Search for excuses after slow summer realty sales
Virtually the entire summer along the Malibu coast was lost to overcast.
But it did not stop there. The fog crept out of the sky and into almost every home for sale, as well as the brains of virtually every prospective home buyer in Malibu, as the local real estate market barely stirred.
Blame it on the weather! How else to explain a summer selling season that can only be described as dreary? After a brisk May and June in which an encouraging $140 million exchanged hands in local homes sales, July and August produced only $80 million, and a large chunk of that from just a few mega-deals.
Have vacation months cut that much into sales? Or is it the economy that has paused again, with haunting effects on our local market? Has suppressive government control over property rights begun to limit equity and growth potential?
Whatever the reasons, including moderate Southland weather that brought fewer folks to the beach for any purpose, Malibu real estate continues to struggle. After 14 houses per month sold during the March to June period, only 25 total sold during July and August.
Sales numbers, as described in the chart above, are so inferior to homes available, that heavy downward pressure continues on prices. The state and county both saw 55 percent drops in values before recovering. Is Malibu destined for the same fate? So far, values are down roughly 40 percent from the 2008 high.
Nevertheless, there are small nuggets of encouraging news: The very low-end of the condo and home markets in Malibu are firming. Particularly, condos priced less than $500,000 are selling quickly. Homes in the $1 million range or less are seeing much faster market times, along with more showings and escrows among willing and (at that price range, most importantly), able buyers.
Also, among the handful of beach and estate properties that have sold, some very expensive exchanges have transpired, buoying the aggregate volume this year. While 2009 was the worst year on record, and nothing special to compare to, at least the number of sales and volume are up about 40 percent from last year.
If anyone ever wondered what the real estate market would be like in a theoretically all-cash/no financing environment, the current condition is close to the answer. With capital still scarce and lending standards brutal, a systemic failure of the market is still in place. It’s not that thousands would not like to live in Malibu, enjoy the beach, fresh air and local community assets. The whole market process is being re-shaped, however, and dominated with short sales as the prime commodity against which all listings are competing.
As demonstrated in the chart, the number of listings keeps rising, while the number of sales (in the four selected months noted, all based on MLS information) are emaciated. That is, except recently in the less-than -$2 million listings (where the less than $1 million listings mostly carry the load).
Beach homes for sale numbered under 30 back in the hot 2005 market when many sold each month. Now, more than 60 beach houses are available at any time, with maybe one or two per month selling. Further focusing on the upper end, estate properties more than $4 million off the sand are struggling mightily. With about 60 also for sale in that category, any one that finds a buyer gets lottery-winner respect.
Homes particularly within the $2 million to $4 million listing tier have about one-chance-in-40, currently, to get to a closed escrow in any one month. Ever since the late-2007 period when the real estate industry crumbled nationally, statewide, and in Los Angeles County, that category as well as the others has seen a spiked number of inventories for sale. To put it another way, the Malibu market in the higher categories has a four-five year supply of homes available.
Even as the values of many homes drifted into the less than $2 million tier, the lowest level for Malibu, the number of buyers this year, however, has increased in that range. That brings some scant indication that a firming throughout the market is on the horizon, as the low level creeps towards stability.
Just as there are more gradations of wealth in this society within the top 1 percent of affluence than in the rest of the population combined, Malibu has highly diverse market phenomena stretched over its spectrum of homes for sale, ranging from $500,000 to $65 million. Wildly different levels of activity can be occurring within the same ZIP code, depending on the type of property. This summer has seen a more active market of lower-priced homes. But homes in the middle and upper end? Just look outside each morning at the weather.
Rick Wallace has been a local Realtor for 22 years.