For the longest time, prospective Malibu home buyers have been hoping for a 180. Waiting to see home prices reverse completely from their rapid ascent, house-hunters have been wishing for a plummet to make up for the double-digit median increases of many recent years when they became priced out.
First things first. Buyers initially needed to be watching for a 180/180. As far as Malibu real estate is concerned, a 180/180 represents a whole new market condition for which buyers can be thankful.
What is meant by 180/180 is that there are more than 180 homes on the market now, and only about 180 homes may sell this year. It is a ratio unseen in Malibu for some time and it represents the current market.
The adjacent chart (Listings-Sales-Median) gives a historical perspective of the sudden alteration in both inventories of homes for sale and actual sale results in Malibu through the midway point of 2006.
For the past three years, well below 180 homes have been listed for sale. Comparatively, more than 300 homes have been selling most years. The inventory has shot upward this year, and homes sales have plummeted. Recently the ratio achieved a 180/180-more homes on the market than projected to sell during 2006. The comparison of inventory to actual sales of homes (effectively, sellers/buyers or supply/demand) is the best measure to glimpse the direction of the market and future prices.
Since 1998, the inventory of buyer choices has steadily decreased. From an average of 288 homes that year, the supply diminished to an average of 118 last year-razor thin in a city of 4,000 homes. This year, the supply has escalated rapidly to about 200 homes.
That by itself would not be of concern. As much so, however, is the sudden slump in home sales. Only 90 homes were known to have sold in Malibu through the first six months of the year. Every year since 1998 has seen 300 sales, except 2001. This year may not reach 200.
Despite both trends, 2006 sales have been robust for values. Prices have actually increased. Those fortunate sellers who find buyers are getting close to their price and even more in some cases recently. Though buyers are fewer, they are also stronger, at least for now.
Sales are still getting close to asking, but that means the last asking price.
Price reductions have been widespread and market conditions are such that future sales may be likely only among the most restless of sellers those willing to drop their price and “look at any offer,” already a growing cry in the industry.
The very few sales in Corral and Latigo Canyons (Malibu Sales Performance chart), generally the lowest-priced neighborhoods in Malibu, indicate the lower price ranges are soft. Homes under $1.5 million have struggled mightily this year. That helps explain why the median price has risen. The rare sale so far in 2006 has been the $2 million – $5 million home, generally. The so-called “entry level” market has run dry. Additionally, the low production of beach sales indicates the upper levels have been tentative.
One good thing about this market in transition; virtually everyone expected it and few are upset about it. Ultimately, most market-watchers realized that when the affordability levels dropped below 20 percent, values could not keep rising much longer. Twenty percent affordability was for L.A. County, never mind Malibu, and meant that less than 20 percent of households could afford a median-priced home in the county. These days, it is not that fewer citizens would like to live in Malibu. They simply can’t afford to.
The median of the past six months is now $2 million higher than just eight years ago. It has increased 250 percent, to three and a half times higher, now at about $2.8 million. All statistics herein refer to single-family homes in the Malibu/90265 ZIP code.
2006 began with fantastic factors favoring higher prices. Inventory was exceedingly low and the momentum of a 300-sale 2005 made for a seller’s market. The trends have pulled a 180 over the last six months.
The increase in inventory is partly seasonal. How anxious and plentiful sellers are in the fall will be important. The current psychology may be short-lived and a balanced, stable period of sales and prices could occur. Most sellers are also buyers and visa versa. If the trend of more and more homes listed with fewer buyers continues, however, values are certain to take a hit. So far this year, one house has sold for less than last year and there is at least one other listed that way.
The Sales Performance chart shows the huge drop off in sales throughout Malibu but particularly up the canyons and on the beach, the bottom and top of the price ladder, respectively. Nevertheless, the few sales that squeaked by have gotten terrific prices. It has been a hit-or-miss year for sellers, those selling rewarded handsomely and those not left frustrated.
If the rest of the year were to see mostly lower-priced homes getting action, the median would drop from its current perch. By year-end, anchored by such activity, the median may not be higher than 2005 after all. If that were the case, these days truly represent the top of the market.
Malibu is certain to see fewer home sales this year than the quantity of agents active in the business. About 270 local agents work regularly in a new environment of greater marketing costs, longer hours and less volume. Last year saw over $950 million in total home sales volume in Malibu, excluding condos, mobile homes and vacant land. This year projects to about $710 million.
Rick Wallace of the Coldwell Banker company has been a Realtor in Malibu for 18 years. He can be reached at his web site
www.RICKMALIBUrealestate.com.
LISTINGS – SALES – MEDIAN
AVERAGE LISTINGS
TOTAL SALES
MEDIAN PRICE
MEDIAN INCREASE
1998
288
325
$801,000
1999
272
305
$1,100,000
37%
2000
222
353
$1,250,000
14%
2001
233
246
$1,149,000
-8%
2002
193
315
$1,375,000
20%
2003
174
313
$1,675,000
22%
2004
125
307
$2,200,000
31%
2005
118
259
$2,495,000
13%
Current listings
Projected sales
6 months Median price
2006
6 months
196
180
$2,802,000
12%
90265 zip code single family homes
MALIBU SALES PERFORMANCE
2004
2005
2006 – 6 months
SALES
MEDIAN
SALES
MEDIAN
SALES
MEDIAN
BEACH/BLUFF HOMES
65
$5,300,000
60
$6,175,000
14
$6,050,000
LAND SIDE HOMES accessed via:
BIG ROCK – PUERCO
73
$1,790,000
68
$2,035,000
22
$2,835,000
CORRAL – LATIGO
34
$1,037,000
22
$1,162,000
5
$1,525,000
SEA VISTA – CAVALLERI/
PT DUME
66
$2,600,000
52
$2,996,000
25
$3,500,000
BONSALL – DEER CREEK
69
$1,750,000
57
$1,925,000
24
$2,012,000
TOTALS
307
$2,200,000
259
$2,495,000
90
$2,802,000