It has been six months since the devastating Woolsey Fire burned about 700 homes in the Malibu real estate area. The real estate industry, as well as the town as a whole, went into shock and has very slowly begun to emerge from it. Finally, enough time has passed to get a reliable gauge of the impact on the local market.
Statistics are included in this analysis in the adjacent chart. The numbers are looking as shocking as the fire-swept western Malibu landscape of mid-November:
• Malibu is on course to sell only one-third the houses of the past few years!
• As much as one billion dollars in reduced business is the current pace.
• The real estate market of 2019 is almost worse than the market of 2009, when it was in a spiraling downward depression.
Note that the chart does not show tallies for one-third of the year, so far. It shows projected tallies for the whole year—which are on pace to end up at one-third of last year.
Through four months, virtually nothing has sold—actually, the number of sales is 32—an amount sometimes scored in just one busy month. The current pace would bring in less than 100 sales for 2019, after close to 250 for each of the past many years.
Only about $153,000,000 of volume had been traded through four months. Two years ago, 2017, saw about 10 times that.
Though the samples are embarrassingly small, the average price of all the sales is down, from about $5.7 million last year to $4.8 million this year. The average price of nine beach sales is down. The average price of just 23 sales on the land-side is down.
It is, so far, a staggering collapse of the market. Five-million dollar transactions are projecting to be half of last year. Twenty-million dollar blockbusters? There has been one this year. There were 19 over the past two years.
These statistics apply to all single-family homes with a 90265 zip code, extracted from information in the local multiple listing service. For the people who still have homes standing in Malibu (or condos, equally) and those who work in real estate in some fashion, it is a time of pause and concern.
Now, for an opposite outlook: Incredibly, values are not fundamentally weakened by all this. Statistically, the median price has shot upward. Two years ago, the median price (of 237 homes) was $3,650,000. Last year, among 242 sales, it dropped to $3,250,000. This year it is lingering at $3,850,000.
Looking deeper into the market, the few sales that are occurring are not showing much slippage in prices. The scant market has been highlighted by more expensive properties selling—in relation to the lower end, which has been even more lifeless.
At least so far. The sampling is small and the median average fluctuates with each sale. So far, the $3.8 million median is simply the point where 16 homes have sold for more and 16 have sold for less. It is nevertheless astounding that only 11 homes have sold in Malibu so far this year for under $3 million. Eleven sales!
Nevertheless, perhaps the most important stat on the chart remains: the inventory. Note that mid-April had only 160 homes for sale, easily the fewest of the years featured. It is the major wild card. While so few people are buying, so few are selling, as well. For those looking for a nugget of hope on prices, that is your saving grace. If buyers have little to choose from, they have to pay a little more aggressively for what they want. And thus, the one “good” statistic of the year, the higher median value so far, is better understood because the supply is way down, and that helps prices hold.
More than in most years, it is that inventory category that is vital in 2019. After all, since November 9 there are hundreds of fewer Malibu homes that exist, let alone listed for sale. Buyers are going headlong into a nasty period of less choice. As a result, at least through April, prices have been salvaged (as opposed to savaged).
Such is the snapshot of four months. Considering the last two months of 2018 were also shut down after the fire, this has been a six-month phenomenon, actually. But things change, and a lot of sports contests finish much differently than how they look in the second quarter.
Reported new escrows are increasing rapidly and a summer momentum—with an economy flush with cash and profits and higher individual incomes—may rescue the woeful sales. If buyer commitments increase while inventory lags, 2019 may end concluding with appreciation, as is arguably the case so far. That would make sense. After all, the supply of homes was drastically curtailed in November, but buyer interest rarely has had such a sudden wholesale drop-off.
Rick Wallace has been a Realtor in Malibu for 31 years and a real estate contributor to the community for 25 years.