Signs of recovery as home sales balanced toward all price ranges

There were two positive trends to Malibu real estate during 2012. First, the number of single-family homes sold

in the 90265 ZIP code will exceed 200 units this year. That has not happened since 2005. Secondly, the distribution of sales is spreading more evenly across the price spectrum.

In recent years, when the market was either in the final throes of the big 2002-2007 boom, or when it was collapsing in the worst price decline in history, sales were weighted more heavily to the highest end or the low end. That is, homes selling for less than $1 million were experiencing a very different appeal than homes selling for more than $5 million, whether much more or much less. During this year, however, a more balanced spread among the price tiers is taking place.

The above chart tracks the total number of sales in eight different price ranges since 2007. The number of sales is the tally of 1- to 4-unit single-family residences in Malibu, excluding condominiums and mobile homes. Homes on the beach and off are considered together. In 2007, for example, only two homes sold for under $1 million. This year, the count is already at 30. But the number of $10 million sales has declined, quite representative of the change in values Malibu has experienced.

Nevertheless, in looking only at the threshold directly above and below $3 million, year 2012 represents better balance. The right side of the chart describes the percentage of action each price tier has enjoyed in the overall market. In 2007, for example, the $2-3 million range had the most action, with 27 percent of the sales. That price tier is down to about 15 percent of this year’s sales, while the $1-2 million range has seen 32 percent of the closed escrows.

A slight boost in $3-4 million sales and more spectacularly in the $5-7 million range this year has been great for the local market. While the $10 million market has been weak the past two years (even in such a wealthy town as ours), the $3 million-plus market, overall, has gone from 30 percent to nearly 37 percent of the sales.

The median value of a sale, meanwhile, that point where half the sales are higher and half are lower, has taken this course: 2007 - $2,875,000; 2008 - $3,225,000; 2009 - $2,400,000; 2010 - $2,350,000; 2011 - $2,000,000. This year there has been a little uptick in values as the upper end has improved, drawing the median up about $100,000, or five percent.

While the 2012 totals will rise beyond the 188 sales known as of November 20, the distribution of sale prices will not change drastically. Nor will the median price end up much different than $2.1 million. Sales momentum has been strong in recent months, with dozens of current listings in escrow, and 2013 bodes well under current conditions.

The sales statistics herein were collected from several sources over the years in question, particularly from the local Multiple Listing Service (MLS) and information on the website of the Los Angeles County Assessor’s Office. Virtually all bona fide sales are accounted for, within the 90265 ZIP code.

Easily noticeable is the dearth of blockbuster sales, over $10 million. While one deal this year was for $37 million, on Carbon Beach, only one other swap was greater than $13 million. For the $7 million-plus price range, this is by far the worst year in a decade or more. It shows the pains of a recovering market. For the upper end to truly thrive, as it was in 2007, there needs to be a sustained period of price appreciation and upward momentum. That is one of the lessons of our current market. Recent years have sapped the strength of the highest-end economic engine. A recovery, almost by definition, has to begin from the ground up. That has clearly been transpiring in Malibu.

Far more encouraging, and just as noticeable, is the new power of the $5 million market, however, which includes many land-side estates as well as beach properties (Eight of the 27 sales were off the sand.). More than 30 sales may conclude by year’s end. That would equal the last three years combined. This facet of the market gives hope to all the price ranges above and below. It is more than just added money volume that shines light on the marketplace, though that is worth noting. It is the underlying confidence and fiscal strength of the $5 million buyers themselves that make this statement: “It is time to buy again in Malibu.”

That is certainly the message under $1 million, also, where the inventory grows thinner and the buyers more aggressive. Next year will almost surely see fewer than 30 sales under $1 million, for two reasons. First, there will not be enough product on the market to be sold. Second, prices seem to be increasing now, bringing that price tier closer to obsolete.