The Malibu Real Estate Report

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Rick Wallace

Local market showing remarkable resilience

With 133 homes known to have sold through August, Malibu remains on a pace to sell 200 homes by the end of the year. Apparently, while a modest amount, that is still not few enough to make a dent in overall prices. The median sales price for the 133 homes has been $2,850,000. That is the price of the 67th highest sale, the point where half the homes have sold for less and half sold for more. Last year, the median was that same exact figure. Throughout 2007, the median has held close to last year’s result.

Insiders know, nevertheless, the market is more complicated than that. Upon further review, two different phenomena are taking place.

The high end is humming along in better times than ever. The low end has proportionately less activity. As such, the weight of prevalent higher priced sales is keeping averages from plunging despite a great deal of price reductions and a dearth of buyers.

The overall statistical picture of Malibu real estate is pretty good, amazingly. The number of homes sold for more than $5 million and $10 million has already matched recent years and will shatter past records. Though elite properties represent a small percentage of Malibu living, mammoth doses of money are keeping Malibu real estate healthy. As the chart indicates, already this year 33 sales have topped $5 million and 14 have topped $10 million through August, putting us on a projection of 50 and 21, respectively. As a result, 25 percent of all local home sales currently are above $5 million.

In contrast, the numbers of sales in the lower priced neighborhoods have dropped considerably. With only 34 deals concluded in such neighborhoods, the same 50 sales and 25 percent of the market will be represented by the low end.

In 2004, $5 million sales were only 14 percent of the Malibu marketplace. Lower-end neighborhoods accounted for 29 percent. This year they are even.

While the industry feeling is that most sellers are fighting for the fewer buyers, the inventory remains moderate, and that also has kept prices from crumbling.

Two sales have topped $30 million in 2007, with two close to that benchmark last year, and practically none ever before then.

Further evidence that prices are holding is this: Of the 13 sales in the lower-priced neighborhoods from 2007 that have also sold previously in the past three years, all 13 went at a higher price this year.

Price slashing is rampant, but only to the levels of previously established values. Buyers beware, in any case: While these may be gloomy days for the market as a whole, Malibu has seen median value drops in only six of the past 42 years (1968, 1980, 1992, 1994, 1995, 2001). Years that Malibu values increased at least 15 percent are far more prevalent than years that values increased less than 5 percent (or dropped). This may be one of those off years, but such times are usually one and done.

To review only Multiple Listing Service data, as Realtors do regularly, the situation appears bleaker than it really is. Only 110 home sales have been reported so far in the local MLS in 90265. During the past two months, it scarcely seemed that more than one or two homes per week were closing escrow. Many sales reported in the MLS do not declare a price. Increasingly, sales are kept from MLS exposure (another hint of busy activity at the high end). Thanks to a myriad of public and private sources, however, virtually any bona fide sale, no matter how private, can be uncovered in a matter of weeks, including established or reliable estimates of price, and included in a study such as this. The statistics herein involve residential units of 1 to 4 units, almost entirely homes, and exclude mobile home and condominium sales.

Admittedly, the immediate future looks challenging and the number of buyers (meaning, willing and ready to buy, but more so qualified to buy under current stringent lending standards) may stay at a relative trickle.

Local Realtors are worried the proposed Point-of-Sale septic inspection ordinance by the City of Malibu may have a depressing effect on values. Some believe the sales process will be additionally burdened by a mandated inspection that is subject to government scrutiny, possibly causing delays and additional costs to the selling process.

On the other hand, there is little about current-day Malibu that seems worthy of complaint. The beauty remains, the parks and amenities of our town are in the process of glorious improvement, calamities seem on the wane, as are embarrassing road closures. The overall appeal of Malibu living keeps millions wishing to live here, and thousands investigating that possibility every year. Besides celebrities, high-powered investors and entrepreneurs now power the local market as well. With values holding in a time of perceived crisis in the real estate industry, these days reveal the resilience and appeal of Malibu real estate just as much as boom times do.

Rick Wallace of the Coldwell Banker company has been a Realtor in Malibu for 20 years. He can be reached at his Web site, www.RICKMALIBUrealestate.com