Is the Real Estate Market Good or Bad?

While it is often said the real estate cycles proceed over 10 years, I would claim that no matter the time duration, there are FOUR distinct phases in a cycle:

1. When things are GOOD, and getting BETTER.

2. When things are GOOD, and getting WORSE.

3. When things are BAD, and getting WORSE.

4. When things are BAD, and getting BETTER.

Before I describe how we are still in mode 3, creeping very close to mode 4, let’s analyze how each phase is defined.

When things are GOOD, that means that prices are going up. Values are improving, bringing equity, wealth and prosperity to those invested in real estate. The REASON prices are going up is purely a function of supply and demand. If demand, as compared over time, is strong, and supply, or the inventory of property for sale, cannot keep up with demand, prices go up.

The opposite is true when things are BAD. There are more sellers than buyers. Sellers have to lower their price to compete with other sellers, to overcome the scarcity of ready, willing and able buyers.

When things are getting “BETTER (or WORSE)” is when the TRENDS of those supply and demand factors are changing accordingly.

The number of sellers and buyers at any time can be definitively measured with two simple statistics: The number of homes for sale and the number of homes closing escrow. The relationship of those tallies is the most vital information for any good Realtor or real estate watcher.

About 190 homes sold in Malibu in 2007. About the same sold in 2008. But then it went down to 110 last year. That was clearly a TREND for the worse. This year is projected to be about the same as last year.

The sales tally (# of buyers) alone was only half the story, however! The fact that more homeowners went on the market also was a trend for the worse. In May, 2007, there were 180 listings of single family homes in the 90265 ZIP code. In May, 2008, it was 215.  Last year in May, it was 259. This year, 254.

You may quickly note the number of sales – AND the number of homes FOR sale – is similar between last year and this! Those two facts indicate that the TREND for the worse has perhaps run its course.

Suppose the number of sales over the next months went from roughly 110, annualized, to 180?  Meanwhile, the inventory of about 250 dropped to about 220 next May? That would be a positive movement that would cement our transition into phase 4.

For illustration sake, let me show how the numbers played out through the last 15 years or so, and how the direction of the market was predictable in some cases:

1997 - 300+ listings, going down, 275 homes sold, going up; Market transitioning from BAD and getting BETTER to — GOOD and getting BETTER.

Several years in that mode prevailed. Prices went ever higher as sales units kept increasing and inventory kept decreasing.

2002 - 240 listings, going down, 300+ homes sold, staying steady, Market still GOOD and getting BETTER, but with the buyer demand maxing out. The future markets, to stay good, required less inventory (supply) while the number of buyers (demand) stayed at an historically high level. That indeed occurred.

2005 - 125 listings, still going down, 260 homes sold, going down. Offsetting the reduction in buyers was the reduction in sellers, keeping the market GOOD, but BETTER (though a better that was weakening). The number of listings was approaching its lowest point realistically possible, while the number of buyers was straining in light of the historically high price levels. (We also know now - as myself and others knew then - demand was artificially enhanced by soft lending practices)

2007- 190 listings, going up, 190 homes sold, going down; with clearly WORSE trends in the works, the market was about to transition from GOOD-WORSE to BAD-WORSE.  There was no question. When the average number of listings during the year, and the annualized number of sales for the year - in this case, 190 vs. 190, is similar, prices are generally stable in Malibu. But the lines on the graph then were clearly crossing.

2009 - 250 listings, inching up, 110 homes sold, staying down. Last year was a BAD-WORSE year that had no hope of escape.  We entered 2010 with similar conditions.

It will be sometime before the number of listings and the number of annualized Malibu sales cross on the graph again (producing, for Malibu as a whole, higher prices). Considering the severity of the discrepancy between bonafide, measurable sellers and buyers at this time, it will take a lot of trending for the BETTER before GOOD is known again.

Meanwhile, much of the real estate news that the public hears is good.  That brings up a new twist to this analysis. Malibu is its own unique market. We are in our own little world (as we have wished to be, in many respects). Often the dynamics here are different than the nation, state or even the county of LA.  As a general rule, the trends for a long time in the county have been BETTER, such that prices are beginning to go up - a GOOD market has replaced a BAD.

Furthermore, within Malibu are many micro-markets; so many different price levels have different dynamics at any one time. For example, the inexpensive condo market in Malibu has had a long period of BAD-BETTER and now prices are about to turn up into a GOOD-BETTER mode, as they stabilize.  The high end has almost the very opposite story.

And much more than meets the eye is involved than this quick dialogue. A long-time knowledge of the behavior of supply and demand and its application to Malibu is vital if you wish to determine at what points the power switches hands between sellers and buyers. You may always feel free to consult me to get an honest handle on the market.

Furthermore, there is much to know about what influences are at play to MOVE the trends, such as the soft lending market once creating more buyers than the market should’ve borne – contrasted to the current state of hard lending practices curtailing buyer enthusiasm.  Once lending standards relax and lenders are motivated to lend money, the flush of new buyer demand will accelerate the current phase.

In conclusion, remember this: If news is reported that appears to be good, it may be in one of several forms:

The news really IS GOOD. That is, supply and demand is causing prices to go up.

The TREND is GOOD.  The number of sales is increasing and the number of listings is falling.  Or, one factor is stable and the other is good, so the overall trend is good.

Lastly, sometimes news just relates to one fact that causes part of a trend to appear moving in a positive direction.  This very commentary hints at such a message. To say that sales are picking up (even if they could not much slower in 2009)... while the inventory has stopped increasing (at least at the moment, “shadow inventory” threats notwithstanding), indicates a trend landscape that is adjusting in a positive way.

Before long, the growing gap between supply and demand will stop growing, and begin shrinking.  We will unmistakably enter BAD - GETTING BETTER.

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Local realty offices hang in during tough times

Almost every company is experiencing changes.

Even if homeowners are scarcely moving from their residences, there's been a great deal of changes among the agents and offices of the local real estate industry. Down times tend to bring interchanging parts at the business end of real estate. Frequent have been the movements of offices and agents in recent times.

The landscape of companies is almost completely changed from about a decade ago. Remember when it was Jon Douglas and Fred Sands dominating Malibu, with about 75 percent of Malibu home sales attributed to their brokerages? Both Mr. Douglas and Mr. Sands sold their businesses, for about half a billion dollars combined, to the company that remains the local leader since.

Coldwell Banker had little presence in Malibu in the 1990s until the national firm, suspecting a boon in real estate, gobbled up most of the local agents with its acquisition of Jon Douglas in 1997 (which had merged with Prudential California Realty two years earlier) and then Fred Sands in 2001. Coldwell Banker has remained the home of nearly half the agents in town, and produced more home sales than all the other companies combined during the past decade.

One Coldwell Banker agent alone accounts for about 20 percent of all of Malibu's business. The top four producing agents in town are all Coldwell salespeople. Still, the down economy and the increased rental costs led the company to combine two offices. About a year ago, two offices under the management of Kim Collen-Ross merged into one. The so-called East office at Pacific Coast Highway and Webb Way was closed and its 50 agents merged with the remodeled Colony office located at Webb Way and Malibu Road. Since the closure, the PCH location, owned by the City of Malibu as a part of the Legacy Park property, has remained empty, though a recent agreement will bring the Super Care drugstore to the location.

Besides the Colony office, now home to about 75 agents, Coldwell Banker has kept a prominent west office at Heathercliff on Point Dume, where about 40 agents reside. That office is managed by Jay Rubenstein, who has 30 years of local management experience.

A similar mid-Malibu consolidation in early 2009 was made by the Pritchett-Rapf company. Closing their office in the Cross Creek Plaza near Radio Shack, all agents were combined into the Malibu Road office across the street from the Colony Plaza, near the news stand. The Pritchett-Rapf company, with about 50 agents, represents two generations of participation in local real estate. The Pritchett and Rapf families combined forces, agents and several offices in 1994. Principals Jack Pritchett and Jim Rapf oversee the operation, with Jeff Chertow as manager.

Perhaps the most famous brokerage location in Malibu is at Cross Creek/PCH. Prudential Malibu Realty opened the modern version of a real estate office there in 2001, primarily owned and staffed with agents previously with Fred Sands before the Coldwell Banker buy out. That location has been in existence as a real estate office since the 1940s, most often featuring the long-time Malibu Realty, now defunct. Previously still, the leader in local real estate, the Art Duncan Company, was housed there. Prudential has about 50 agents, under the guidance of manager Mike Novotny.

The Prudential Company also claims one of the few construction efforts currently underway of any kind in Malibu: The reconstruction of the Point Dume office at Zumirez and PCH. The previous facility was built in 1945 as a sales office for the Point, when only a handful of homes existed on the barren peninsula. The new space will open this summer.

The volume of real estate sales last year, excluding sales of condos, mobile homes, or raw land, was less than half the years 2004-2007 (approximately $400 million in 2009 compared to more than $900 million in the hottest four years). Volume this year is projected to be similar to 2009, which was less than 2008.

The pie of commission dollars, more than half of which is sliced up among the top 10 Realtors in town, is fully doled out among an aggregate 250 local real estate agents.

Many new companies not in existence a few years ago additionally fight for market share, but changes are afoot.

Sotheby's has run an operation in the high-rent central kiosks of the Cross Creek Plaza for about a decade with up to 20 agents. (The site was once the long-time home of the Jim Rapf Company). Sotheby's and its agents are planning a move at the end of the month to an undisclosed location.

Taking over the space soon at Cross Creek will be Westside Estate Agency, or WEA. Their move is from the large office building behind the green car wash adjacent KFC on Pacific Coast Highway, where they have been since 2007 with about a dozen agents. WEA originated in 1999 as the brainchild of Kurt Rappaport and Stephen Shapiro, super-high producing Realtors in Beverly Hills. Malibu is their one other office.

Three years ago, Katie Bentzen and Eytan Levin, among the top producing agents with Pritchett-Rapf at the time, split off to form their own company, Bentzen-Levin. Housed in the refurbished building at 22611 PCH (once the long-time home of Malibu Travel), several agents have joined the brokerage since it opened. Change has come there as well, however, when the principals recently parted ways. The firm has become simply Levin and Associates.

Meanwhile, the brand new Arete Realty (ahr-I-tey, a Greek word that means virtue) is Bentzen's latest endeavor, located at Heathercliff and PCH.

Malibu's longest continuously running real estate company by far, Busch & Associates, maintains business from its location at 22333 PCH where it has been for more than 30 years. Iconic Louis T. Busch was the second of three generations of local Realtors in Malibu.

Virtually every building in Malibu has housed a real estate office at one time or another, and almost every realty office in town has once been something else. The aforementioned Coldwell Banker Colony office, for example, Malibu's largest real estate space, which was once Bank of America before the bank moved across the street.

With about 250 active agents, even in down times, the local real estate business is the number two local employer in the Malibu area, behind only Pepperdine University.

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2010: A year of short sales, foreclosures

    
     Flurry of new escrows offers hope for Malibu.
     So it has come to this, a return to 1995. Not 1995 prices. But a common feature of real estate transactions this year may seem much like the mid-90s in Malibu-plentiful short sales and REO foreclosures snapped up by eager buyers.
     A realistic estimate is that about half of local home and condo sales in 2010 will be under some sort of distressed cloud, a property that is: upside down, or “underwater,” where the value is less than the loan, the owner is current on payments but selling it as a short sale, with the bank accepting less than is owed; or it has a current “notice of default” filed against the property by the lender, the key step toward foreclosure; or it has already become lender-owned, foreclosed, known as a REO property (real estate owned by the lender).
     The Malibu market, after suffering a 33 percent drop in value last year, is suddenly in territory long avoided. The last bad market was during the lengthy, lingering recession of 1992-1996. There are differences between now and the mid-90s, however. The sag in prices during the 1990s was due mostly to the Southern California economy, along with over-speculation that had sent prices unrealistically high by 1991. Price declines in Malibu during that period were very gradual, with some homes eventually seeing 35 percent less value during several years.
     However, because not all wealth levels were taking an economic beating then, not all price levels took a hit in value. There were more total sales in 1995 than the emaciated tallies of the past two years. Besides, Malibu's upper end held its own better then than now; the overall averages of that time were only in small declines.
     Contrast that to 2008-2009, which is highlighted by a systemic collapse that is the most unique in history. Real estate has suffered full-scale price devaluation due to a virtual shutdown by the lending industry and a dry pipeline of money flow. Once the industry stopped lending, Malibu faced an inevitable and unavoidable 30 percent to 55 percent drop in values just to keep in line with outlying areas. Every price tier, including beach homes and large estates, has now been affected.
     The state of the real estate market today begins and ends with just one discussion: lending practices. As lenders remain tight with their money, and require exhaustive borrowing standards for even the most credit-worthy customers, values continue to suffer. Particularly at the jumbo loan threshold necessary for Malibu, scant few borrowers can qualify. Sales and prices continue to struggle despite low, albeit unattainable, interest rates.
     So short sales and foreclosures will be popular attractions this year. Of the 41 condos currently listed for less than $1 million, almost half openly advertise such status. The 20 lowest-priced homes in Malibu/90265 ZIP code are one-quarter short sale or foreclosure in variety.
     For those “normal” owners, not in financial trouble, just wanting to sell, there is no separate playing field. Buyers these days expect only foreclosure value, no matter what the circumstance of the homeowner. If a standard listing is not priced competitively with the REO down the street, the buyer will focus only on the REO listing.
     How are values so far, in 2010? There is bad news and good news to report, in that order. Early returns indicate that 20 homes sold and closed escrow in the 90265 ZIP code through March 15. That would put Malibu at a tempo similar to the last two turtle-paced years. Less than $60 million total volume for 75 days of business suggests a winter market with barely a pulse, even slower than 2009.
     Furthermore, half the sales have been for less than $2 million and half have been for more than $2 million. Thus, a $2 million median represents, should that number hold all year, another 11 percent drop in values from last year. At the moment, we have felt a full 40 percent drop overall from the high in 2008.
     (The state and Los Angeles County, now seeing increasing sales and improving values, did not begin to recover until both geographical categories saw more than 50 percent in declines established).
     At the upper end, while a paltry 23 homes closed escrow for more than $5 million last year, only two had done so by March 15.
     The good news?
     Buyers know it won't get too much more opportune, particularly when lending flexibility increases. More than 30 homes have gone into escrow in the past 60 days, a relatively quick burst of $110 million in volume. Additionally, there is a potential stabilization of the median value, based on a healthy distribution of price ranges finding willing buyers lately. Even with a high rate of mortality of escrows these days, spring results look to be positive.
     Furthermore, a long-increasing supply of homes and condos for sale may be ready for a reverse. For example, while Malibu had 79 homes for sale at less than $2 million at one time, now there are only 50. The low end will lead the way to recovery and condos and low-priced homes are already being snagged in quicker times. Of course, it is the low end where loan-qualifying is easiest. More notably, the low end is most partial for properties branded short sales and foreclosures.
     Rick Wallace has been a Realtor in Malibu for 23 years.

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2010 Malibu Sales January 1 to February 25

2010 Single Family Residence Sales

Address                                     Listing Price     Selling Price

1 18151 Kingsport Dr                $1,275,000   $1,220,000
2 18357 Wakecrest Dr              $2,299,000    $2,150,000
3 18326 Clifftop Way                $2,485,000    $2,150,000
4 11892 Beach Club Way          $1,695,000    $1,600,000
5 19710 Pacific Coast Hwy        $2,795,000   $2,200,000
6 18980 Pacific Coast Hwy #2   $2,999,999   $2,750,000
7 31950 1/2 Pacific Coast Hwy  $7,995,000   $6,300,000
8 24166 Malibu Rd                    $16,500,000  $15,000,000
9 43 Paradise Cove                    $295,000        $265,000
10 33439 Mulholland Hwy          $864,800       $827,637
11 140 Paradise Cove Rd           $985,000       $937,500
12 140 Paradise Cove #140        $985,000       $937,500
13 31435 Birdella Rd                  $1,050,000    $1,000,000
14 20404 Roca Chica Dr            $1,075,000     $1,056,600
15 29343 Bluewater Rd              $1,495,000     $1,510,000
16 29201 Larkspur Ln                $1,795,000     $1,650,000
17 20721 Big Rock Dr               $2,199,950      $2,000,000
18 24507 Vantage Point Ter        $2,200,000    $2,000,000
19 1771 Rambla Pacifico            $2,995,000     $2,750,000
20 3600 Sweetwater Cyn Dr       $4,850,000     $4,300,000
21 26258 Fairside Road              $551,000        $551,000

2010 Condominium/Co-Op Sales

1 27400 Pacific Coast Hwy #106   $500,000       $459,000
2 25120 Malibu Rd                        $4,950,000     $4,600,000
3 11938 Oceanaire Ln                    $550,000       $510,000
4 6473 Zuma View Pl #135            $1,239,000    $1,150,000
5 23901 Civic Center Way 373      $430,900       $430,900
6 6450 Lunita Road 122 #122        $899,000       $875,000

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Malibu City Election - City Council

As a Malibu Realtor, I speak with hundreds of Malibu citizens over the course of a year. In Malibu election seasons such as now, the talk is often of the local campaign. I am frequently asked which candidates I view favorably in the city council election.
In that vein, I write to you. Malibu will be electing two new city council members on April 13.
This year, I wholeheartedly endorse Laura Rosenthal. And I would recommend Lou Lamonte for your second vote.
It should be an exciting campaign with 10 individuals running this year! I believe Laura Rosenthal and Lou Lamonte represent our best choices: first, to bring reason and fairness to property rights matters that I care so much about; but also to the many other needs of the community and individuals within.
The “other camp” is expected to spend a lot of money and run a tough, perhaps bitter campaign. Watch closely the characters of ALL participants in this April 13th election. I hope you and the plurality of our voting neighbors cast your ballot with the desire for balanced thought and harmonious conduct in our local government.
Laura Rosenthal and Lou Lamonte are the best candidates to achieve such results, and best represent Malibu. You can find out more about each candidate or find out how you can help, by visiting their websites www.rosenthal4malibu.com or www.lamontemalibu2010.com.
Rick Wallace

Letter to the Editor

This article was recently published about me in The Malibu Times opinion section: Letters to the Editor
Published: Wednesday, February 10, 2010
Credit given
I am an appraiser who specializes in the appraisal of luxury and ultra-luxury homes in Malibu and Beverly Hills.
In the past year I have appraised more than half of the sales in Malibu in the $5 million-plus range for one of my clients.
There is a section in the appraisal report form named “Market Conditions.” In my report, I quote Rick Wallace and The Malibu Times extensively. The powers that be in New York and Germany think I am a genius.
Truth be told, I just paste and click Mr. Wallace's quotes (with proper credit given to your paper).
This note is to give credit where credit is due and to hope that Rick Wallace will continue to be a regular contributor to The Malibu Times.

Mark J. Mallinson

Home values sink 33 percent

After two years with a median home value at more $3 million, Malibu's residential real estate market saw a 33 percent plummet in values in 2009. The median price of a home sale dropped from $3,325,000 to $2,225,000.
The year began with few sales and distinctly lower prices. Throughout 2009, as deals trickled in, the median remained at less than $2.5 million. The Malibu median price, the point at which half the homes sell for more and half sell for less, is just above the level of 2004.
Only 104 known sales occurred in the Malibu real estate area that includes all addresses with a 90265 ZIP code, counting sales not reported in the local Multiple Listing Service. That is the lowest of any year going back at least 30 years, according to records. By any gauge, 2009 was the worst year for local real estate ever.
Consider that the state of California median home price had never seen a slump of more than 5 percent in one year, but then experienced a 55 percent drop during 24 months (mid-2007 thru mid-2009). It was only a matter of time before the upper end, which the Westside and Malibu represent, would suffer the impact. Malibu had never had a single-year drop of more than 10 percent in its values. Last year's slide had been thought unimaginable based on past performance.
The entire spectrum of the market is feeling the hurt in Malibu. That includes the upper end, sometimes thought to be impervious to economic forces. Nine deluxe Malibu properties found buyers for more than $10 million during 2009. But that is far less than recent years. In 2007, for example, there were 25 such sales.
At the base of Malibu real estate-condo sales-trying times prevail. After 117 sales in 2005, Malibu condo transactions numbered only 50 by 2007, 37 in 2008 and 35 last year. The median of 2008, $1,045,000, was reduced to $822,000 in 2009. Whereas no condo sold for less than $567,000 in 2007, there were three sales for less than $400,000 in the closing stages of last year.
During the past two years, Malibu homeowners have demonstrated a very deep love of their homes. Their appreciation and pride for their properties, no matter how long occupied, has translated into emotional listing prices, at least for those daring 47 that met with much resistance from the buying public.
The wide gap in opinions of value between buyers and sellers resulted in sales volume last year of less than $400 million, the lowest since 1997. For local brokerages, the business pie was 61 percent smaller than in 2005. Furthermore, about $1.5 billion in listings did not sell during the year. Five particular local Realtors alone accounted for $840 million in listings of homes that went unsold, but required expensive marketing.
It follows that the number of homes for sale, commonly called the inventory, is at high levels. Buyers have plenty to choose from among increasingly competitive sellers (all in an environment of already reduced prices and very low interest rates). Two hundred thirty homes listed for sale in the 90265 ZIP code in January was the highest tally for the month since 1999.
Since the upper end of the market was contributing less weight to the sales barrel, the average price of a home sale was also dramatically lower.
Compare: In 2008, 117 sales for $574,790,000 made for an average of $4.9 million per sale; last year, 104 sales for $384,739,000 put the average at $3.7 million per sale.
Frequently reported in the media is the increase of real estate activity in the state and region, which will surely arrive in Malibu before long. Gradual price stabilization, now seen in the lower price tiers of the Southland, will be Malibu's next phase. The stunning buying opportunities of present will diminish.
How the market reacts after some stabilization is unknown. For sellers who have been chasing the market downward seemingly forever, at least it will be refreshing to regain some negotiating backbone. For buyers who missed out in 2002 and 2003, before triple-digit appreciation raged throughout the market place, the values of those years will once again be available to capture.

Year ends with new look at local home prices

Is this really Malibu? Homes selling for less than $500,000? A Malibu two-bedroom condominium that once could've fetched $600,000 closing escrow recently for $340,000? Mobile homes in a city famous for $1 million trailers now going for mostly less than $400,000?
The worst real estate year in Malibu history is ending with the feel of a tornado just passed by. In virtually every neighborhood, whether it is of homes, condos, or the two mobile home parks, recent sales have been breathtaking. As in, prices so low it makes one hard to breathe.
On Heathercliff Road near the Point Dume shopping plaza is a collection of 42 townhomes, some with a view of the ocean out the back toward Zuma Beach. Every sale among the units for the past four years has been above $800,000. This year there was one sale: $451,000.
The bell weather neighborhood of Malibu West has seen a handful of $2 million sales over the years. Most recent sale price: $935,000 for a three-bedroom home in the lower canyon. Right across the street is a similar house that sold for $1,550,000 just two years ago.
If the regional market is most focused on low-end housing first, the word has not yet gotten to Malibu. Our most affordable neighborhood, Corral Canyon, had only four sales in all of 2009. The highest priced of those was for $690,000. The average sale price in Corral had been more than $1 million from 2004 - 2007, including a peak of $1.3 million in ‘06. Two sales for about $460,000 have occurred there recently.
Condo sales were in very short supply, about 30 percent of the number of sales from the peak of the market. At Malibu Canyon Village, where there are 104 units, just one sold this year, for $467,000, while 11 others failed to sell. The unit with the highest record sale in the complex, at $720,000 in 2005, was recently on the market at $442,000.
From 2004 - 2008, the Malibu Villas across from Paradise Cove had 37 sales above $600,000, and a few at more than $1 million. About that many units have attempted to sell above $600,000 in the past couple years. Year 2009 brought just two closed escrows among them-for $500,000 and $450,000.
Zuma Bay Villas had its first sale at less than $1 million since 2004. So too is the case of the Vista Pacifica townhouses, the relatively new complex on Lunita just north of Trancas. After 34 sales upward of $1 million since 2004 began, one sold this year at $865,000 (the same unit had sold in 2005 for $1,230,000). The other sale at Lunita in 2009 was for $1,280,000, exactly $300,000 reduced from its 2006 purchase price.
A three-bedroom townhouse on the beach near Moonshadows sold for nearly $2.5 million in 2006. This year it got $1.6 million.
The only sale all year in 104-unit Tivoli Cove went for $900,000. The same unit had sold in 2004 for $1.1 million.
Almost every sale is pre-2004 now throughout Malibu, as the buyers have maintained their firm grip on the market and negotiations. Only the most desperate sellers are letting go as the full brunt of the housing collapse has permeated our city. A home in the west part of Malibu hit the market last week-and immediately into escrow-that had sold for $1.5 million in 2005. Last week's price: $875,000.
A home in Big Rock that brought $1,530,000 in 2005 just transacted for $1.2 million. Three of the other five sales in Big Rock this year were of properties that also sold in recent years-at a higher price the first time (and one sold a notch above its 2004 price).
Another bell weather neighborhood for Malibu is Sea View Estates atop Las Flores Canyon. For the first time since 2003, a home there has sold for less than $1 million. The home in question has four bedrooms, partial ocean view and a pool. Many similar homes were bringing more than $1.5 million in recent years.
The sales stories for 2009 are few. But among them, tales of tough battles are many. The average time on the market for current sales has exceeded 15 months. Compared to past Decembers, the inventory is the highest since the 1990s. The number of buyers is as low as it's been on a percentage basis since perhaps the 1960s.
The condos at Malibu Gardens had four sales, averaging more than $600,000, just two years ago. This year, two of the four sales have been at $350,000 or less.
Higher priced markets still have more sellers unwilling to accept the new realities, but some sales indeed slip through the cracks. A Winding Way-area home closed escrow in August for 10 percent less than its 2005 sale price of $3.2 million. A home in the Saddle Peak area has reported in escrow after a price reduction about 20 percent lower than what it had sold for in 2005.
One home in Malibu had seven price reductions before it sold this year, at a price less than half its original asking price. The latter feature is not uncommon in Malibu. The former matter, many price reductions, is becoming almost standard practice.
Homes on the beach have not been immune. A La Costa Beach house that just dealt at $9 million was a million dollars less than its 2005 value. A Broad Beach home that was on the market for $7 million earlier in the year did not sell-even though its last established value was more than $11 million, from a closed deal in 2007. A Malibu Road house attracted a buyer for about $2.5 million less than the owner had paid in just 2007.
It was once thought impossible that Point Dume would ever see the light under $2 million but a few such homes have traded for less this year, and one recent listing was for less than $1.5 million, even with three bedrooms and an acre of land.
The more affordable mobile home parks of Paradise Cove and Point Dume Club enjoyed $1 million-plus fortunes for many years but only three such units were recorded this year (one for nearly $2.3 million). It was back to more modest numbers for the other 17 sales of 2009, all at less than $1 million and the majority of those went for less than $500,000.