Market Turns In Favor Of Sellers

Supply is way down. Demand is way up. Lurches in both directions make it official: It's a Sellers Market once again.

It isn’t every month that a sudden real estate market trend occurs. And it really isn’t very often that they happen during the months of January and February. But the past two months have distinctly tilted the market balance in favor of sellers.

Supply is way down. Demand is way up.  Lurches in both directions the past 60 days make it official:  It is a Sellers Market once again.

All the many, long adjustments since the 2008-2009 market collapse in sales and prices have been completed.  Last year began and ended with relative stability and balance between buyers and sellers.

The start of this year changed that.  The inventory of homes available is now at super-skimpy levels. Only about 150-160 homes have been listed as actively available for sale to begin the year, as derived from the local Multiple Listing Service for the 90265 ZIP code.  Last year it was about 170 to begin the year and two years ago is was more like 230 homes.  To put it in additional perspective, the last time supply was so low was in early 2008 when prices were still screaming upward.

They may do that again this year.  The other half of the equation is buyer demand and it has been plenty strong even during these traditionally slow months.

A whopping 43 homes in Malibu are in escrow at this writing.  More so, 31 entered escrow just since the start of the year.  In every price range, practically, there are voracious buyers. From eight listings in escrow under $1 million to two over $14 million, sales are healthy all over the map.

A more detailed look at the overall picture starts at the under-$1 million tier.   Only four homes remain for sale compared to the eight that are in escrow now.  Might we see no homes under $1 million by the end of the year? That seems to be the direction things are going.

Ultimately, market pressure on prices begins at the low end and works its way up.  Next is the $1 – 2 million price range, nearer the heart of the marketplace.  Only 16 homes in all of Malibu are offered in that range.  But 13 others are in escrow.  When that dynamic is in place, that as many homes are in escrow as are active, generally you see multiple offer situations, bidding wars and prices moving upward before your very eyes. That seems to be the consensus around town currently – and it is not even Spring yet!

Only 19 homes have been reported with closed escrows as of this date, but that modest tally is partly a residue of an unexciting December to finish out the year.  The 40 or so homes that will see escrow activity through the final days of this month assure buoyant sales reports upcoming.

Under current conditions, there is no question prices have to adjust upward to meet the pressure of low supply mixed with high demand.  How high might they go? The year 2006 may provide a clue.  That year, the average inventory throughout the year was 206 homes for sale.  The total number of sales was 264. The result of those intersecting graphs was a 14 percent increase in median values in Malibu.

This year appears to be heading for similar numbers, though it is early and a bounce in either direction may yet occur.  But the above scenario relies on the inventory getting over 200 homes and staying there.  It has been four months, albeit the slowest months for listing activity, with the inventory under 170. And last year, which tracked higher than this year so far, never saw inventory levels above 216 homes.

So, even a 14 percent increase projection, again under current circumstances, may be modest.

Media reports throughout the region do not reflect this optimism but there are two qualifications to that. First, Malibu is often in a different selling mode than other areas. Secondly, and related, Malibu is usually behind the regional trend.  Actually, the region has already seen this sort of heated market and may be slowing on the back end, if anything.  Complaints come from most outside quarters cry of low inventory frustrating anxious buyers and their agents, alike.

Malibu is now officially in that low-inventory setting. Beach house listings, included.  At this writing, 46 beach and bluff homes are listed, compared to 59 during February last year and 70 during 2012. The January figure of 40 was the lowest since the end of 2008.