If there is one goal within the Malibu real estate industry, it may be this: Get to 200 sales this year. Two hundred home sales used to be a standard practice. During the glory years of 1999-2005, even 300 sales was common. But six years of slowing, slumping, dropping and depreciation have passed, as sales tallies below 200 units of single family homes in the 90265 ZIP code have been the hallmark of these tough times. 2005 was, indeed, the last year more than 200 deals closed escrow in Malibu.
Early signs this year are for new life. Throughout the industry, positive energy of a recovering market is borne out by the numbers. Through February in Malibu, 27 homes had closed escrow. While that translates into 162 for the whole year, several factors below the surface provide encouragement (that is, encouragement for the industry and future sellers, but not for future buyers).
First, 27 sales is a lot better than recent years. Typically, the January-February total is less than 20 and leads to a year of barely 100 sales (such years of starvation were yielded in 2009 and 2011).
Second, the sales represent the slowest reporting period of each year. Market activity usually slows in November and December and escrow closings during the first two months of the year are seasonally light in general. A pace of 162 sales by this point should accelerate, and make a 200-sale year probable.
But a third, otherwise unseen, factor is this: The number of new escrows has skyrocketed. Indeed, there is action in the marketplace! At press time, there were 48 homes reported in escrow in the 90265 ZIP code. Usually at this time of year, it is less than 30.
The nature of those escrows points to a market phenomenon that translates to a better market in the near future. Most of the action is in the lowest price ranges. For the market to recover, a boost at the low end is the natural first step. That boost has arrived. Thirty-one homes listed under $2 million are currently in escrow, an unmistakable jolt to the industry.
Homes listed specifically for under $1 million have become a distinctly hot commodity. Fifteen such listings have pending sales – and only 12 remain active on the market. It has been a long time since any sector of the Malibu market had a circumstance that more than half the listed homes were in escrow. But the low-end home in Malibu, like the low-end condo last year, has brisk activity.
Through February, the median price for the 27 closed sales has been $2.1 million, about the same as last year. Buyers are profoundly turning away, however, from higher priced properties, as only four of the sales topped $3 million so far this year (all were between $5 – $6 million, in fact).
Furthermore, while the latest trend may be positive, the overall health of the industry remains wanting. The total dollar volume for the 27 sales this year has only been about $60 million. That translates to an annual pace of $360 million. Malibu needs a volume of at least $600 million to be rendered healthy by the very minimum of standards. In the heyday of 2005, the volume was nearly $1 billion. Even in the nightmare year of 2009, the volume was $420 million. So Malibu still has volume issues. That is a function of the vast majority of action being at the low end, as encouraging as that is.
Back to positive trends, however, and this factor: The inventory is seemingly on its way down. The local inventory of homes for sale dropped precipitously in January and February. The supply tally was less than last year for both months. Such a year-over-year decline in inventory is something new. Buyers, long in control of the proceedings, may gradually find a double-whammy building against them: more competing buyers and fewer available choices.
In summary, the numbers of homes sold, in escrow and currently available, tell a story of hope if you own a lower-priced home, and dire odds if you own a more expensive home:
– Homes under $1 million have had six sales through February, 15 are in escrow and only 12 are available at this writing.
– Homes between $1-2 million had six sales, 16 are in escrow and 56 are available.
– Homes between $2-3 million had 11 sales, five are in escrow, 47 are available.
– Homes between $3-5 million have had no sales, six are in escrow, 50 are available.
And the upper end of Malibu:
– Homes between $5-10 million have had four sales, five are in escrow and 61 are available.
– For more than $10 million, no sales so far, one in escrow and 35 available.
One Malibu home over $10 million selling, out of 36 possible is not a good trend for two months’ effort.
Of the entire landscape of $3 million-plus properties four have sold, 12 are in escrow and 146 are languishing, miles from the reality of the marketplace. That is not a good place to be.
Contrast that to 21 homes selling out of 34 that are sub-$1 million brings hope for the whole industry. Even if they are smaller deals, getting to 200 this year may be possible and a key first step to recovery.