The ‘real’ real estate market
By Rick Wallace / Special to The Malibu Time
The home sits in the heart of Point Dume. The property has a beautiful pool and a large, outside entertainment deck with a pizza oven. Though the lot is small by Point Dume standards, the house is large enough with five bedrooms and three fireplaces. It sits on a terrific street.
When it hit the market in June of last year, the asking price of nearly $3 million would’ve brought a profit above the $2,750,000 paid in 2005. But profit would not come. The listing had a price reduction several times before finally expiring from the multiple listings. According to public records, the home sold in March for just more than $2.1 million, a loss of $650,000.
A few weeks later, a newer Spanish Hacienda style home in Carbon Mesa closed escrow for $4.2 million. It had been on the market only two weeks before it entered escrow at nearly full price. Granted, following its previous sale in 2004 for about $3.5 million, it had seen marketing stints during both 2005 and 2006 at about $4.5 million asking price. Nevertheless, it didn’t sell then. This year it went in a flash.
In contrast to recent years when every Malibu listing seemed to sell fast and at full price, the sales results today are quite varied; and thus, the impression of the market is varied also.
Evidenced by the above chart, the real-life selling activity so far this year indicates that listings at less than $2 million are struggling badly. Homes in the $2 million – $3 million range are actually doing quite well. Homes between $3 million and $5 million have had mixed results. These tallies apply to single-family homes off the beach (called “land side” in the local industry) at $5 million or less in the Malibu 90265 zip code that have seen any listed market time since January 1.
Two hundred five homes in this category have produced 68 homes that have sold or entered escrow. At that rate, Malibu is in an 18-month period to sell all such homes that hit the market, an average of nine months from first list date to close of escrow.
Approximately half the homes surveyed are still on the market. About half of those (45 listings of 98 available at this writing) have been on the market for more than 180 days already.
While many listings are withdrawn or expired at one time and then hit the market fresh with the same or a different agent, this analysis includes all market time from all past efforts to sell the house, according to information available in the local multiple listing service. Many listings go on and off and have inconsistent selling efforts, but their actual, total exposed market time is included in this analysis, as well as the full history of price reductions, regardless of most recent status.
Homes at less than $2 million, where only 15 of 66 this year have found a buyer that currently have or closed an escrow, are the most apt to see price reductions. Twenty-one of the 34 current listings have already had at least one price reduction, as have 15 of the 18 on the market at least six months.
Homes are gradually selling farther from their original list price (though sales prices from last asking price tend to be close). That confirms many homes need price reductions to sell, and some prices are traveling a long way down. Of 44 closed deals, 27 have sold at least 10 percent below the original asking price when that owner first tested the market.
The best range to be selling currently is in the $2 million – $3 million range. Thirty-one of the 69 listings this year have found buyers in less than five months. Twenty-one have closed escrow and 10 are in escrow. About half of the closed escrows saw market time less than 180 days and/or sold within 10 percent of their original asking price.
Nevertheless, the market as a whole is challenging. Had inventories not remained low by past standards, more homes would have sold in recent times at lower prices than before, such as the one described above, which is not alone. More than one-quarter of this year’s sales were more than 25 percent below their original asking price (12 out of 44).
Though 39 homes, from all the price categories, have gone off the market during this calendar year, and some may have seen little actual exposure in 2007, the truth is that many of them had long previously unsuccessful market efforts before giving up.
Obviously, the longer a listing stays on the market, the more likely the owner will grant a price reduction. Still, homes priced less than $3 million see more rate of reductions than those more than $3 million. Of the 28 homes that have been listed six months or more at less than $3 million, 24 have had price reductions. Of 17 listed that long at more than $3 million, only eight have reduced.
Rick Wallace of the Coldwell Banker company has been a Realtor in Malibu for 19 years. He can be reached at his web site, www.RICKMALIBUrealestate.com