Strong indicators remain for local real estate
By Rick Wallace/Special to The Malibu Times
So, what happens now? How will terrorism affect one of the nation’s richest real estate neighborhoods?
Many of Malibu’s statistical indicators are strong as we enter a “new world”, one that has only one certainty: an uncertain economic future.
I always tell clients they should make buy/sell decisions about where they live based on their individual needs and circumstances, not on guesses of what the market will do. It may be harder for folks to absorb that advice after the tragic attacks in New York and the preparation for war since. Economic and market conditions will indeed play a more important role in Malibu real estate buy/sell decisions.
However, Los Angeles may be able to resist a significant economic downturn for some time. Interest rates are the lowest in 30 years. The entertainment industry averted a crippling strike. The powerful Southern California defense industry is about to get a boost. Technology and information services, a foundation of the Southern California economy, are essential during war or peacetime.
The charts on page A12, from research conducted over several years, indicate the relatively strong underpinnings of the Malibu realty marketplace.
A summary of each chart:
Median averages: A strange phenomenon is occurring in Malibu this year. Both median beach and landside home averages have increased, but Malibu as a whole is down in price, to $1,125,000. That is because the beach market, which propelled values to new highs last year, has dried up. The big money is far more cautious now than in 2000. The vast majority of sales are on the landside (homes not adjacent to the sand). While those averages are up, they do not compensate for the lack of beach sales influencing the averages.
Total sales: Sales are far fewer this year, on and off the beach. Already at eight months, we are not yet half way to last year’s record number.
Inventory levels: The best news is that inventory levels are very low. Prices will not go down unless inventory increases, or unless buyers virtually walk away from the market, not likely considering interest rates and regional economic indicators described above. We don’t know how many serious buyers are in the marketplace, but we do know how many sellers (the supply factor). They are few. The exception may be in the bulging marketplace of homes listed at more than $1 million.
Market time/discount off asking price: There is fantastic news suggesting it may be awhile before the market is hurting, if ever in the next several months.
Homes generally sell quickly in the current environment. More so, sellers still get the edge in negotiations. In a poor market (1993-1994), homes could take more than 30 months to sell and then get less than 80 percent of their asking price in half the cases. Buyers must still act quickly and aggressively to get the property they want.
Malibu, like all locales, can be segmented into three levels of wealth. At the lowest level, this positive statement can be made: The time may be past that you can ever buy a condo for under $200,000 in Malibu again. It has been awhile since the last such sale, and at this writing there were none listed under $250,000. The marketplace in the most affordable ranges is very strong, for homes and condos.
At the uppermost level, a premier estate just sold for about $31 million. The same property sold two years ago for about $27 million. Located on Encinal Bluffs, it is one of California’s–and the nation’s–most impressive properties. Other beach and bluff sales this year have landed at very high prices. The problem is, there have been much fewer at those levels.
At the middle level, for landside homes at more than $1 million there may be dark clouds on the horizon. The inventory is growing while buyers are decreasing. As year 2001 has progressed, buyers have focused more proportionately below the $1 million mark than above it. In August, nine landside homes above $1 million sold; 120 did not. Comparatively, 12 homes sold below $1 million; only 45 remain on the market.
At least, that is the picture in the days just following Sept. 11.
Rick Wallace of the Coldwell Banker Company has been a Realtor in Malibu for 13 years. He can be reached at RICKMALIBUrealestate.com.