Basically...Quality of life. People will pay a premium to live in MB as it is a very desirable community and a relatively small area.
Having said that - i'm not seeing prices increase in MB. Price are lower than they were a year ago, inventory is up, as is list time on the market.
For very detailed info on MB - The Strand, Hill, Tree, Walkstreets, etc, please check out ManhattanBeachRE.com - you can also search the MLS for MB homes by specific area directly from the site.
It is also a detailed guide to life in the city and has many stunning images.

Well, it as to do with location and expected appreciation on investment. Supply and Demand.

If you haven't found a home yet then you may find that prices in Manhattan Beach are finally coming down. Prices have decided about 20% overall. Most sellers have realized that we are in a changing market and there are some deals to be had in Manhattan Beach.

Now that doesn't mean prices are not still on the high side... they are. Prices in most beach communities are well above those in surrounding communities. The good news is that lower prices and the return of jumbo loans to the market mean a buyer who wants to buy now may just find a deal or two or three.

Hi John,
If you graphed it, prices would ultimately be determined by intersection (or equilibrium point) of the supply and demand curve. However, to better understand the answer as to why Manhattan Beach prices (were) still increasing, you must consider at least some of the many macro and micro level forces that affect supply and demand.
For example, on the demand side, demand on Manhattan Beach housing stems from major aerospace and defense employers (i.e. Raytheon, Northrup Gruman, and nearby Boeing). As these companies expand or contract, pressure on the housing supply expands or contracts as well. Most of these jobs are white collar and their associated salary allows them to pay a higher price for housing. Further, the employees want to live close to their work.
On the supply side, we are obviously bordered by the Pacific Ocean, so that immediately increases the price pressure because only certain streets (i.e. west of Alma) can actually see the ocean. Literally, housing supply has a hard border. The ocean, and our beautiful beaches, are something that can never be taken a away from our city, which creates a supply constraint.
Another major supply issue is related to the credit markets, or the ability for a home buyer to get a loan. This is big topic that is outside the scope of this answer.
Other factors that affect price of housing include safety and quality of schools. Because prices are high, taxes are high, residents are wealthy, and our city can afford to have an excellent police force and top-notch schools. Over time, this creates a population that is increasingly wealthy and educated which is cyclical in nature.

Justin Reese
JRealty
229 28th Street, Manhattan Beach, CA 90266
o) 310 545 5269 | c) 310 980 1660 | f) 310 545 7804
justin@jrealty.org | http://www.jrealty.org

Hi John,
I have lived and worked in Manhattan Beach for over 17 years now and the prices in Manhattan Beach are declining contrary to what some Realtors may think. The good news is that since there are so few foreclosures the prices have not dropped like they have in the areas hit hard by these. The credit crunch has made it hard for people to get loans so we see a decrease in the number of sales and people putting their homes on the market. A home will stay on the market now for anywhere from 6-8 mos. A lot of new homes have been sitting for even longer. New construction has almost halted because builders can't get construction loans. All of these factors have contributed to declining prices and a buyer's market. Manhattan Beach is a very desirable area to live and the savvy buyer with good credit and some cash can come in and buy properties for around 25% less than what they could when the market was booming.

Michelle Bond
Shorewood Realtors
Manhattan Beach
310-600-0118

Hi John,
Contrary to what the news is saying, the real estate market is not crashing and burning. It is true that there are areas which have been hit very hard due to subprime lending practices. It is also true that there are areas throughout the Los Angeles area and other areas throughout the country where prices are remaining stable and in some instances are still rising.
Where ever you choose to buy, you should do your research carefully and look at local trends in the market place. Then you can make an informed decision.
Nancy Sanborn
The Sanborn Team
310-777-2858

After living and working in MB for nearly ten years and I am asked that same question repeatedly. Buyers are often shocked at the prices in MB. My quick answer is that we beautiful beaches, fantastic restaurants and shopping, an award winning school system, easy access to freeways providing shorter commute times etc. In the last few years several other factors have been added to the mix. One of these is the astounding “mansionizing” effect that has been going on for many years in MB. Small (under 1000 sqft) beach cottages are torn down and replaced with multimillion dollar homes. When those homes are resold, the median home prices increase over all. Now add the fact that volume sold in MB dropped nearly 50% last year. From a purely statistical stand point fewer homes sold with higher price points will explain “some” of percentage increase in home values being quoted in the Los Angeles Business Journal.
Recently I have also seen that many if my buyers are coming from out of the country. Seems news of all the wonderful things MB has to offer is “going global”. Since the Euro is so strong against the dollar we are actually a great value for people coming from Italy, Canada and New Zealand to name a few. They see MB as the perfect place for vacation or rental homes. So you have a scarce, valuable resource with global competition it’s no wonder prices in MB are more resistant to market fluctuation.
Did I mention our beautiful beach….

Supply and Demand. MB has gone up over 17% since the same time last year (from latest LA Bus. Journal.) There is only so much land there and as long as people find it desirable, it will continue to go up in value. Also so much building has taken place, if you have a SFR rather than a townhome..value goes up.