Rick Wallace
Malibu prices begin to soften
The number of homes sold in California in September was the lowest since 1991. The median price of a home in California in October was 10 percent less than the median one year before. In Los Angeles County that month, the median price was down almost 5 percent.
There is bad housing news everywhere, but has it had an effect on Malibu yet? The answer is yes, finally.
Besides the fact that only one house sold in Malibu the first 10 days of this month (a far cry from the year 2000 when one sold per day), properties off the beach now show tangible value decreases common to the outside world.
Focusing on specific neighborhoods that have never known average sale prices above $2.5 million: the Sea View Estates up Las Flores Canyon has seen four sales trickle in at an average of $1,475,000, less than the 2004-2006 results.
Areas accessed by Las Flores Canyon and Rambla Pacifico have averaged nearly $1.7 million per sale; that is also the lowest of the past four years.
Big Rock, Corral Canyon and Latigo Canyon have all had at least one high-priced sale that was uncharacteristic of those areas. Those aside, the average price of a sale is statistically illegitimate. Why? Because there have been practically no sales. The three neighborhoods saw 38 total sales in 2003. In 2005, it was 25. This year: 11.
The one exception for Malibu’s low end has been the Malibu West area where many recent sales have put the 2007 average at $2 million, better than last year or any year previous.
More evidence prices have slipped: all other homes off the beach have seen an aggregate drop in average and median prices as well. For neighborhoods that specifically averaged $2.5 million to $4 million per sale last year, the average and median has dropped slightly (each about $20,000) on volume that was 62 sales in 2006 and 41 sales this year
For the elite areas on the landside such as Serra Retreat, Winding Way, Broad Beach bluffs and others, 31 sales in 2006 averaged $5.9 million. This year, 42 sales have averaged $4.6 million. The median has gone from $4.5 million to $3.5 million.
There has been no discernible drop in beach property values. In fact, values have inched up on the average, though the lower-priced beach homes, less than $6 million, have struggled.
Finding tangible, solid statistics to match the perception of a lousy local market, even as many homes sit unsold and offer one price reduction after another, has been an elusive task all year. After all, the median value in Malibu has actually gone up in 2007. Sales were running about the same as last year (until lately). Total volume has been healthy.
Additionally, one reliable measure of price trends is the sale of the same house twice. For example, in 2005 five houses sold twice in the same year-all went for more the second time. In 2006, three houses all sold for more the second time later in the year. Last year, a whopping 25 homes sold that had previously sold in 2005-and all sold for a higher price. This year, 17 homes sold that last sold in 2005. Fifteen went for more this time. Of the seven houses that sold in 2006 and 2007, six went for more in 2007.
Over the last three years, 57 homes have sold twice. Fifty-two sold for more the second time. It’s true the numbers are skewed by remodels in many cases, and selling costs offset small profits in other cases, but for numerous homes it was the same product getting more money on resale.
That was then, this is now. Many homes currently listed, however, are already certain to experience losses from a recent purchase. If they sell again, that is. Ironically, the Malibu market would appear worse except that homes aren’t selling at the lower end. Last year, 65 percent of the sales were homes off the beach in generally sub-$4 million neighborhoods. This year, only 52 percent of sales are such.
Buyers have certainly gained bargaining leverage, and it is borne out in statistics. Through 2006, final sales prices were generally within 5 percent of the last asking price. Now, that number is closer to 10 percent (another trend mirrored in state statistics). Almost anything goes in price negotiations these days.
Perhaps the greatest deterrent to a return of a normal market is the lenders themselves. This year was highlighted by a drastic tightening of lending standards. Just as lenders were so liberal in their qualifying from 2004 to 2006, they were double tight in 2007. Many buyers who want to buy, can’t.
The number of new households in the state grows by more than 200,000 per year, but this year the number of new housing units constructed is less than half that. The crunch for housing ultimately works its way up the ladder to Malibu where demand is built-in strong. Thousands of interested and capable buyers wait for a time like this to pounce on exclusive real estate.
Most of the fundamentals of the economy are good. Consumer confidence, at an average level historically, has barely changed in three years. There is little to indicate the values losses underway are anything more than a correction. Corrections in Malibu tend not to last long.
Rick Wallace of the Coldwell Banker company has been a Realtor in Malibu for 20 years. He can be reached at his Web site, www.RICKMALBUrealestate