The number of sales in 2010 increased and time on the market decreased, but both were due to appealing pricing in the short sale and foreclosure marketplace that has become about half the business.
By Rick Wallace / Special to The Malibu Times
The year 2010 was better than 2009 in some key ways, as the number of home sales increased and time on the market decreased, but otherwise the year did little to stem the trends established when the Malibu real estate market plummeted last year. Historically, 2009 ranks as Malibu’s real estate nightmare.
This year had its moments, such as 10 beach homes selling for $15 million or more. Nevertheless, the averages of the market as a whole, excluding ultra-luxury beach homes, showed further erosion in values.
With a year gone by now to reflect, it is all the more clear that 2009 was miserable in every measurable way. For one thing, the median value in Malibu went down more than 25 percent in one quick collapse. For another, the inventory of homes for sale shot upward. Furthermore, the time on market to sell a house reached an agonizing average of about 11 months.
The chart above tracks every significant statistic for Malibu real estate, going back to 2005. Among the highlights:
For the 5th year in a row, total sales in Malibu will be less than 200 homes. The local market cannot achieve appreciation with such limited sales totals (unless there is a notably low supply, or inventory, as there was until 2009 hit).
Median sale prices have clearly fallen to pre-2005 levels. For landside homes, the median has dropped from a high of $2.5 million, plummeting last year to $2,087,000, to $1,925,000 million this year. The condo median price was more than $1.1 million two years ago. Now? Just over $600,000.
Sales volume in 2009 of about $420 million was less than half of 2007, let alone 2005. Additionally, there was about two and a half times the number of homes sales in 2005 as compared to 2009. There were more than three times the number of condo sales.
2010 has been decorated by increased activity at the high end and the low end. The middle has suffered. Plentiful lower-priced beach sales this year balanced out the 10 megadeals, thus keeping the beach median at a moderate $7.5 million. Meanwhile, landside houses are selling more frequently at prices less than $2 million than above.
The Total Sales compared with the Average number of Homes Listed tallies are the best indicators of the market direction. It is still a strong buyer’s market. But the supply side increase is slowing, and the buy side is moving upward. Prices will likely fade lower until the lines cross. In 2008, as Malibu values were peaking, it was clear the power switched to buyers and prices were headed for a fall.
Nevertheless, nobody could’ve predicted that Malibu would drop 25 percent in one year. It never happened before. Even in the recession-based depreciation of the early 1990s, Malibu never dropped more than 10 percent in any year.
Then again, amidst the lending and financial crisis of 2007- 2008, the state median price dropped from its peak of $484,000 (in March, 2007) to $221,000 (in April 2009). Closer to home, the Southland median went from $505,000 to $247,000 during the same period. Malibu’s real estate “Waterloo” was apparently destined for 2009.
Of course, a few more sales from this year will trickle into the stats but change the outcome very little. 2010 was historically poor, but a moral victory of sorts. The number of sales increased and time on the market decreased, but both were due to appealing pricing in the short sale and foreclosure marketplace that has become about half the business. It is inescapable that short sale/foreclosure values are the values for every home at this time, because they are the ones attracting buyer interest at the current time.
Thus, the present direction of prices is unmistakable. Note that without the 10 particular beach sales accounting for $220 million volume, including Malibu’s all-time highest sale on Carbon Beach for $37 million, the average for 2010 would have dropped to about $3 million, far lower than the $3.7 tier that characterized 2005 and 2009.
Even though the median for Malibu homes as a whole has dropped from $3.225 million to $2.3 million, only about 30 percent, the condo market median plummet of 48 percent is probably more indicative of the reality most homeowners are facing in the market. The action is in the lower-priced ranges, where affordability is crucial.
It is worth noting that during years 2000, 2002, 2003, 2004, the number of sales in Malibu was more than 300 per year. The inventory dropped below 200. In March, 2005 it dipped to only 95 homes for sale. Those were the good old days, bringing robust appreciation.
It was thought only a nuclear war, or tragic natural disaster, could do such damage to the local real estate market since then, or possibly a full-scale national economic meltdown. That last option is basically in effect, as it pertains to real estate. Malibu has not been exempt. It is practically a no-loan/no-credit marketplace, and priced accordingly, the likes of which have not been seen since the 18 percent interest rates of the early 1980s.
The numbers herein are based on weekly reviews of the Multiple Listing Service information, as well as frequent examinations of numerous sources of title information of every home and condominium in the 90265 ZIP code. The listing and sales history of every property in Malibu, some 4,100 homes and 1,100 condos, is accounted for in this study.