What Happens When 100 Buyers Want the Same 20 Houses?

What Manhattan Beach's Low Inventory Could Mean for Luxury Home Buyers, Sellers—and a New Generation of SpaceX Wealth

By Ed Kaminsky | Manhattan Beach & South Bay Luxury Real Estate

Imagine having $5 million to spend on a home and discovering there is almost nothing to buy.

That sounds impossible in most of America. In Manhattan Beach luxury real estate, it is a situation buyers can face right now.

As of September 16, there were only 46 single-family homes for sale citywide. In the MLS snapshot I pulled while preparing this article, only 21 active listings were priced from $4 million to under $6 million. Narrow the search to the Manhattan Beach Tree Section and the choices dropped to two.

And that is before a buyer says: I need 3,000 square feet. I want to be west of Sepulveda. I don't want a busy street. I want move-in condition. I want a yard. I want to be near a particular school.

Suddenly, a buyer with an extraordinary budget can have virtually nothing to buy.

This is where a low-inventory South Bay luxury real estate market gets interesting—and sometimes uncomfortable.

Why Are There So Few Manhattan Beach Homes for Sale?

Part of the problem is the same rate-lock effect affecting housing markets around the country. Many homeowners bought or refinanced when mortgage rates were dramatically lower. If they don't have a compelling reason to move, exchanging that low-rate mortgage for today's financing can make moving considerably less attractive.

Then the problem feeds on itself.

Homeowners don't see enough homes they want to move to, so they don't list the homes they already own. Less inventory creates less reason to move, which creates even less inventory.

Yet life doesn't wait for the perfect real estate market.

People marry. Families grow. Couples divorce. Children leave home. Jobs change. Parents pass away. People relocate. Athletes get traded. Businesses are sold. Companies create enormous amounts of wealth.

And now there is another dynamic I believe could be particularly important to Manhattan Beach and the South Bay real estate market: substantial new wealth associated with SpaceX.

What Could SpaceX Wealth Mean for South Bay Real Estate?

SpaceX isn't headquartered hundreds of miles away. It is part of the South Bay business community.

Many SpaceX executives, employees and shareholders whose financial circumstances have changed substantially already live in the area, work nearby or are familiar with Manhattan Beach, Hermosa Beach, Redondo Beach, Palos Verdes and the surrounding South Bay.

Some won't change a thing.

Others may decide the house they expected to buy five years from now can be purchased today.

Someone renting may decide to own.

Someone living in a $3 million home may suddenly be comfortable considering a $7 million home.

Someone already successful may now be considering a $10 million, $20 million or higher-end South Bay luxury home.

And others may decide that instead of buying an existing property, they want to purchase a teardown or lot and build exactly what they want.

You don't need thousands of new buyers to affect a relatively small luxury market like Manhattan Beach.

You simply need enough highly qualified buyers pursuing the same limited number of exceptional properties.

Manhattan Beach Is Really Dozens of Micro-Markets

I've worked as a Manhattan Beach and South Bay real estate agent since 1987, representing buyers and sellers through nearly four decades of change in the local market.

One of the most important things I've learned is that there really isn't one Manhattan Beach real estate market.

There are dozens of micro-markets.

The Sand Section behaves differently from the Tree Section. The Hill Section is different from East Manhattan Beach. Within the Tree Section, the area around American Martyrs can behave differently from another portion of the neighborhood.

Sometimes a micro-market comes down to a single block.

A buyer may begin by saying:

"I want a home in Manhattan Beach."

Then it becomes:

"I want the Tree Section."

Then:

"I'd really like to be near American Martyrs."

Then:

"I need a larger lot."

Then:

"I don't want a busy street."

Then:

"I want at least 3,500 square feet and I don't want to remodel."

You may have started with 46 houses.

Now you might have one.

That's the part of Manhattan Beach luxury real estate that an online search can't adequately explain.

True value here can change from neighborhood to neighborhood—and sometimes from one block to the next.

3501 Maple Avenue: When the Buyers Took Over

We recently represented the seller of 3501 Maple Avenue in Manhattan Beach, a roughly 3,400-square-foot home in the Tree Section.

Our early conversations around value were in the mid-$3 millions, possibly around $3.5 million.

The north end of the Tree Section has real advantages. It's convenient to Los Angeles, LAX and the freeways. But historically, buyers can become somewhat more price-sensitive as you move toward the Rosecrans corridor.

We could have decided we wanted $3.9 million and simply put a $3.9 million price tag on the house.

We didn't.

Instead, our job as the listing agent was to concentrate on creating the best possible product and positioning the property to let the market tell us what it was worth.

The seller worked with us to enhance the staging, improve the landscaping, touch up paint and get the home into beautiful condition. We produced professional photography, floor plans and video and then orchestrated the launch through the neighborhood, the brokerage community and the public market.

After several strategy discussions, we listed at $3.6 million.

Then something important happened.

The buyers took over.

Two offers reached $3.96 million. A third exceeded $3.9 million.

The home ultimately sold for $3.96 million - $360,000, or 10%, above asking.

Who Really Determines Manhattan Beach Home Values?

Sellers can ask any price they want. Real estate agents can recommend any price they want.

Neither can force the marketplace to accept it.

Ultimately, buyers establish the next high-water mark.

When several motivated buyers independently decide that losing a particular property is more painful than paying another $50,000, $100,000 or $300,000 for it, that's when price discovery occurs.

There is certainly strategy involved.

Presentation matters. Marketing matters. Luxury real estate negotiation matters. Understanding the property's micro-market matters. Knowing how to manage multiple interested buyers without destroying trust matters.

But ultimately somebody has to write the check.

That's the buyer.

And there is another part of the Maple transaction that I think is particularly relevant to what could be ahead for the South Bay.

Three buyers competed.

One got the house.

The other two didn't disappear.

They returned to an already constrained marketplace. They remained qualified. They still wanted a house. And after losing one, they may be even more determined when the next exceptional property appears.

Now add another group of buyers whose financial capacity has suddenly changed substantially.

That's where things can get interesting.

What New SpaceX Wealth Could Mean for Manhattan Beach Homeowners

If you're a South Bay homeowner particularly the owner of a luxury property, this doesn't mean you should immediately raise the value of your house.

Quite the opposite.

One extraordinary sale doesn't automatically reset an entire neighborhood.

Real estate doesn't trade like a stock. If one buyer pays $500,000 more than anyone expected for an unusual property, every house on that block isn't suddenly worth $500,000 more the next morning.

That property might have had an irreplaceable lot.

It might have been the only home available near a particular school.

It could have had an exceptional ocean view.

The buyer may have needed to move immediately.

Or one person may simply have been willing to pay considerably more than everybody else.

One buyer can create an anomaly. Several buyers arriving at approximately the same number tells us considerably more.

That's why the Maple sale caught my attention.

We didn't have one buyer at $3.96 million while everybody else was at $3.6 million.

We had multiple buyers clustered around essentially the same elevated number.

That's evidence worth watching.

For a homeowner considering selling a luxury home in Manhattan Beach or elsewhere in the South Bay, the opportunity isn't simply to put a higher price on the property because newly wealthy buyers exist.

The more important questions are:

Who is the buyer for your particular property?

What attributes will that buyer value most?

How do you reach that buyer?

And perhaps most importantly:

How do you create competition when the property deserves it?

The buyer for a $5 million, $10 million or $20 million or more South Bay property may already live three blocks away.

Or that buyer may be sitting in an office at SpaceX today and hasn't started looking yet.

What If You're a Newly Wealthy SpaceX Buyer?

The other side of scarcity is more complicated.

For newly wealthy SpaceX executives, employees and shareholders considering a home in Manhattan Beach or elsewhere in the South Bay, having the financial ability to purchase is only the beginning.

The first question shouldn't necessarily be:

"How much house can I afford?"

A better question may be:

"Where should I put my money, and what should I buy?"

Understanding the differences between the Tree Section, Sand Section, Hill Section, East Manhattan Beach and the surrounding Beach Cities can be important.

So can knowing about private sales and off-market homes in Manhattan Beach that may never appear in a Zillow search or even reach the public MLS.

And when the right property finally does appear, another question becomes critical:

How quickly do you move?

840 18th Street: Buying Before the Plane Landed

Recently, I saw an oversized-lot property at 840 18th Street in Manhattan Beach, in the highly sought-after Martyrs area, come on the market at $7.5 million.

I believed immediately that if it made it through the weekend, it was likely to attract serious attention.

There was one problem.

My client was on an airplane.

Because we had already developed a trusted relationship and I understood exactly what he was trying to accomplish, we were able to communicate while he was in flight.

I prepared an offer. He signed it. I reached the listing agent.

Coincidentally, the seller happened to be with the agent when I called, which created an opportunity to convey the strength, seriousness and simplicity of the buyer's offer.

We offered slightly above asking with very clean terms: no financing contingency, no appraisal contingency and an abbreviated inspection contingency.

The seller accepted our offer.

My client's plane hadn't landed yet.

That's an extreme example, but it illustrates something important for luxury home buyers entering a low-inventory market.

Having the financial ability to purchase the property is only the beginning.

Wealth Doesn't Eliminate Competition

This may be particularly relevant for someone whose financial position has changed dramatically through SpaceX or another liquidity event.

Having $10 million, $50 million or considerably more doesn't necessarily make buying an exceptional South Bay property simple.

In fact, the higher you go, sometimes the harder the search becomes.

There aren't unlimited ocean-view lots.

There aren't unlimited oversized Tree Section properties.

There aren't unlimited newly constructed homes in the best locations.

And some of the most interesting off-market properties in Manhattan Beach and the South Bay may never be broadly marketed at all.

When the right property does become available, another buyer may be every bit as capable of purchasing it as you are.

At that point, the advantage may come from local market knowledge, relationships, negotiating experience and access to opportunities.

It can mean understanding value at a block-by-block level.

Hearing about an opportunity early.

Knowing which terms actually matter to that particular seller.

Moving quickly when speed matters.

And knowing when not to chase a property simply because you can afford it.

I think that last point is particularly important.

New wealth should create more choices, not more expensive mistakes.

The Numbers Never Tell the Whole Story

The 840 18th Street transaction didn't end when the offer was accepted.

Once the buyer had an opportunity to properly inspect and fully evaluate the property, additional negotiations took place.

Through cooperative discussions, buyer and seller ultimately agreed to an adjusted price slightly below the initial accepted offer but still above the original asking price.

Both sides felt good about the outcome.

Could the seller theoretically have received more by exposing the property through the entire weekend?

Possibly.

Could something have gone wrong by waiting?

Possibly.

That's exactly why looking at public sales data only gets you so far.

Eventually, the public sees two numbers:

List price.

Sales price.

What you don't see are the circumstances, timing, contingencies, inspection findings, occupancy issues, privacy concerns, certainty of closing, personalities and motivations that determined everything in between.

After nearly four decades as a Manhattan Beach real estate agent, I've learned that everything in between is usually where the real estate transaction is won or lost.

What Should You Look for in the Best Real Estate Agent in Manhattan Beach?

People often ask what they should look for when choosing the best real estate agent in Manhattan Beach for a luxury purchase or sale.

I think the better question is whether that real estate agent has the local transaction history, relationships, market knowledge and negotiating experience necessary for the specific property you're trying to buy or sell.

Luxury real estate at this level is rarely generic.

If you're selling, does your agent understand who the likely buyer is and how to reach that person?

If you're buying, does your agent understand not merely the city, but the particular neighborhood, street and property?

Can they recognize an opportunity before everybody else does?

Do they have relationships that can uncover off-market homes and private real estate opportunities?

And do they have enough experience to tell you when the right decision is to walk away?

Those questions matter much more to me than a slogan.

Rocket Bay Is About More Than SpaceX

I started calling this series Rocket Bay because SpaceX is such a fascinating catalyst for what may be the South Bay's next chapter.

But this story is bigger than one company.

I've watched the South Bay change dramatically since I arrived here in 1983 and entered real estate in 1987.

I've watched aerospace cycles, recessions, the mortgage crisis, the rebuilding of Manhattan Beach, the growth of owner-built custom homes and an enormous transformation in the type of wealth attracted to this community.

Over the years, I've represented entrepreneurs, executives, professional athletes, finance professionals, business owners and families whose financial circumstances can make almost any home affordable.

Yet the fundamental questions remain remarkably similar:

Where should I buy?

What is this particular property really worth?

Is there something better that isn't publicly available?

Should I buy a completed new home or build one myself?

Am I paying for something the next buyer won't value?

If I own an exceptional property, who is the buyer for it—and how do I reach that person?

Those are the questions I believe will become increasingly important as another generation of significant wealth enters Manhattan Beach and the South Bay.

Because in a luxury market where many qualified buyers may be chasing a very limited number of appropriate houses, access to capital matters—but access to information, relationships, judgment and opportunity can matter just as much.

That's what I'll continue exploring throughout the Rocket Bay series.

A Private Conversation With Ed Kaminsky

Whether you're a SpaceX executive, employee or shareholder considering your first South Bay real estate purchase after a liquidity event, an experienced luxury buyer looking for a property that may never reach the public market, or a Manhattan Beach homeowner considering selling, I'm always happy to have a confidential conversation about what you're trying to accomplish.

Ed Kaminsky
Kaminsky Real Estate Group | eXp Luxury
Manhattan Beach & South Bay Luxury Real Estate
310.427.2414 | ITZSOLD.COM

Manhattan Beach Luxury Real Estate FAQ

Q: What are the best neighborhoods in Manhattan Beach for luxury home buyers?

A: There really isn't one "best" neighborhood in Manhattan Beach. The answer depends on what matters most to the buyer.

If ocean views are a must, you're probably going to focus on parts of the Sand Section or Hill Section. If a large home and large yard are more important, East Manhattan Beach may provide better opportunities. If you want both a larger property and an ocean view, certain parts of the Hill Section may be particularly attractive.

For buyers looking for a certain neighborhood character and feel, the Tree Section can be the right fit.

But that's only the beginning, because there are micro-markets within every Manhattan Beach neighborhood—and even micro-markets within those micro-markets.

The Martyrs area of the Tree Section is a good example. The Poet Section of East Manhattan Beach is another. There are particular streets, blocks and pockets throughout the Sand Section, Hill Section, Tree Section and East Manhattan Beach that experienced local buyers consider especially desirable.

At the very high end, properties combining ocean views, substantial square footage and usable outdoor space tend to be among the most valuable because that combination is difficult to replicate. You can find it in select parts of the Hill Section, Sand Section and even portions of the Tree Section.

That's why I generally start with the buyer's priorities rather than telling them which neighborhood is "best."

Q: How could SpaceX wealth affect Manhattan Beach real estate?

A: The most important factor is additional demand entering a market that already has limited inventory.

If a meaningful number of SpaceX employees and shareholders decide to purchase or upgrade homes in Manhattan Beach and the surrounding South Bay, that creates another pool of highly qualified buyers competing for a relatively small number of desirable properties.

My expectation is that this could create upward pressure on pricing or, at minimum, provide additional support for prices during periods when broader economic or geopolitical uncertainty might otherwise weaken buyer confidence.

That doesn't mean every Manhattan Beach home suddenly becomes more valuable. Real estate is much more property-specific than that.

But when additional qualified buyers compete for scarce inventory—particularly exceptional homes, larger lots, ocean views, new construction and highly desirable micro-locations—it can have a meaningful effect on individual transactions.

That's really the premise behind Rocket Bay: what happens when significant new wealth is created almost in the backyard of an already supply-constrained luxury real estate market?

Q: What should I look for in a Manhattan Beach luxury real estate agent?

A: I would look far beyond how many years someone has been licensed.

A strong Manhattan Beach luxury real estate agent should understand the nuances of individual neighborhoods, streets, blocks and even particular properties. In Manhattan Beach, those differences can materially affect value.

You also want an excellent negotiator and someone deeply connected to both the local brokerage community and Manhattan Beach homeowners. Some of the most valuable information in a transaction isn't available online. It comes from being involved in the day-to-day activity of the market.

For buyers, I think an agent should understand construction, inspections and property condition and have excellent resources to help investigate a home before you commit millions of dollars to it. They should be diligent about finding information, interpreting it and getting it to the buyer quickly enough to make an informed decision.

For sellers, the skill set expands further. Your agent needs to understand luxury marketing, positioning, pricing, presentation and negotiation and how to identify and reach the most likely buyers for that particular property.

Experience matters. But what really matters is what that experience allows the agent to see, know and execute that may not be obvious to someone simply looking at the same information online.

Q: Are there off-market homes for sale in Manhattan Beach?

A: Absolutely. In my experience, Manhattan Beach has an unusually active off-market and private-sale environment, particularly at the higher end.

There are many reasons a homeowner might prefer not to publicly market a property. Professional athletes and other high-profile owners may value privacy. Other homeowners simply don't want people walking through their home or don't want a public record of months of marketing.

There are also properties that aren't technically "off-market" opportunities forever—they're simply not on the market yet. A homeowner may be preparing to sell, talking with an agent or quietly considering an offer before launching publicly.

Finding these properties requires looking well beyond the MLS.

I personally use more than a dozen different sources and channels when searching for off-market opportunities. Those can include agent and broker networks, homeowner relationships, private networking groups and, particularly when searching for land or teardown opportunities, connections involving family trusts, family offices and other sources.

Not every off-market property is a great opportunity, and "off-market" doesn't automatically mean "better deal."

Sometimes the advantage is simply access—being able to buy a property that otherwise might never have become available to you.

For a luxury buyer with very specific requirements, that can be extremely valuable.

Q: Is the Tree Section or Sand Section better for my needs?

A: Neither is inherently better. They're very different lifestyles.

The Manhattan Beach Sand Section is really about beach living. At its best, it can almost feel like you're on vacation every day: coastal breezes, easy access to the beach, and in many locations the ability to walk into downtown Manhattan Beach for restaurants, coffee and shopping.

The tradeoff is usually privacy.

Lots can be narrow and homes can be extremely close together. In some areas, setbacks can put neighboring homes only several feet apart. If privacy and a substantial backyard are at the top of your list, some Sand Section locations may not be the right fit.

The Manhattan Beach Tree Section generally gives you a different neighborhood experience. Many lots are around 40 feet wide, which can provide more separation and the possibility of usable backyard space. Depending on where you are in the Tree Section, you can still be relatively close to downtown and the beach while having more of a traditional residential-neighborhood feel.

I don't think buyers should make this decision from a map.

Spend time in both neighborhoods. Walk the streets. Go inside different styles of homes. Experience the floor plans, lot sizes, density, parking, privacy and proximity to the beach.

Usually, after doing that, buyers start to realize fairly quickly whether they're Tree Section people or Sand Section people.

Q: Not sure which part of Manhattan Beach fits you?

A: A few years ago, I created a simple tool specifically to help buyers understand the differences between Manhattan Beach's neighborhoods and some of the nuances that aren't obvious when you're looking at listings online.

Take Ed Kaminsky's “What's My MB?” neighborhood quiz

Navigating a liquidity event?

Ed Kaminsky Kaminsky Real Estate Group · eXp Luxury

#1 Real Estate Agent in the South Bay · Top 15 in the Nation (RealTrends) · Over $4 Billion Sold

310.798.1277 · itzsold.com