The Malibu Times
It is a fallacy to believe that when the real estate market moves in one direction, the trend is different for different areas or types of property. If Malibu homes go up 30 percent, the same rise applies generally to all kinds of homes and all local neighborhoods.
Furthermore, the popular notion that condominiums or mobile homes do not appreciate as fast as homes is incorrect also. Unless there are unusual supply and demand factors, values roughly move along the same graph.
It may be true that over a longer term, such as 20 or more years, one area may do better than others. Beach properties and a location such as Point Dume may have appreciated more than the rest of Malibu over the past generation.
On a year-to-year comparison, however, tracking value increase is a reliable exercise. In fact, all things being equal, a home value today can be closely determined using the value alterations since the last year it sold as a basis.
For example, if the market went up 50 percent since 1998 and a home that sold for $500,000 in 1998 comes on the market, it is likely the current market value is in the neighborhood of $750,000.
There are other ways to estimate the current value of a property. A full-scale appraisal or typical broker comparable market analysis using comparable recent sales can be very effective for listing purposes. It is almost assured that the estimated value will not be far off from the method above. (Often, the mere wish or imagination of the seller is utilized to establish an asking price).
Most homes on the market in the past 10 years in Malibu have sold, and many of those were in relatively the same condition as last time.
Through May, approximately 87 homes had sold in Malibu, with a median sale price at about $1,180,000. After a slow start, with primarily higher priced homes selling, the selling pace has quickened this spring, with lower priced homes getting more attention.
The following are ap-proximate increases between the median prices of all home sales in Malibu for each year in comparison to current values:
1991 30%
1992 41%
1993 59%
1994 63%
1995 74%
1996 76%
1997 62%
1998 52%
1999 15%
2000 same
Every listing that has previously sold in the past 10 years seeks a higher price than last time. Which listings are most reasonable? Which listings are most in line with the trends from their last sale?
The 10 listings described below are priced best, as of this writing, to the commensurate value increase of Malibu homes for the year it last sold.
Of course, this does not mean these are the only good buys. Fundamental flaws exist in this type of analysis (and, in fact, the purpose here is primarily for entertainment, as a guide to buyers and as recognition of sellers and/or their agents willing to price their homes most reasonably).
It may be that a home sold and then was dramatically upgraded since. Of course its current price would not be in line with the changes from its previous year sold. Effectively, it would not qualify for this study. Or, a home has suffered from deferred maintenance and it deserves to be priced lower than the trend from the last time it sold.
The changes during the year are not reflected. A home that sold in 1999 was in a market as much as 35 percent higher than earlier in the year.
Lastly, homes that sold previous to the last 10 years are excluded.
Despite the statistical shortcomings described above, the following homes, beach and landside single-family residences, rank as the most prudently-priced homes on the market in the Malibu/90265 selling area:
- A home in Sea View Estates, up Las Flores Canyon, has come on the market at about the same price it sold for in 1991. The market went up 30 percent in the years since. The home is listed at $739,000, just 6 percent more than what it last sold for.
- A Las Tunas Beach home sold that in 1998 and again in 1999 is on the market one more time.
Previous sale prices: $895,000 and $1,120,000. The current asking price is reasonably 12 percent above last time: $1,250,000.
- A home on Ramirez Mesa sold at the bottom of the market in 1994 for $1,275,000. The market has increased more than 60 percent since then. The listing for the same house is just over $1.85 million, only about a 45 percent increase.
- High atop all of Malibu, in the West Saddlepeak neighborhood, a home last sold in 1998 for $650,000. It is about $150,000 more now, but still well priced.
- On La Costa Beach, a home may be a good deal on 40 feet of beach at an asking price of $3.3 million. When it sold last in 1993, it went for $2.5 million.
- Can a home be a good value at nearly $6 million? We’ll see. A bluff top estate above Malibu Road last sold at $4.95 million in 1993. Now it’s about 20 percent higher, at $5.95 million.
- It was just two years ago a Malibu Park home traded at $950,000. The market is up, but the price isn’t so much. It was just reduced to only $995,000.
- Move to a little house on the beach for under $1 million and get a deal? A small 2-bedroom home on Big Rock Beach is listed at $875,000. It sold last at for about $650,000, but that was 1996. The market has increased about 76 percent since that low period, but the asking price is only 35 percent higher.
- A home in Malibu Country Estates is a little on the high side, but that didn’t keep it from selling for almost $1.6 million in 1998. It is listed for $200,000 more now, priced well below the 50 percent increase since that time.
- Another home in Sea View Estates caught the bottom of the market in 1995, selling for about $550,000. Now it is listed at $785,000, much higher, but reasonable.
Several other homes are listed at below the increase that the market has seen since their last sales. Likely, buyers will soon find those homes favorable to the competition.
Ultimately, buyers determine what is a good buy or not. In 1999, a home came on the market for virtually the same price that it had sold in 1994, despite a marketplace that had appreciated more than 20 percent during that time. Sure enough, the listing was bidded to a selling price 20 percent higher, as the marketplace quickly reacted to the mistakenly low list price.
In general, homes on the market now for more than double what they sold for in the last decade are overpriced, unless they undertook significant improvements. And there are plenty of such listings.
A serious seller that is overpricing will inevitably have to accept an offer that is more in line with the established appreciation trends since they bought themselves. Value is not created magically.
Rick Wallace of the Coldwell Banker Company has been a Realtor in Malibu for 13 years. He can be reached at RICKMALIBUrealestate.com