Condo Market Surprisingly Strong in 2018

It seemed last year that many weeks would pass with scarcely a single condo sale. The market felt quiet, born out by a dearth of sales at many larger, prominent complexes. For example:

The Malibu Canyon Village off Civic Center Way had zero sales all year. With its 104 units, there had been six sales in each of 2016 and 2017, the typical frequency.

•The large complex at Tivoli Cove had just two sales.

•Malibu Villas, which has seen at least six sales for many years, had only four transactions.

•The Pointe, which had 12 deals in 2017, dropped to five last year.

Nevertheless, the condo year was robust in Malibu with the highest averages ever. What happened?

It was subtle, but the beachfront condo market went gangbusters in 2018, lifting the average value of a sale (there were 77 total in Malibu) to nearly $1.5 million. The median price of all transactions went to a new record also: $1,240,000, far more than double the score from 2011.

The condo market easily outpaced the home market in Malibu. For those who say condos are never as good an investment as homes, that is silly. Condos track appreciation very similar to homes over the long run. In Malibu, in fact, the condo market supply is capped—nothing new ever gets built. Meanwhile, the home market supply regularly expands slightly—at least in years when there is no devastating fire.

The secret to 2018 for condos was beach-proximate locations. Specifically, units that sat right on the ocean directly, with no obstruction, had an outstanding year. (As such, being on the beach, there were several “quiet” transactions, done privately, that escaped immediate appearance in public forums such as the MLS.) The number of units sold directly on the water has gone like this:  2015: 10, 2016: 6, 2017: 9, 2018: 15.

The median value hitting $1,240,000 meant that the middle sale, the 39th highest—and lowest—transaction, took a big jump from the year before (an 18 percent increase). Clearly, the most expensive units in town were selling; the lower-priced ones were not.

There are several examples of the “beach condo” market doing well and defining 2018:

•At the small building at 20638 PCH, which was the very first “condominium” building in California, as opposed to apartments, there are 11 units. Not a single one sold from 2011-17. Last year, facing right into the water with a view of the whole Santa Monica Bay, five sold. 

•At the very opposite end of town, the Malibu Bay Club had 10 sales of units all on the beach side of PCH, just inside Ventura County. Four of them were beachfront, on Beach Club Way.

One million dollars is still a ton of money to spend on housing that is only a condo, but that is one reflection of the enormous draw that is Malibu real estate and lifestyle. A million dollars is worth about 1,300 square feet of air space and a pleasant (with pricey monthly dues) homeowners association. Only two of the 77 sales were for under $700,000.

Rick Wallace has been a Realtor in Malibu for 31 years and real estate columnist for 25 years.

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