New listings face hit-or-miss prospects
Is the “see-saw principle” in effect?
By Rick Wallace / Special The Malibu Times
Less than halfway through a race, it is rarely easy to predict the winner. Be it camels, horses, humans, or cars, the ultimate leader may be obscure.
About three-eighths of the way through 2006, it is hard to know what Malibu listings will win or lose an increasingly competitive battle for buyers. What seems more certain, however, is the difference between winning and losing is growing wider.
The number of homes for sale in Malibu is rising steadily; the number of homes actually selling is decreasing. The dichotomy doesn’t end there. The average sale prices keep rising, while the number of homes that may enjoy that increase may be dwindling.
It is a Malibu real estate market of sharp contrasts, emboldened by amazing recent years and not fully reacting to a new reality.
The pace of sales indicates that the number of homes sold in Malibu this year may barely reach 200, the lowest total in 10 years. Nevertheless, prices keep increasing. The 68 sales known to have closed and recorded through May 15 (single family homes, with a 90265 zip code) had a median value of just over $2.7 million, higher than last year’s tally of $2.5 million. The average sale has been $4 million, ahead of last year’s $3,772,000.
The good news doesn’t stop there. Homes that sold recently did so at the fastest pace of any time in recent years. Final sale prices also averaged closer to last listed price than any time in recent years.
The seller today who gets through escrow seems to be genius and super human all in one. What better than catching a market at all new heights and doing so quickly, and getting their price?
Great fortune for those who sell. And for those who don’t it is possibly a daunting future. The number of homes on the market now is about 175, compared to the low of 100 in March, 2005. In every category, increasing competition is the trend. The number of listings under $2 million has swelled from a low of 17 eight months ago to 35 now. Listings under $4 million have gone from 46 a year ago to 85 now.
For the first time in years, “must sell” has been seen in ads. Price reductions are prevalent. About one-third of the current listings began their selling effort in 2005 or before. Of those 62 homes, 45 have already had at least one price reduction and many have had several drops. It is the approximately 115 new listings, those new to the scene in 2006, that face a challenge different from the 1997-2005 boom. Of those new listings filled with hope, only 15 have adjusted their price downward so far (and four have increased their price!).
Indeed, for the new listings on the market, price is critical. The gap between a quick powerful sale and lingering on the market indefinitely? Once again a widening fate for sellers. Typically, the listings that really need to sell will find a way-and find a price. Those with just high hopes find their way to giving up. It’s a camel race that many camels will not finish.
And still, the market produces one-third of its sales at better than $4 million. Furthermore, four buyers in the last 60 days have doled out over $10 million each for Malibu estates. That may be the key to understanding what is happening now.
Big money is aplenty and many huge sales mask a market that fidgets at most price levels. The high end, though weaker, remains viable and pushes the averages up while the base is unsteady. Only 29 homes have sold for under $2.5 million so far in 2006 and yet 40 are currently listed as such.
While half the homes in March and April that closed escrow did so within four scant months of hitting the market, it is certain that statistic will balloon in the near future. Standard market times of 8-12 months may become acceptable in coming times, just like the old days.
Despite almost every resale of a home this year that last sold in 2004 and 2005 resulting in a healthy profit, the direction of the market is clear:
In 2005, with about 120 homes typically on the market, 252 homes changed owners. In 2006, with 175 homes the current inventory, about 200 home sales for the year are projected.
The market may be experiencing a “seesaw effect.” That is, there is always a steady number of buyers and sellers combined.
The number of buyers and sellers are distributed on opposite sides of a seesaw. In recent years, massive buying interest resulted in, and faced, virtually no sellers.
The seesaw slanted entirely to one side. Now the side of the seesaw with sellers seems to increase proportionately to the decreasing number of buyers on the other side of the seesaw.
Prices reflect the relationship, and despite some healthy results through three-eighths of the year, at some point the number of camels on each side of the seesaw may be equal. The same camels heading out to the race track.
Rick Wallace of the Coldwell Banker company has been a Realtor in Malibu for 18 years. He can be reached at his web site, www.RICKMALIBUrealestate.com.