Is It a Good Time to Buy at the Beach?

BEACH RESULTS 2011 - 2018.jpg

With 3,500 miles of land mass all the way to Nova Scotia in one direction, and 7,000 miles of water to the Philippines in the other, that narrow thread of sand separating the two is pretty special. There is no more unique place on earth to live than on the beach of a large ocean, wherever it may be. Furthermore, just up the coast from a cultural mecca in the most prosperous country on earth, Malibu is ideally situated to attract beach home lovers.

But that’s not all. Amid the metropolis of Los Angeles and its 15 million people are microscopically few homes that exist on the sand. Only about 1,000 homes along the Malibu coastline are available for private use. The demand to live in such places is staggering. The supply of available units is almost nonexistent.

Voila! The average price of beach sales in Malibu last year was about $13 million. That is a lot of money for a house. Supply and demand factors make for an extremely rarified air of value. Malibu beach homes compare with any real estate in the entire world. So, when is a good time to buy into such a product? Is this a good time?

The quick answer is that it is always a good time to buy on the beach. Look at what has happened in the past. The adjacent chart shows the staggering values of beach property, even going back to post-collapse that the real estate market felt in 2009-11. But is it a better time than other times to buy?

The beach market, like the rest of the Malibu real estate market that surrounds it, has been amazingly steady. Look at the consistency of sales on the chart. This year will surely be the seventh year in a row that sales units land between 50-63 transactions. The flow of buyers grabbing the gold standard of real estate has been uniform. In that respect, this period is no different.

Strongly related to the flow of sales units are the prices that result in the tug-of-war of the marketplace. Again, consistency has been the hallmark. Prices this year will be very similar to last year.

The median value of a beach sale in Malibu (that point where half the sales are higher, half are lower) has been about $8 million. There has not been much change over the past four years. 

The one wild card in the statistics is, what may happen in the $40 million-plus marketplace? Such mammoth sales have unequal influence over the average price tallies. During this year, four transactions have landed at $38 million and above, including a new record at $110,000,000. Those deals have pushed the average price (calculated through August) to north of $14 million. This year will likely see the highest sale price average in history.

So, which view might be the better perspective: The average price is higher than ever, so it is better to wait, or, the median has not done much for four years, time to jump in before it escalates again?

Either way, a declaration I like to make is pertinent. We are not talking about standard real estate here. These are not so much homes that are lived in as they are collectibles. This is art. These are rare commodities that are collected and saved. Usually, they are passed on from one generation to the next. Malibu beach homes are typically very long-term investments that bring incredible payoff over time. 

Every single year ever, however, it seems beach homes are so expensive, they are foolish to own. A minute fraction of the buying public makes the leap. And yet, look at the long-term results. (And climate change/rising sea predictions are having zero impact on the marketplace, at least so far, evidently, by the results shown). So, the answer to the question may be whether the buyer is willing and able to go long term on this type of unique real estate. About 50-60 will do so this year.

Rick Wallace has been a Realtor in Malibu for 30 years. He has contributed real estate columns to the community for 25 years.