The median price of a home sale in Malibu rose to $2.25 million during 2012, an increase of about eight percent from the year before. With booming sales at the end of the year, Malibu also posted its best year since 2005 in the number of transactions.
The highest median year locally was in 2008 when the median topped $3.2 million, even though the real estate industry was in a widespread meltdown. Thus, current prices are generally about 30 percent below the high.
The last year that Malibu experienced 300-plus home sales was in 2004. Though median home prices jumped 5 to 15 percent for each of the next four years after that, the number of units sold grew increasingly sluggish. Last year saw 249 home sales transactions, better than the average of all years since 2000.
In 2009, the market went into a tailspin, as prices dropped an unprecedented 26 percent. The median value continued down further the past two years as well, hitting a low of $2,075,000 in 2011. The median price is the point where half of the sales are lower and half are higher.
The adjacent chart covers every home sale in Malibu that has a 90265 ZIP code, west of Topanga, and is a complete summary of all sales reported in the MLS or otherwise recorded in county records, derived from several sources. Condos and mobile homes are excluded. Neighborhoods are broken up into two categories— beach locations on the sand, and land side homes that do not have beach/bluff distinctions.
Most neighborhoods saw either a large increase in activity from the year before, a bona fide increase in values, or both. The chart uses the blockbuster year of 2004 (when values also increased over 30 percent that year), and the years of 2009 and 2011 as comparison points. See the highlights box for more information about why 2012 was special.
What does it mean for the future?
Based on current trends of plentiful, anxious buyers and low inventory, prices are very likely to keep going up, perhaps at a stronger pace than seen last year. The year 2003 had a similar mix of units selling and inventory levels that we see now, and prices went up 19 percent that year as a result. Certainly, dynamics can change in a fragile economy, causing underlying factors within supply and demand to alter course. Nevertheless, even with a sudden drop in sales pace or a hefty increase in seasonal inventory, the current market has enough momentum to likely keep prices stable or moving upward for the foreseeable future.
Though 2004 was a great year and 2009 was the worst, that five-year gap saw prices rise so dramatically that values were still better in the latter period. Nonetheless, sales units had dropped radically from 307 in 2004 to only 109 in 2009. Volume was less than half.
Fortunately for homeowners, however, 2012 has brought salvation and hope. The market seems to have adjusted to the stagnant economy, higher-than-usual unemployment, haunting debt levels and a restrictive lending market. Buyers and sellers are acting with all those factors acknowledged as a given. As such, values 30 percent below their all-time high apparently remain attractive. Generally, prices reflected in the 2012 column of the adjacent chart represent levels that were bottoming in 2011 and the first few months of 2012, and now are working their way upward.
What is the product?
Malibu real estate, to some degree, is an investment competing with other investments. If one type of investment is at an all-time high, while Malibu real estate is down 30 percent, dollars may be coming in our direction. Additionally, as hundreds of Malibu homeowners know, especially the 1,000 or so families who own beach houses, local real estate is partly a collectable. It is not meant to be frequently bought and sold, but held over many years, and thoroughly enjoyed, while generous long-term appreciation seems a probable by-product.
That is why, even in a healthy sales year such as 2012, only about six percent of all the homes in 90265 traded hands.
Rick Wallace has been a Realtor in Malibu for 25 years.