Malibu home sales volume down 62 percent

Pricing trends now indicate acceptance that prices are going down. The current question is: how far?
The local real estate industry is feeling a double whammy. Not only are sale prices much lower, but the number of sales this year has been dramatically fewer as well. While the median price has dropped about 33 percent in 2009 in the 90265 ZIP Code, buyers have refused to jump into the market. Thus, Malibu is on pace for fewer than 100 home sales this year. Total volume projects to about $600 million less than just two years ago-a 62 percent plummet.
During several years this decade, home sales volume in Malibu hit near the billion-dollar mark, including in 2007 when about $966 million in real estate sold in just the single-family home category, not including mobile homes or condos. Through September of this year, the tally was less than $300 million and projecting to $365 million.
Those wanting an insight to future price trends can compare the inventory to the number of sales. Since 2005, exact opposite dynamics have taken hold. In 2005, as few as 98 homes were for sale at one time-while the number of sales hit 264. This year, 268 homes have been for sale at the highest point -and only 92 homes are projected to sell.
Every part of Malibu is seeing volume about 75 percent less than it was in 2007, through September. The upper end, which lagged two years behind the rest of America before it felt a strain on prices, is feeling the hurt now. While 58 beach and bluff estates sold in 2005, and a respectable 32 such sales occurred in 2008, this year has seen only 15. Sales more than $10 million numbered 25 just two years ago. So far this year: six.
At least Malibu has completed its long and deep period of denial that prices would go down at all. As a general rule, home sellers, aided often by the brokerage industry itself, have been pricing properties for ever-greater appreciation, even as buyers intensified their boycott. Pricing trends now indicate acceptance that prices are going down. The current question is: how far?
The local real estate industry not only faces ever lower revenues from fewer sales and lower prices, but also longer marketing efforts, additional outlays of time and money, and bigger battles to get deals through escrow. Home sellers feel a similar pain, in the emotional toll of long marketing efforts that now average well more than a year while seeing equity positions reduced dramatically or wiped out.
The accompanying chart of Malibu/90265 home sales for the past five years is based on a complete review of the local Multiple Listing Service and many other sources. Two sources or more are used to verify sale information in almost every case. Neighborhoods are grouped geographically to allow for sufficient data to display price and volume trends. Of course, within each area noted, specific neighborhoods have divergent price averages.
Malibu is a unique real estate market that lags way behind other markets. When virtually every region in the state was reporting 40 to 50 percent drops in value during the past two years, Malibu deceptively edged up in average and median price. Now Malibu has seen a certifiable 33 percent drop in value, still lagging most other areas that have completed their 50 to 60 percent downward adjustments and begun to inch upward.
For way too many sellers, the news that Malibu was holding its price the past two years was all that mattered. Now, the news that other areas are slowly increasing in value is all that matters to them. Never mind the two-year gap in time and 60 percent fall in values in between.
At the top of the market, Malibu values enjoyed a factor of nearly six over the state median -the California median was about $560,000 in 2007, while Malibu registered a median just more than $3 million. If Malibu presently had the same factor of six over the state median, local prices would average at about $1.5 million instead of the $2,225,000 recorded so far. The state median has stabilized at about $250,000, the tier it was in year 2001. It is questionable, besides the consideration of vital supply and demand factors, whether Malibu will maintain its current level of nine times the state median level.
Loose lending practices were to credit for the spiraling price appreciation of 2001 to 2005 and the subsequent collapse. Lending practices, virtually everyone agrees, are the prime culprit of the current stagnation, as well, in opposite form. Ultra-severe application standards are keeping vast numbers of buyers from qualifying for loans they would've easily secured before. So, while many sellers and buyers are fully motivated to bring liquidity to the marketplace, the system remains stuck in the mud.
All while interest rates are obscenely low. Or is it because interest rates are obscenely low? Super low interest rates are great for borrowers, but uninviting for investors/lenders. At least within Malibu, lenders are clearly reluctant to risk high dollar amounts for little interest rate reward while prices reflect 2005 levels and the rest of the state operates in year 2001 realities.
It is a painful time for the industry, for the homeowners stuck with dwindled or lost equity and for the buyers who would love to buy, but can't qualify. And not really much fun for the messengers who report it.
Rick Wallace has been a Realtor with Coldwell Banker for 23 years.

Malibu's Best Deal - Beach Front Property!

$5,950,000

4 Bedrooms/3.5 Bathrooms
This is a rare opportunity to own one of the few homes on the sand of exclusive Sea Level beach. Three spacious levels, 4 bedrooms, 3.5 baths, marble floors, and a gourmet kitchen. Entertain your guests on the roof top deck. Fabulous master suite with fireplace and private balcony with spectacular ocean views.

For more information about this home, contact me today!

310-456-0088 RickMalibu@aol.com

Malibu's Best Deal Over $4 Million

$4,350,000

5 Bedrooms/5 Bathrooms
Once in a lifetime opportunity! Very fine gated Estate in great Malibu neighborhood surrounded by parkland, very private & serene. Custom hi-end finishes thru-out, gourmet kitchen, and beautiful master w/large deck, grand living room which opens to amazing grounds with pool and tennis court and outdoor entertaining area. Lender owned.

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Malibu's Best Deal $2-$4 Million

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6 Bedrooms/6 Baths
Stunning Mediterranean Villa located behind the gates of prestigious Sea Star Estates. This expansive estate offers endless ocean & whitewater views throughout every living space. State of the art kitchen w/built-ins, granite counter tops, high-end appliances & a wine fridge makes cooking & entertaining a dream. Luxurious master suite boasts his & her closets, large double vanity bathroom w/spa tub & great patios for relaxing & soaking up the views. Guest house, 3-car garage and community tennis courts.

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Malibu's Best Deal Under $1 Million

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Large contemporary w/incredible views. Great indoor/outdoor feel with large back yard that includes decking and spa. Private balconies and 2 car garage. Great value for size and views.

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Buyers Beware, or at least be informed!

As the market finds it’s foothold, both buyers and sellers are waiting for the most opportune time to strike. Whether you are searching for your dream home, or a sound investment in your future, buying a home in Malibu will be the most exciting time in your life. With inventory reaching all new highs, the choices are overwhelming. Save yourself some trouble by having the most informed representation possible. I have been a Malibu Realtor for over 22 years. I’m the only agent in town who has kept track of every listing in Malibu since I began my career. Every home, every sale, every detail. I currently own 9 properties in Malibu. Isn’t it time you had yours too?

What it's like to be a Malibu home seller in 2009

Nearly 500 homeowners in Malibu have attempted to sell their home so far this year. The frustration and, in some cases, catastrophic results of their efforts, would have been unpredictable just three years ago. While the underlying product of Malibu real estate remains the most exclusive and coveted of any in Southern California, it has not been immune to a financing system collapse and market deflation everywhere. Through August, only about 50 of the homeowners will have successfully closed escrow on their homes, a paltry 10 percent of those who have tried.
What is it like in this marketplace for those who put their personal pride and greatest investment on public display? How does selling a home in 2009 compare to past periods?
While not all 470 homes have been listed this entire calendar year-and as many as 25 more are in escrow at this time-the number represents a cumulative effort that, furthermore, marks frustrations from previous years. The tallies are among single-family homes only, excluding mobile homes and condos in the 90265 ZIP code, among approximately 4,200 homes that actually exist. The challenges current sellers face are best demonstrated by analyzing what actually sold this year.
The 50 approximate sales projects to a year total about 75, which would be fewer than last year (110) and about half of the worst recession years of the 1990s, when about 150 annual sales was the low for Malibu. Successful 2009 home sellers endured so far by making the greatest compromises versus their competition. Those compromises took shape in three forms.
First, price reductions were prevalent in almost every case. Only about 10 of the 50 home sellers this year managed to sell their home using their initial asking price which, in retrospect, was market savvy to begin with. About half the sales took place via three or more price reductions. Many home sellers determine their initial asking price with their heart rather than as a function of competitive juices and motivation. This market has usually extinguished initial wishes and forced homeowners to eventually feel the necessity of competing with price reductions.
Second, the time on market has surprised most home sellers. The median amount of time needed to sell a house, from first effort to close of escrow, has been 16 months among recent sales. That includes periods off the market and escrow time as well. That means half the homes sold were first on the market at least 16 months before; half sold within that time to establish the median. Taking into consideration only the most recent listing agent and the most recent continuous listing effort, the time has been 280 days as an average. By comparison, at the height of the market, the periods were 6 months and 140 days, respectively. Thus, market time has doubled. Again, that is among the listings that actually sold. Many homeowners have run out of time and lost their home to foreclosure or been forced to seek a short sale.
Third, and perhaps most dramatic, is the discrepancy between the original asking price and the final sale price. (Similarly, the gap between last price and sold price has grown dramatically). Buyers these days are tough cookies-they negotiate only with the most anxious seller. Sellers who have shown the greatest flexibility in their price have found buyers. How much flexibility? The average discount from first asking price to final sale price is about 30 percent. Some homes have seen 50 percent drops, such as a home originally listed at nearly $10 million that sold this year for $4,500,000. The average cut in price in actual negotiations, from last asking price, is about 15 percent. Some homes finally hit a magic price and sell close to that price, even with multiple offers. Others, looking for “any offer,” will settle for more than 20 percent off the last advertised price. These numbers are again double in apples-apples comparisons from the hot market of 2003-2005.
Suffice it to say, the Malibu market, with about 260 current listings (excluding the 210 that gave up, went into escrow or have sold) and a pace of only 75 annual sales, is clearly a “buyers market.” What does that mean?
In any price range, when genuinely ready, willing and able buyers step up, they essentially let the serious sellers in that price range bid for their business. He who lowers his price most, wins. That house sold, when the next scarce buyer steps up, the next most motivated seller will secure a deal. Each time, the comparable price drifts downward as sellers effectively jockey among themselves to score the next sale, based on their motivation, as well as their accurate gauge of the competition.
The opposite occurs in a seller's market, as was the case for several years and sure to return. More easily described, multitudes of buyers bid upon a limited number of homes available. The highest bidder wins at each sale, usually bumping up the market.
The sense of price free fall has taken a noticeable turn lately. Encouraging for prices down the road, the intensity of buyer resistance has cooled; 25 homes in escrow represent a recent bump up in activity, particularly as more sellers move aggressively to minimize the pain. Additionally, there is a possible reversing of the inventory trends that were moving upward unabated. The past two months, seasonally adjusted, have spelled a pause in the growth of listed homes. While prices will continue to reflect the realities of the times, at least the long period of negative trending, of ever fewer buyers and ever more sellers, has begun to level out.
Rick Wallace has been a Malibu Realtor with Coldwell Banker for 22 years.

Gap widens between number of homes listed vs. homes sold

The supply/demand dynamics of Malibu real estate have reversed completely from five years ago when scant few homes were on the market, and home sales were sizzling. Mid-way through 2009, a sales tally unimaginably low is offset by an inventory of homes available that is the highest of the decade.

Malibu is on a pace for much fewer than 100 home sales this year, compared to 2004 when more than 300 homes sold. Contrarily, about 140 homes were on the market five years ago and the number was decreasing rapidly. Now, the inventory approaches 270 homes for sale.

Listings represent supply. Actual sales represent demand.

Home values seem to resemble those of 2004, but moving quickly back in time. While the state and Los Angeles region have gradually seen more than 50 percent drops in value, Malibu is off about 33 percent this year from last. The median value of a home sale this year, $2,250,000, is well below the past two years, which topped $3 million, but about the same as the median of 2004.

Only 10 homes have sold in excess of $4 million so far in 2009; in 2007 it was six per month. In that prestigious category (homes for sale more than $4 million), more than 100 such listings are in the computer, highlighting the severe challenge of home sellers this year. With only one in 10 selling during a five-month span, the current inventory is about 50 months of high-priced Malibu listings waiting to sell.

The direction of values is unmistakable. A symptom of a lending market that collapsed and has yet to fully recover, the breakdown in the marketplace is systemic. Nevertheless, the result is a playing field where only the very most compromising sellers are luring willing buyers, and the influx of short sale listings and foreclosures increasingly influences the Malibu scene as it already has virtually everywhere else.

Both homes and condos are finding the same fate. Fourteen condos, in fact, had sold through May, a pace far different from 2004 when about 10 sold every month. On the plus side, the number of escrows opened recently has increased and activity is reported brisker throughout the industry.

The summer inventory of homes listed, seasonally the busiest of the year, only reached 200 last year-the first time since 2001. It is now at a point (more than 260 homes listed) not seen since 1999. Even beach homes are finding extra competition, with about 50 currently listed.

Malibu's pricey marketplace has lagged well behind adjusting to the financial meltdown. Only about a year ago did the tug on prices downward begin here, 18 months behind entry-level communities. Those communities have hit bottom, apparently, as California is experiencing brisk sales in low-priced regions and stabilized prices, albeit at 50 percent to 60 percent off the peak. Homes that sold in the past three months averaged 371 days of market time during their latest listing, some with previous brokers and attempts going back even farther.

The adjacent chart is produced from ongoing analysis of the local Multiple Listing Service information and a review of the public records of every home and condo in Malibu, as some sales are made privately. All homes and condos in the 90265 ZIP code were reviewed.

The median in Malibu was rising steadily since 2004 even while the number

of sales was decreasing. Malibu has been anchored by the high-priced market, which kept overall volume robust and tilted the averages upward, the last frontier for a market virus that slowly spread up the ladder.

Until this year.

Lower-priced homes (and condos) are getting the most attention as only the most affordable properties are sought by cash-strapped and loan-battered prospects. The inevitable recovery will begin with the lowest tiers, though a buying frenzy in that marketplace lacks apparent imminence.

Sales in Malibu as a percentage of homes existing is surely the lowest ever. Even as every price range in every region of the state has dropped more than 50 percent during the downturn, Malibu, in judging the behavior of asking prices, has pleaded exemption. The vast majority of new listings this year of homes that sold since 2004 are asking more than what the owner paid.

The measly sales totals are both a cause and effect of a community in denial of its fate. Buyers have long seen Malibu as overpriced and out of step with these new times. The sales totals of the past 18 months bear that out. On the other side of the coin, with such little comparable sales information available to work with, sellers have grappled with their pricing decisions and, as a whole, misjudged the market.

City adopts budget, passes resolution against state tax raid

City adopts budget, passes resolution against state tax raid

The Malibu City Council at its Monday night meeting voted to adopt both the 2009-2010 fiscal year budget and a resolution to help prevent the state of California from seizing $2 billion in statewide municipal property taxes to help balance its more than $24 billion budget deficit.

The council also voted to levy assessments for the maintenance, repair and improvements of landslide mitigation services in the Big Rock Mesa, Malibu Road and Calle Del Barco areas.

Totaling more than $36.5 million, the approved city 2009-2010 fiscal year budget includes expense reductions and fee increases the city has made after determining in April that its 2008-2009 fiscal year budget is $1.2 million less than originally projected.

Such changes include $300,000 saved by the termination of three city positions (senior civil engineer, division manager and part-time public works office assistant), and a $15,000 total decrease in authorized city salaries, among others.

For additional revenue, the city last week announced it would on July 1 begin collecting Transient Occupancy Taxes of 12 percent of rental income from private homes leased for 30 days or less. (A property owner will have to pay $120 per $1,000 in rent charged.)

The tax will generate an estimated $200,000 per year and will require property owners of the short-term rentals to register with the city and obtain a transient occupancy registration certificate. A one-time registration fee of $25 per property will also be implemented.

Despite its recent budget cut, the city stands to lose another $700,000 and myriad city services if the state decides to borrow $2 billion in statewide cities' property taxes as part of a plan to address what could amount to a more than $24 billion budget deficit.

The plan, unveiled by Gov. Arnold Schwarzenegger after voters on May 19 rejected a batch of ballot measures intended to generate $6 billion through mid 2010, would also hack billions from education, healthcare, law enforcement and social programs. If enacted as an urgency statute, the plan could be become effective July 1.

Thus, council members on Monday night adopted a resolution declaring that the proposed tax acquisition would create a severe fiscal hardship, as property taxes amount to one-third of the city's revenue. The resolution is intended to support the League of California Cities' efforts to prevent the state from collecting the taxes.

The state's possible property tax collection could jeopardize capital for numerous projects within the City of Malibu relating to water treatment, computer updating, street improvements and park construction.

Should the state decide to collect the taxes, Administrative Services Director Reva Feldman said the city would meet to discuss budget modifications.

Included in the 2009-2010 fiscal year budget are the assessments approved by the council on Monday night for the maintenance, repair and improvements of landslide mitigation services for the district areas of Big Rock Mesa, Malibu Road and Calle Del Barco.

The total 2009-2010 fiscal year levy for continued maintenance and capital improvements on Big Rock Mesa is $256,526. The annual assessment will amount to $726 per single-family household, a $280 increase from the cost during the 2008-2009 fiscal year. The increase is due to anticipated capital replacements scheduled for this fiscal year, as stated in a city report.

Malibu Road's total levy amounts to $46,513 for continued maintenance and capital improvements, with each single-family home assessed at $465. However, the city anticipates Malibu Road will incur a $1,544 deficit due to delinquency of tax payments.

The predicted deficit has not yet been factored into the 2009-2010 fiscal year budget, and staff in the upcoming year will consider a ballot measure to increase assessments to reduce the potential of deficits in future years.

The total 2009-2010 fiscal year levy for Calle Del Barco totals $95, with each single-family household assessed at $1. The city had a large surplus of funds due to collection of delinquent payments.

Meeting actions

- Directed staff to obtain a minority report from the View Protection Task Force.

- Authorized the city manager to execute the Community Recreation Agreement with the Santa Monica-Malibu Unified School District allowing the city to operate and maintain Malibu Equestrian Park.

- Appointed eight local students and two alternates to serve one-year terms on the 2009-10 Harry Barovsky Memorial Youth Commission.

- Authorized the mayor to send a letter to the U.S. Board on Geographic Names in support of renaming Negrohead Mountain, located near SantaSeminole Hot Springs, to Ballard Mountain.

Source:
The Malibu Times
By Olivia Damavandi / Staff Writer
Published: Wednesday, June 10, 2009 1:05 PM PDT

Realty in Malibu Ignors Reality

Many thousands of people would love to own a Malibu home. Hundreds inquire about the possibility every month. The sideline is packed full of wishful buyers. Malibu is the dream of multitudes who crave beauty, recreation and a small-town feeling for their lives, as well as the ultimate reward for accomplishment. Yet, in 2008, only about two homes per week sold here.

Despite the deep romantic chemistry between the public and our town, the transitive property of equality (if A = B, and B = C, then A = C) is ignored by many Malibu homeowners.

"A" is a real estate market that statewide and in the Los Angeles region has seen values drop more than 40 percent. "B" is the historically proven notion that realty trends in the region similarly occur in Malibu. "C" follows that Malibu is experiencing a 40 percent drop in real estate values, or more. Our town, however, has been in a long period of denial. The assumption of insulation from the market has been dominant. Many listings still come on the market at higher prices than were recently paid for the same house, as if a profit is still expected in this economy. Other listings sit for months with no offers.

The result: almost no marketplace at all; very few sales; a Malibu real estate industry with barely a pulse.

It is true that the lending and home value collapse had a delayed effect on Malibu, as well as on other high-end areas of Los Angeles. Now, however, every price range, including the revered upper-end, is suffering from a harsh lack of willing and able buyers. The discrepancy between the number of active buyers and sellers is large. Many in the industry and the town seem unwilling to face it.

I believe Malibu risks a much greater value decline than necessary unless price stabilization occurs sooner than later. Just as the individual who starts with an aggressively high asking price is often the most motivated seller later on, settling for a much lower than anticipated price, our market as a whole risks a greater decline in the long run because reality is disregarded in the short run.

Only 100 homes sold last year? This is more challenging than any market of the 1990s when we had a prolonged housing slump. Last year was probably the worst year for sales in Malibu history, with only about 2.5 percent of existing homes transacting. Yet many listings are currently priced as though year 2004 appreciation is still in effect when, really, a 2004 sales price now might be fortunate.

The marketplace requires that either a buyer have a good amount of cash, is taking a profit out of their recent home sale, or can get a large loan. All three sources are limited. Investment portfolios are diminishing, home equities have narrowed or been eliminated, and lending market requirements are anything but relaxed.

While banks are operating with the right hand making it thorny for anyone to get a loan, the left hand takes back more properties lost by sellers because buyers cannot get a loan. Only when prices are so low that lenders feel little risk left from the market will they go back to taking chances with borrowers.

That means that competitive pricing is vital. Before a real estate recovery can occur, let alone rising prices, some equilibrium needs to be established. Sales and value data need to be in place. Buyers and sellers (and Realtors) need to be working from some knowledge base. Our community lacks that simple guide at this time.

Individuals can never be expected to put their needs behind those of the community, but this is a time the stars are aligned. All of Malibu will benefit from smart sellers. The best advice now, I believe, is the same as during the past 18 months: "Mr. and Mrs. Homeowner, with values heading downward, you are better off selling sooner than later. And if you don't need to sell, you are not getting any offers and you decide not to lower your price, it is probably not the right time to be competing in the already saturated market. Unless you're willing to price your home with the growing number of short sale and foreclosure sale prices (the prices most buyers are watching), just sit back a few years and enjoy your lovely Malibu home."

Prices are easily forecast for the next six to 12 months, if supply and demand trends are clear. In Malibu, when the annualized sales projection is equal to the current inventory of homes for sale, prices likely remain flat. In good times, yearly sales totals were in the 300s and the inventory was only about 150 homes for sale; prices were going skyward. But now, with a pace of 100 projected homes selling annually and 200 to 250 on the market, prices are guaranteed to keep going down. With the current discrepancy, it may be a steep drop.

Sellers have a choice of burying their heads in the 2006 sands, taking a 2002-2004 number now or looking at a lower, year-2000 price down the road. I hope Malibu's retreat on the calendar is as brief as possible. Clarity of the market environment may help.

Conversely, Malibu in good cycles has grown in value exponentially better than the rest of the state. To illustrate, in 1972 the median value of a home in Malibu was twice that of the state. By 1990, it was three times greater. By 1997, it had gone up to four times the state median; recent years, five to six times. While prospects for the long term are fabulous for Malibu investors, at the moment the median asking price in Malibu is 14 times the state median sale price. I feel it is out of sync with reality.

Malibu real estate will always be the best that can be found, but this is a time to be cutting losses, not attempting gains. Malibu is not immune from the rest of the world; pricing needs to adapt to conditions. Those who realize this soonest will be rewarded, as will all of Malibu.

www.RickMalibuRealEstate.com

Buyers Market 101

Sometimes it is worthwhile to go back to basics. In these days of uncertain and haunted real estate markets, a Malibu continuing education class on the subject might employ the following syllabus.

Week 1, Buyers Market- More members of society will next purchase real estate rather than sell it. There are more potential buyers out there than sellers. Those concerned with selling often unload many accumulated properties at one time, while a much wider spectrum of folks are looking to buy for their first time, or buy again before they next sell something. Thus, the behavior of the buying public is key to the fortunes of any real estate market.

Week 2, Price-- What is a price? What does it mean? Contrary to popular opinion that price represents some subjective greed of an owner, it is an objective measure that matches the number of willing sellers with the number of ready, willing and able buyers. If more buyers are in the market for a property (such as a Malibu beach house) than those willing to sell, the price goes up. It adjusts until the number of buyers most ready, willing and able matches with the number of properties available. If few buyers exist (note year 2008, Malibu as a whole), the price fluctuates downward where the most motivated seller competes for the next buyer.

Week 3, Deal or No Deal?- What many sellers and buyers never realize, is that a decision to not do something is a decision to act all the same. Deciding not to sell is a gamble that a later, preferred time will bring a higher price. Deciding not to buy, which is a common theme in all markets but especially at a time like now, is a bet that a later time will offer better capability, selection and/or a better price dynamic. Gambling terms apply because all decisions-and non-decisions-employ some potential risk and reward.

Week 4, Economics or Art?-There is a component to Malibu real estate that is scarcely comprehended. It is, to some extent, like a collectible or art. While 15 million people within two hours drive live, work and compete to make better lives, there is constant movement up and down the socioeconomic ladder. When one achieves the ability to buy at the highest levels, it can get crowded at the top. Malibu is perceived as among the most desirable places to live for many reasons (see Week 12). So Malibu real estate becomes like art, a possession that is difficult to value because it is sometimes measured not by any objective or comparable method, but by what one feels willing to pay. The actual use of Malibu real estate can be of less importance that the mere ownership of it.

Week 5, Interest Rates-Buyers make buying decisions based on three primary components: their ability to buy, price and the interest rates bridging the two. Interest rates are at extremely low levels historically. Real estate, the cost thereof, is up to 20 percent reduced when interest rates are lower. As an example, a buyer getting a $1 million loan at 6.5 percent pays $65,000 per year in interest. But if the rate is only 5.5 percent, that same buyer can make the same interest payment on a loan that is nearly $1.2 million. Interest rates that are 20 percent to 30 percent lower than before mean that 20 percent to 30 percent higher price can be paid, subject to the down payment required. The cost of money can be as important to the purchase as the price itself.

Week 6, What to Watch For-Since supply and demand are the keys to prices, it is helpful to know what those factors are doing. That is, how many buyers and sellers are participating in the marketplace at any one time. That can be known by monitoring both the number of new sales and escrows being reported and the number of houses on the market.

Week 7, Join the Crowd-Real estate investing strongly involves herd mentality. If nobody is buying and prices are going down, buyers wait till they go down more. In fact, there is little satisfaction in buying unless you know you can't squeeze any lower price. Then, at any sign that prices go up, sellers become reluctant to sell, waiting for prices to go higher. Perception is a major component driving the market.

Week 8, Own or Rent-Everyone has to live someplace. And they either must own or rent. As a result, sales and rentals compete for business. When sales are hot, citizens buy and don't bother to rent, and then the opposite is true when sales are slow. Rentals will go up in value in a time that sales values are dropping, because the many people refusing to buy flood the rental market and create more demand. Often at the same time, more owners prefer to sell than rent and they deplete the rental supply, causing prices to move upwards. Overall, if more people enter the arena faster than housing units can be built, home values or rentals will be going up (generally the case in Southern California for the past 100 years). The cost of housing, whether the rental or purchase market, historically requires a 5 percent to 10 percent cumulative annual increase between rent and sale values. For example, if sale prices are going down 10 percent, rental rates are likely going up 15 percent to 20 percent.

Week 9, Malibu Disasters-Natural disasters, such as the fires of 2007, have an insignificant effect on local prices. First of all, since they reduce the supply of existing or listed homes available, there is some added pressure on buyers to pay more for a more limited inventory. Contrarily, that factor may be offset by the added fear that prospective buyers feel when considering Malibu and some may want to avoid Malibu and its disasters. Then again, that factor is offset by the enormous attention and free PR that Malibu gets in times of disaster. Simply that it is a place that gets so much media attention, often in great contrast to other ravaged areas, is a statement in itself. Prices at any one time in Malibu have already been adjusted for long-accepted risk of loss to disaster. That they actually happen is already assumed, and values are not altered.

Week 10, The Dollar-There are rare times, such as the present, when the weakness of the U.S dollar draws more foreign investors. As a general rule, 40 percent of Malibu buyers are already in Malibu and making a move within the community. Another 45 percent to 50 percent are within an hour's drive. This is a unique time that outside investors, sensing bargain U.S. prices on a weak dollar, come looking for collectibles (see Week 4) at a time they consider our product at a 30 percent to 50 percent off retail price.

Week 11, Break for some sort of holiday.

Week 12, Product Malibu-Ultimately, the value of Malibu real estate is tied to an evaluation of many factors. Weather, natural beauty, cleanliness and condition of the city, recreational opportunity, access to technology, culture and sports, the esthetic quality of the homes, landscaping and commercial developments, the perceived quality of the people, comfort, safety, schooling and infrastructure are among the dozens of evaluated factors. Generally, Malibu is improving or already highly rated in many of the above.

Week 13, Why Invest?-Malibu is a poor place to invest for income. As a general rule, a Malibu home returns only about 4 percent to 6 percent of its value in gross rent. Rarely, with 20 percent down, does any property "pencil" to a positive. Purchase values, however, include land, view, and other factors that are hard to quantify for rent. For long-term appreciation, however, Malibu has a great track record. There have been more years that Malibu median values have increased by more than 20 percent in one year, than years the Malibu median went down at all.

Week 14, Foundation Lost-Malibu real estate relies on buyers moving up from lower-price tiers. The current time, unbeknownst or otherwise denied by many potential Malibu sellers, is one of a collapsed foundation. The lower the price level in Malibu, the more it is felt, currently. With markets below Malibu's level in crisis, foreclosures rampant, and rapid price declines everywhere, it is inevitable that Malibu will adjust to the foundation below. (Factors from Weeks 1-13 included).

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