Median price in Malibu stays steady

Neither buyers nor sellers are gaining any advantage.

If you have been watching the presidential election polls in recent months, you know they have been pretty even and steady. Neither candidate has gained much of a lead at any time and the percentages have hardly moved for months. If you have been watching Malibu real estate median prices all year, it has been the same: a very steady, unmoving line.

Throughout the year, at every glance, the median has been virtually unchanged from 2011. Neither buyers nor sellers are gaining any advantage. Prices are very stable.

The median price is the very middle price of all sales thus far during the year. In this case, there have been 137 sales of homes in Malibu through August. The sale that was the 69th highest, that point where 68 sales were lower and 68 sales were higher, was $2,102,000. That happened to be a deal in the Carbon Canyon neighborhood that closed escrow in January.

The median value for 2011 was about $2 million (as reported in The Malibu Times on Jan. 11, 2012, down from about $2.3 million in 2010).

If the next few closed sales are less than $2.1 million, then the median will drop to $2.1 from a sale in Encinal Canyon, or perhaps down to $2,085,000, the price of a deal on Victoria Point. A plurality of sales of more higher-priced listings might nudge the middle line to $2,150,000, where two homes have sold this year.

When there had been about 75 sales during this year, the number 38 sale at the time was about $2.0-$2.1 million. When there had been about 125 sales, the number 63 sale at the time was about $2.0-$2.1 million. The flow of sales throughout the year has continuously balanced below and above that threshold.

But just as the presidential election may swing at the end, 2012 may yet produce a notable movement in either direction on Malibu prices. Place your bets cautiously on the Malibu real estate proposition, however, as there is no strong indication either way as to the next price movement (the election results, actually, may have an effect).

The other way to determine an average price, though it weights very high in Malibu where there are exceedingly expensive properties, is the mean average, the total amount of sales volume divided by the number of sales. So far this year, the average is $3,134,000 per home sale. Last year, when practically nothing was selling on the beach, it was $2,860,000. Improved strength in the pricier properties this year is reflected in that statistic.

Sometimes, like the beginning of last year, sales are weighted more to the lower end because that is where the action is. The median statistic drifts downward because the pull of the market is to lower values. If the median has gone from $2 million to $1.8 million, it may not mean that every property is worth exactly 10 percent less, just that the market is being pulled lower. Nevertheless, the median is a telling statistic and the most reliable measure of price movements. If the market is constituted so that only lower-priced merchandise can find buyers, that is significant, and the median reflects that. The opposite can occur, as well.

In 2008, even as the real estate market was collapsing all around the nation, and the lower end of Malibu could find few buyers, the beach homes and estates were still selling. Malibu’s median went up (hitting the all-time high of $3,250,000).

Seen in the aggregate, the median is a great way to compare years in Malibu. The median in 2002 was just under $1.4 million, before it exploded all the way to 2008. Now, most of those gains have been lost and 2003 prices are most represented, with a tilt towards 2004. (The median increased in Malibu about 50 percent from 2002 to 2004.)

While there can be the aforementioned temporary anomaly in the statistic, the median is still a very accurate measure of a property’s current value. If the median has decreased 33 percent during a specific period, a property during that same period is likely 33 percent off in market value also, unless significant upgrades have occurred. Many homeowners try to ignore that. The characteristic of many listings these days is an attempt to get a 2005-2008 price when the market is really back in 2003-2004. It almost never works.

A home’s current value, in fact, is frequently about the same percentage variation from the median value from when it was bought. For example, if it was bought for $1 million in 1999 when the median was $1.1 million, it is likely worth a little less than $2.1 million today, all things being equal.