Malibu values going back in time
The science of measurement can be done artfully, with different forms of description. A trip to Santa Monica may be referred to as 20 minutes, rather than 12 miles. The height of a five-foot horse may be described as 15 hands. Among Malibu Realtors and the local public, current prices of local real estate are described two ways.
First, what is the percentage drop from the peak? Secondly, and more metaphoric, values have fallen back to the levels of what year?
Last year, the 110 single-family homes that sold in Malibu/90265 had a median value (representing the point where half the homes sell for more and half sell for less) of $2,225,000. That was about the level of 2004.
Comparing just the median value may not be enough, as one looks to the past to measure the present. Another method is to compare sales of the same home-over two different years. About 40 homes that sold in the past 12 months also sold during the mid-decade, from 2003 to 2007.
For example, a three-bedroom ranch house on an acre in Point Dume sold last in 2005 for $2,400,000. The same home sold again in January in essentially the same condition, for $1,510,000. Such re-sales have influence on the market, and provide a reflection of it as well.
Sales have occurred higher than last time also. A beautiful home near the water in the Broad Beach area got $5 million in 2007. Recently, it sold again-for $6,300,000. However, five other homes that last sold in 2007 have sold for lower since. Most homes re-selling since 2005 through 2007 have gotten less in the most recent transaction. Those with higher re-sales often boast upgrades to account for the uptick.
Homes that sold last specifically in 2004 and again in late 2009 and 2010 have split between getting more or less the second time. Thus confirming that the median is a fair representation of current values. By two measurements, 2004 is the period at which values have arrived.
There are other direct sale comparisons to 2004. Another home that traded on Point Dume in 2004 for $3 million sold again this year for $2,325,000. The sale of a home late in 2009 in Horizon Hills behind Malibu Park brought almost the same price as it did in 2004. Two homes in Latigo Canyon sold in 2004 for $965,000 and $1,350,000, respectively. More recently, the same homes: $720,000 and $805,000. Then again, homes in Malibu West, Malibu Park and a Sea Level beach house scored better in their more recent sale than they did in 2004. Four identical homes that were bought in 2003 were more expensive in recent transactions.
Though trends are for still lower prices, 2004 seems as far back as the current prices go. Deals made in 2003 are inferior to the present, at least so far.
When the market is hot, it is usually going to levels never seen before; new records, new highs. With prices dropping, knowing when we last saw current values is helpful not only for pricing and marketing purposes, but lawyers and accountants use it in settling legal and tax issues.
Perhaps more so, this information is helpful for a more efficient pricing approach, something the local marketplace has struggled with. Listing prices are often publicized with seemingly little consideration of what has actually occurred in the past. Every single listing of a Malibu home on the market now that last sold in 2003 through 2005 is priced dramatically higher than its last sale price. Other than those with commensurate upgrades, all seem to pretend value drops did not happen, or happened less than they wish.
The median price of a sale has crept down to about $2.1 million so far in 2010, but well above the 2003 median of $1,675,000. Year 2004 had brought a skyrocket in prices, the median climbing 38 percent that year alone. Retracting all that year’s appreciation may take time. Perhaps our market has taken us to about August 2004?
Of course, it is the home without any recent sale history that is most prevalent in the inventory. Most listings, many of which are REOs (real estate taken by the lender in foreclosure) and short sales, are priced to lure buyers to 2010 realities. Those listings will provide the foundation upon future comparisons. This year may be the base from which robust future appreciations are measured. After all, a home that last sold in year 2000, for example, is still worth about 60 percent more now, as an average, though in 2008 it had climbed to a lofty 160 percent increase over eight years.
For those who still prefer the simple measurement of percentages, forty is your number. Current values are about 40 percent below the high, established in 2008. Thus, it has taken only a year and a half of market downturn to wipe out the previous four years of appreciation.
Rick Wallace has been a Realtor in Malibu for 22 years.