Record year masks underlying trouble

Average sales price in Malibu reaches nearly $5 million.

By Rick Wallace / Special to The Malibu Times

Another year in Malibu, another year that prices went up. It happens an average of four out of five years, going back over two generations of Malibu real estate history. The average price of a sale in Malibu was more than $4,800,000 during 2007, accounting for all the 170 known sales of residential 1-4 unit homes in Malibu, the vast majority of them single-family homes. That is a new record, up from nearly $4.1 million in 2006.

However, the loud statistics disguise underlying problems in the Malibu market. Homes valued at less than $4 million, and particularly those less than $2 million, are facing trends that portend likely lower prices in the near future. The chart at the end of this story represents all home sales in the Malibu real estate area (specifically, the 90265 zip code) for the past four years. The median value of sales during that time has progressed steadily upward: 2004-$2.1 million; 2005-$2.5 million; 2006-$2.8 million; 2007-nearly $3 million, the all-time high. Particularly on the beach, and in the higher-priced areas off the beach, mammoth sales propelled the local market. Total volume was $819 million.

Meanwhile, the low end rested. The lower-priced canyons of Corral and Latigo, which saw a combined 33 sales in 2004, rallied for only six total sales last year. A few of them were the higher-priced product, no less, further disguising a low-end marketplace that has virtually no buyers. The lower the price scale, the worse the local market is.

Not that prices anywhere in Malibu are in a free fall, or will be. Matching a marketplace of few buyers is a supply side of few sellers. Inventory, which began this year at a slim 150 homes in all of Malibu (not much higher than when the market was red hot), has been a firebreak on plummeting prices. Additionally, the November fire further reduced the supply of existing and listed homes in the more affordable Corral Canyon, slightly tilting the supply-and-demand balance further against entry-level buyers.

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As the chart indicates, the beach and bluff areas from Carbon Beach to Broad Beach have all become $10 million areas (the exception, in the geographic middle, is the zone from Corral Beach to Escondido Beach). Carbon Beach, the Colony, Paradise Cove and Broad Beach are now arguably $15 million neighborhoods, each.

Nevertheless, a second straight year of sales volume of less than 200 units means growing anxiousness for many sellers. The chances are likely that sellers, as a whole, of homes between $900,000 to $2.5 million will give on price this year before enough willing and qualified buyers come to the rescue. While the beach is bursting with demand from more and more celebrities and mega-millionaires, the “starter home” is feeling the vacuum where outside markets and price ranges are in crisis. Willing buyers are few; qualified buyers are fewer. It may remain that way until the overall regional market recovers enough to feed Malibu’s loftier price appetite.

In the first five weeks of this year, an ultra-frigid six homes were all that sold. Sales recently have been at a virtual standstill. (In the condominium market, there was one sale.)

Middle Malibu, where homes generally sell from about $2.5 million to $5 million, is more of a mixed bag. The chart indicates that while most neighborhoods saw fewer sales, values where maintained for the most part. Most encouraging was the bell weather neighborhood of Malibu West where prices genuinely rose and were not propped up by unusual, out-of-character large sales such as took place up on Saddle Peak, Big Rock, the land side of the Colony and Encinal Canyon. Those areas all had large, atypical sales that artificially bumped up the averages.

As a general rule, 2007 was summarized by the priciest areas in Malibu doing well, and the priciest homes within all areas doing best. Quality properties found buyers, regardless of price. That Malibu has endured two years of scant sales and yet seen increased average prices is either extreme resilience, luck or merely a delay of reckoning. This year will tell.

Besides the increase in the local averages and median, the ratio of beach homes to land side homes was a notable indicator of the trend of the market. When 310 homes sold in 2004, 65 of them were on the beach compared to 245 off. The ratio was about 1-to-4. In 2007, 43 homes sold on the beach and only 127 off. The ratio has dropped to 1-to-3. When the market heats up again, it is likely that ratio will reverse to more land side home sales and as such, the impressive value levels now recorded may give way to lower averages dragged by the weight of those lower sale prices.

Areas with enough sales to reflect a credible median average are noted, those with at least 11 sales during a year.

The statistics herein are derived from a thorough review of many sources, though the local Multiple Listing Service accurately provides the bulk of the information. Other popular data research entities frequently cited in other publications reflect less totality than the tallies here, both in the number of sales tracked and the accuracy of the sale prices. Public records and word of mouth are also important methods to determining the when and what of many local sales that are meant to be kept secret. Local mobile home and condominium sales results are excluded from this study.

Median Sales Price 90265

2004 $2.1 million

2005 $2.5 million

2006 $2.8 million

2007 $3.0 million

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https://malibutimes.com
The Malibu Times is the first newspaper in Malibu, serving the community since 1946.

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