To say the bottom has dropped out of the Malibu real estate market would be highly inaccurate. To say, however, that the bottom has disappeared from the Malibu market would be correct.
Through six stunning months of local home sales in 1999, there is virtually nothing left of the “low-end” real estate market (beach homes less than $1 million; land side homes less than $600,000). While low-end sales and inventory have evaporated, abundant beach deals and high-end transactions off the beach have contributed to an unbelievable leap in the median home sale average.
More homes have sold in Malibu this year for more than $1 million than have sold for less! So far, the median price of a single-family home in 1999 has been $1.1 million.
While ’99 sales have slowed slightly (as predicted by the California Association of Realtors, due to lower inventory), the heavy volume of the past two years has come home to roost.
In 1997 and 1998, at least 85 homes sold on the “land side” (houses located off the beach or bluff) for less than $600,000. This year is projected to see only 34 such transfers.
To offset the disappearance of low-end product, the beach market is generating dizzying results, with 41 sales already in the past six months. That is more than some full years. And the big money is in play: $2 million beach sales are already equal the entire year of 1997.
In 1997, only 19 percent of home sales were on the sand (or the bluffs above the beach). Last year, the ratio was about the same; 1999 is seeing a whole new shift of market action. Beach homes account for almost 30 percent of the reported sales. No wonder the current statistics show an increase in the overall median price from $800,000 to $1,100,000.
It would be deceptive to declare that all Malibu homes are experiencing such an overwhelming leap in values. More definitive is the focus of buyers, propelled by a spirited economy. Low-end Malibu, sapped dry by heavy sales activity in 1997 and 1998, is simply getting less notice. The nicer estates are where the action is.
On the other hand, everything is $200,000 “nicer” than it was last year. Beach sales excluded, the “typical” median home in Malibu has increased in value from $709,000 last year to $892,000, a phenomenal 25 percent increase in only six months, even as fewer buyers jump in. If the current trends merely hold steady, it will be a remarkable year for values.
The sales figures are based on an analysis of all single-family home sales cultivated from records in the multiple listings, reviews of publicly recorded home transfers and word-of-mouth information. Homes in the 90265 zip code are included, and the statistics exclude condos and mobile homes.
Are there any hints of what the future might bring? There is this nugget of information: The inventory remains at exceedingly low levels. At this writing, approximately 281 homes are actively listed for sale, an amount usually representative of the dead of winter. Beach listings are about 25 percent lower than normal. The total number of homes for sale under $1 million is a paltry 84. (More than 70 percent of the inventory is listed at more than $1 million. For every mile of Malibu coastline, there are only three homes asking less than $1 million.)
More of a mystery are the current and future attitudes of buyers. While sellers bathe in newfound realty wealth, the buying public faces ever more daunting prospects. Unless underlying incomes and investments rise to greater levels on the whole, it may be that buyers will begin resisting these values, forcing sellers to ask and accept lower prices.
Rick Wallace has been a Realtor at Fred Sands Malibu office for 11 years and a Malibu resident for 24 years.