagnant real estate market had been steadily picking up pace over the latter half of 2024, and most local real estate professionals were bullish about 2025. Then the Palisades fires happened, and the Manhattan Beach market caught fire, with a record $181.7 million in homes going into escrow in January alone \u2014 beating the old record by a cool $100 million.<\/p>\n
Most observers thought the rest of the year would follow the trend, if not reaching quite so spectacular highs, at least achieving a full rebound from the previous sluggishness. And then\u2026a whole lot of nothing happened. By year\u2019s end, Manhattan Beach had logged just 325 sales \u2014 barely 21 more than 2024\u2019s depressed total of 304, and not even matching 2009\u2019s \u201cGreat Recession\u201d volume. Each quarter after that record Q1 saw fewer sales than the one before it \u2014 a pattern that, as broker Dave Fratello of the Edge Real Estate Agency noted, \u201csimply never happens\u201d in real estate.<\/p>\n
And so the New Year was not a time of great hope. Then January happened.\u00a0<\/p>\n
It didn\u2019t quite reach the heights of last January, which were driven by emergency buyers, but registered the second biggest total value in sales at $121 million. Nearly everyone\u2019s expectations were boggled.<\/p>\n
\u201cAt the start of this year, I expected a great Super Bowl and a tepid real estate market,\u201d Fratello said. \u201cI had it backwards.\u201d<\/p>\n
The January surge featured multiple properties receiving double-digit offers, with one East Manhattan Beach home drawing 18 competing bids. Properties that real estate professionals carefully priced to attract attention were routinely bid up 10 percent or more above asking, a pattern not seen since the fire-driven frenzy of early 2025.<\/p>\n
Fratello said these multiple bid properties were indicative of just how unexpected early 2026 surge has been.\u00a0<\/p>\n
\u201cWhen you\u2019re over 10 [offers], it\u2019s telling you that your price was probably 10% too low, or more,\u201d he said. \u201cProfessional realtors do not intentionally underprice by 10%. Because every house could be an auction, but we don\u2019t do that \u2014\u00a0 so it\u2019s telling you that we as a community just did not anticipate the demand that was right there just below the surface.\u201d<\/p>\n
Amy Pearce of Vista Sotheby\u2019s International Realty, who represented the 18-offer property at 1728 Oak Street, couldn\u2019t speak to the final offer because the home is still in escrow. But she said the offers far outstripped the original listing price, a four bedroom, 1,996 sq. ft house, which was $2.199 million.\u00a0<\/p>\n
This home on Oak Street in Manhattan Beach garnered 18 offers in January. Photo courtesy Amy Pearce\/Sotheby<\/p>\n
\u201cWe sent out 10 seller multiple counter offers, eight responded with a best and final, and we are in escrow well over $2.5 million with a backup offer as well,\u201d Pearce said.\u00a0<\/p>\n
The Oak Street home illustrated both the opportunity and challenge facing Manhattan Beach buyers. Though somewhat dated and in need of updates, prospective buyers told Pearce they were \u201cjust fine living in it the way it is, and then giving it the glow up later on.\u201d<\/p>\n
\u201cI think people are willing to put the work in to get into the market,\u201d Pearce said. \u201cThey\u2019re not afraid of a fixer-upper.\u201d<\/p>\n
\u00a0
\nTopsy turvy<\/p>\n
To understand January 2026\u2019s surprise, it helps to revisit the strange trajectory of 2025. It was a year that defied every prediction.<\/p>\n
The year began with extraordinary optimism. Market momentum had been building through late 2024, and real estate professionals sensed the long stagnation was finally breaking. Then the January 7 Palisades fires accelerated everything into overdrive.<\/p>\n
\u201cThis market was already heating up substantially in summer and fall of 2024, particularly at the high end,\u201d Fratello said. \u201cAnything that was happening that was busy, or prices going up in early 2025 was, in many ways, a continuation of trends we already had.\u201d<\/p>\n
\u201cTo me, the most significant positive change in the market was in the way both buyers and sellers re-entered the market \u2014 it felt like a normal year,\u201d he said. \u201cWe just really hadn\u2019t really seen sellers by choice for two and a half years. Like 90% of the homes that were on the market for two and a half years, somebody died or got divorced or got a job transfer, and that was the reason behind the sale. And it was like daybreak last year. People were saying, \u2018Hey, I\u2019ve waited long enough. I\u2019ve always been wanting to make this move, out of state to be with family, or cash out and move to the desert\u2019 or who knows what \u2014 the many different reasons why people might sell their home. They were deciding that it was time to sell and that the market looked fine for them.\u201d\u00a0<\/p>\n
The fire added rocket fuel. That record $181.7 million January was more than double the $81.3 million COVID boom year of 2021 and represented only the first January ever to exceed $100 million in new escrows.<\/p>\n
By April, however, something shifted. \u201cBy mid-March to mid-April, someone had hit the brakes,\u201d Fratello said. Each subsequent quarter saw fewer sales than the one before, creating that unprecedented upside-down pattern.<\/p>\n
The second half of 2025 turned particularly sluggish. Properties that had sold in days during the January frenzy sat for months by fall. The Manhattan Beach rental market \u2014 typically predictable at $8,000 to $15,000 per month, with a median rent of $9,500 \u2014\u201dalmost collapsed\u201d in terms of demand, according to Fratello, with some homes renting for less than previous tenants had paid.<\/p>\n
\u201cThere\u2019s something weird going on out there,\u201d Fratello said at the time, speculating about broader economic uncertainty.<\/p>\n
Jerry Carew, broker and owner of Three Leaf Realty in Manhattan Beach, attributes the 2025 pattern to basic supply and demand dynamics amplified by the fires.\u00a0<\/p>\n
\u201cYou had this big demand that just shot prices way up because of crazy demand, and then there\u2019s the inevitable come down from the high,\u201d Carew said. \u201cA lot of people took advantage of the demand that was created by the Palisades fire. The supply has been low for years, so it\u2019s our new norm. We had an unusual demand, and then the demand went away, so it softened up.\u201d<\/p>\n
Despite the year\u2019s ups and downs, Manhattan Beach finished 2025 with a median home price of $3.325 million \u2014 up 9.9 percent from 2024 and setting a new record. The previous high of $3.137 million was set in 2022.<\/p>\n
\u00a0<\/p>\n
![\"\"](\"https:\/\/www.newsbeep.com\/us-ny\/wp-content\/uploads\/2026\/02\/Fratello-3208-Agnes_Front2.jpg\")
This home on Agnes Street, a 3,505-square-foot, six-bedroom, seven-bath home made from salvaged brick walls and reclaimed wood, sold for $6.25 million last year. Photo courtesy the Edge Real Estate Agency
\nThe Palisades fade<\/p>\n
One major question heading into 2026 was whether fire-displaced buyers would continue impacting the market. The answer appears to be no \u2014 at least not in the dramatic way seen in early 2025, nor in the expectations that it would permanently change the local market.<\/p>\n
School enrollment data tells part of the story. According to Manhattan Beach Unified School District figures, emergency transfers from fire-affected families peaked at 231 students last year. By this school year, according to MBUSD data first reported by the MB News, that number had dropped to 76 \u2014 a decline of 67 percent.<\/p>\n
Mira Costa High School, which enrolled 120 displaced students in the initial surge, now has 43. Manhattan Beach\u2019s five elementary schools combined host just 28 transfer students, with another 5 at the middle school.<\/p>\n
\u201cEach family\u2019s journey after the fires has been deeply personal, and we respect the decisions they made for their children,\u201d Tina Shivpuri, current president of the MBUSD school board, told MB News.<\/p>\n
At the real estate level, Palisades buyers appear to have largely moved on from the Manhattan Beach market.<\/p>\n
Carew concurred. \u201cIt seems like it was about a nine-month run and then it was over,\u201d he said. \u201cThere\u2019s probably some, especially in the Sand Section, maybe just the higher end, but the impact was severe and swift and less and less impact. I would say not a whole lot at this point.\u201d<\/p>\n
Pearce thinks the impact will be ongoing, if less dramatic than early last year. She believes some families affected not just by the Palisades fire but the other fires from last January are finally able to pull the trigger on purchasing new homes.\u00a0<\/p>\n
\u201cI have a couple of Palisades buyers that are looking, but as I think back to all of these offers, they weren\u2019t [Palisades buyers],\u201d Pearce said of her 18-offer property. \u201cThere were like three people from Culver City who were looking, maybe one from Santa Monica, someone from the valley, which was random. But there weren\u2019t any Palisades buyers, actually.\u201d<\/p>\n
The initial wave, last January, tended to be what one realtor at the time called \u201cthe big whales,\u201d those with the resources to pay cash. But for most other potential buyers, it took time for insurance to cover their losses before entering the market, and for the possibility of rebuilding to perhaps fade. Some families who lost their homes to the fires and initially leased locally are now making permanent moves.\u00a0<\/p>\n
\u201cOne client made a comment to me that they\u2019re the first of their friend group that lost their homes that have actually bought something,\u201d Pearce said of a recent Malibu fire victim who purchased in Hermosa Beach. \u201cSo I think we have yet to see the impact of those people starting to make decisions. They\u2019ve had the time to look around and figure out where they want to be.\u201d\u00a0<\/p>\n
\u201cIf they\u2019re not heading back up towards the Palisades or not rebuilding, then they\u2019ve figured out where they want to be,\u201d she said. \u201cThey\u2019ve had the time, and now, it\u2019s go time.\u201d\u00a0<\/p>\n
\u00a0
\nAfter the surge<\/p>\n
It\u2019s fairly clear, at any rate, that Palisades families didn\u2019t fundamentally drive the January surge. Who or what did? The answer remains somewhat mysterious, even to veteran professionals. Several factors may have converged. One is simple pent-up demand.\u00a0<\/p>\n
\u201cBuyers did seem to retreat a bit in the later part of 2025, and those with needs and plans may now just be deciding it\u2019s time to come back,\u201d Fratello said.<\/p>\n
Mortgage rates dropped in late September and early October to around 6.3 percent, but more importantly, buyers seem to have accepted that rates in the sixes are \u201cthe new normal.\u201d<\/p>\n
\u201cI think it\u2019s between just low inventory, rates getting better, and people just getting used to the rates,\u201d Pearce said. \u201cThis is where we are. It\u2019s not going to get any better, so if we want to get in, we need to get in. People are just ready.\u201d<\/p>\n
Or maybe, Fratello said, only half-joking, it was just a matter of what a little bit of sunshine could do.\u00a0<\/p>\n
\u201cDon\u2019t rule out good weather,\u201d he said. \u201cWe had plenty of rain leading into the New Year and in the first couple days of January, but the clear, warm and beautiful days ever since have paired nicely with visiting open houses. Perhaps it\u2019s that kind of elevated mood one might need to jump into multiple offers. You need a big down payment and a bunch of Vitamin D to compete.\u201d<\/p>\n
Unlike many off-season listings that hit the market due to distress sales, January 2026 featured \u201csome really, really nice places,\u201d according to Fratello. \u201cThat\u2019s why they\u2019re all getting bid up and absorbed so quickly.\u201d<\/p>\n
Inventory increased slightly to 42 active listings from December\u2019s 33, providing \u201cjust enough\u201d new listings to hold buyers\u2019 interest without flooding the market and creating what Fratello calls \u201cmass waiting\u201d \u2014 where buyers sense an advantage developing as more and more sellers bring out homes at the same time.<\/p>\n
Carew noted that Manhattan Beach buyers typically come from north of the South Bay. \u201cWhen you say, where are most of the buyers coming from? They\u2019re coming from the Culver City, Palms area\u2026They\u2019re just coming from north of here, they\u2019re moving south,\u201d he said.<\/p>\n
The fundamental constraint on Manhattan Beach\u2019s market remains inventory \u2014 or rather, the lack of it.<\/p>\n
Sales as measured by number of homes sold have remained well below normal levels for several years, a phenomenon Fratello attributes to \u201cgolden handcuffs\u201d \u2014 homeowners with 2 to 3 percent mortgage rates who are reluctant to sell and take on today\u2019s 6 percent rates.\u00a0\u00a0<\/p>\n
\u201cWe still have a shortage of willing sellers,\u201d Fratello said.\u00a0<\/p>\n
Inventory numbers support this theory.\u00a0 By way of example, 2024, with 304 sales, was the lowest sales volume since 1995, according to Fratello\u2019s MB Confidential website\u2019s data. Despite its fast start, 2025 saw only 325 sales. Typically, about 400 homes sell each year. The highest year on record was the 518 homes sold in 2021.\u00a0<\/p>\n
Carew said that those golden handcuffs won\u2019t last forever.\u00a0<\/p>\n
\u201cThe further we get away from the 2 percent rates, the less people will have them, and the more people will want to move,\u201d Carew said. \u201cBut for a couple of years, people had just refinanced for 2 or 3 percent, so there\u2019s no way they\u2019re going anywhere. As time goes on, it\u2019ll have less of an impact, so it\u2019s a slow increase back to what we would call normal inventory.\u201d<\/p>\n
This is not specific to Manhattan Beach. Carew\u2019s data shows the Beach Cities are still off approximately 35 percent in transactions compared to 2018-2019 levels.<\/p>\n
\u201cWe\u2019re still off quite a bit,\u201d he said.<\/p>\n
The combination of limited inventory and strong demand continues pushing prices higher, creating an affordability crisis even by Manhattan Beach standards.<\/p>\n
\u201cEverything under $4 million has been bid up,\u201d Fratello said. \u201cIt\u2019s scary in many ways. This is obviously a luxury market anyway, so affordability \u2014 traditional calculations of affordability \u2014 don\u2019t really apply here. But still, you\u2019d like to think that somebody could get into a nice house for under $3 million, and it\u2019s just getting really hard.\u201d<\/p>\n
According to data from Haynes, Manhattan Beach\u2019s median home price of $3.325 million requires a minimum annual household income of approximately $802,350 to qualify for a mortgage with 20 percent down, assuming a 6.9 percent interest rate.<\/p>\n
By comparison, the California median home price of $905,680 requires an annual income of at least $232,400.<\/p>\n
Manhattan Beach is increasingly becoming a market dominated by cash buyers and the ultra-wealthy. In the second quarter of 2025, 44.6 percent of Manhattan Beach transactions were all-cash purchases, according to Haynes\u2019 analysis \u2014 far above regional norms.<\/p>\n
Real estate professionals have varying outlooks for 2026, shaped by last year\u2019s unpredictability.<\/p>\n
Pearce is bullish. \u201cI think it\u2019s going to be a really good year,\u201d she said. \u201cThere\u2019s a lot of momentum and a lot of people watching. Hopefully, if people are thinking about selling, they\u2019ll want to get on the bandwagon and list their house if they have an alternative, because we need to shake loose some inventory.\u201d<\/p>\n
Carew is more cautious, hoping for what he calls \u201ca vanilla year.\u201d<\/p>\n
\u201cSome ways I\u2019m hoping for a vanilla year so that we can predict it,\u201d Carew said. \u201cWhen you can predict the market, it\u2019s kind of nice. You know what\u2019s coming. Everything seems to be very unpredictable around the globe at the moment, so it\u2019d be nice if at least real estate was predictable.\u201d<\/p>\n
He projects an average year at best unless something dramatic changes, such as interest rates dropping to 4.5 percent.\u00a0<\/p>\n
\u201cIf it stays around six, give or take, I think we\u2019ll just have an average year, nothing special,\u201d Carew said.<\/p>\n
Fratello, chastened by the unruliness of 2025 and early 2026, is reluctant to make forecasts.\u00a0<\/p>\n
\u201cIf I couldn\u2019t predict what was going to happen in January, how can I predict what\u2019s going to happen the rest of the year?\u201d he said.<\/p>\n
What he and everyone else in the local real estate industry can measure is momentum. Carew tracks weekly escrow data across the Beach Cities for his office meetings and has seen consistent improvement since January began.\u00a0<\/p>\n
\u201cIt\u2019s gone up every week since January, and we\u2019re in week five or six, and it\u2019s gone up nice and steady,\u201d he said. \u201cThe market\u2019s improving. That\u2019s what you would expect, and it\u2019ll peak in May, June.\u201d<\/p>\n
Whether that pattern holds \u2014 or whether 2026 delivers another surprise \u2014 remains to be seen.<\/p>\n
\u201cThere\u2019s no one thing that broke,\u201d Fratello said, reflecting on January\u2019s unexpected surge. \u201cYou could try and say, now that it\u2019s happening, I can taste what\u2019s in the soup. But the truth is, nobody could have foreseen it. There isn\u2019t any one factor.\u201d<\/p>\n
Manhattan Beach\u2019s strong performance is leading a broader South Bay recovery, according to Haynes\u2019 year-end analysis.<\/p>\n
Redondo Beach saw an 11.7 percent jump in sales volume in 2025, the highest increase in the region, paired with 4.8 percent price growth to a median of $1.59 million. Hermosa Beach\u2019s median rose 6.8 percent to $2.4025 million, though sales dipped 8.3 percent \u2014 likely due to tight inventory.<\/p>\n
On the Palos Verdes Peninsula, the picture was mixed. Rolling Hills Estates posted 7.9 percent price growth despite an 11.4 percent drop in sales. Rancho Palos Verdes saw modest 0.8 percent appreciation with a 5.6 percent sales increase. Palos Verdes Estates experienced a 7 percent price decline to a $2.5665 million median, though sales rose 6.9 percent.<\/p>\n
Rolling Hills, with its extremely low transaction volume, saw the largest price swing \u2014 down 28 percent \u2014 though sales increased 23.5 percent.<\/p>\n
\u201cDespite high mortgage rates and affordability concerns, the market proved resilient,\u201d Haynes wrote. \u201cBuyers were still making moves, and well-located homes continued to command strong prices.\u201d<\/p>\n
Carew emphasized Manhattan Beach\u2019s continued dominance in the region.\u00a0<\/p>\n
\u201cManhattan Beach leads everything. There\u2019s no doubt about it,\u201d he said. \u201cEven when the market crashed back in \u201907-\u201908, it was the last to crash and the first to come back. It will always be the leader of the Beach Cities. It\u2019s a destination. I don\u2019t see that changing anytime soon. I am just happy to be living here, and to have a business here.\u201d<\/p>\n
It\u2019s also continuing to be a destination for high profile buyers. Last year, Laker Luka Donicic bought a $25 million Sand Section home (one formerly owned by tennis star Maria Sharapova), while actor Vince Vaughn, a longtime East Manhattan Beach resident, bought a Strand home for $16.75 million (which, curiously, was originally listed at $27 million).\u00a0<\/p>\n
As the spring selling season approaches, one thing seems certain: in Manhattan Beach real estate, the only constant is unpredictability, albeit of an ever-upward sort. ER<\/p>\n","protected":false},"excerpt":{"rendered":"by Mark McDermott Local Realtors did not enter 2026 with outsized expectations. Last January was very different. A…\n","protected":false},"author":2,"featured_media":131882,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[35],"tags":[75,84,83,9,24,63],"class_list":{"0":"post-131881","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-manhattan","8":"tag-manhattan","9":"tag-manhattan-headlines","10":"tag-manhattan-news","11":"tag-new-york","12":"tag-new-york-city","13":"tag-nyc"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/posts\/131881","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/comments?post=131881"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/posts\/131881\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/media\/131882"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/media?parent=131881"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/categories?post=131881"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/tags?post=131881"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}