Median Home Values Approach $2.5 Million
By Rick Wallace
1999 was a special year for more than just the sunset on a century. Malibu home values increased more than 20 percent that year, marking the first time in a decade of such a rise. In fact, in one monstrous year the median home value went up 37 percent locally. A 20 percent or more gain for one year in any investment is often rare and fleeting.
It was a common prediction after such a leap that Malibu would not see such appreciation for some time. But in 2002, values went up more than 20 percent. The same thing happened in 2003. And then it happened again in 2004. Anybody for four in a row?
You may be in luck, those on a train of home ownership barreling down the tracks at dizzying speeds, while 82 percent of the population now priced out of the market in Southern California (let alone Malibu) watches and waits and cannot jump on.
In just the first six months of 2005, the median sale price is up 13 percent in Malibu, growing at a rate of two percent each month. That makes for a stretch of at least 50 consecutive months of such breathtaking appreciation. The median price ended year 2002 at $1,375,000. It is now approaching $2.5 million. The median is the level where half the homes are selling for less and half are selling for more.
One hundred and thirty known sales for this year mark a slight, and expected, decline. Total dollar volume, however, is heavy. Nearly half a billion dollars in home sale volume means that the average sale price is now more than $3.8 million, already a 31 percent increase over last year.
In essence, the market is doing this: Lower valued homes are scarcely available on the market and sales are thin. Higher valued homes are more plentiful and sales are robust. Just the 33 beach sales in Malibu so far this year have averaged a price of more than $7 million.
Is the market partly speculative? Almost certainly. Of the 130 home sales, at least 46 were previously purchased in the past two years. Some flipping is in play.
Furthermore, about five percent of the volume of home sales in the past 30 months has apparently come from one entity. That is, one guy has spent more than $100 million toward the $2 billion sold.
The upper end of the market is raging, nevertheless. At least 29 homes have sold this year for in excess of $5 million. Last year saw 40 such sales for all 12 months. In 2003, 29 for all year.
At this writing, no condo in all of Malibu is listed for less than $699,000 (except a 385-square-foot studio in Tivoli Cove for $629,000). The news of mobile homes selling for more than $1 million and one listed in Paradise Cove for $2.7 million currently was a recent national sensation.
Until there is significant change in the demand, still strong thanks to low interest rates, or supply, still weak with extremely low inventory, the train may keep on humming. Only about 125 homes are listed for sale in the 90265 ZIP code, well below levels of recent summers that were thought to be razor thin to begin with. It would likely take an inventory of 200 or more to tilt the advantage to buyers, depending on other factors.
The chart above is an accumulation of statistics culled from a review of every house that has been listed in the past four years, as well as an extensive review of all properties recording a sale privately, according to public records. Using a number of sources, the chart represents possibly every sale of 1-4 unit residences, almost entirely single family homes. Only sales that have occurred in the Malibu area, specifically the 90265 ZIP code, are considered.
So far in 2005, home sales in the east part of Malibu, up to Malibu Canyon, have been robust, while the mid section of Malibu has been much slower, with Point Dume and the west end slower as well. Generally fewer sales in Corral Canyon and Latigo Canyon, where homes are less expensive, partly explains the leap overall.
Hidden from the statistics is a bulging tally of homes in escrow that will surely propel upcoming averages even higher. More than one third of the homes offered for sale at this time are in escrow. It seems almost certain 2005 will hit the magic level of $1 billion in sales, for homes alone. The volume in 1995, by comparison, was about $200 million.
Rick Wallace of the Coldwell Banker company has been a Realtor in Malibu for 17 years. He can be reached at his web site, www.RICKMALIBUrealestate.com.