During the later part of April, three different Malibu homes came on the market. Which was the best deal? Which will probably sell quickest?
First, a large estate in Bonsall for well over $10 million had last sold in 2000 (the listing is 261 percent higher in price from its last sale; prices in Malibu have gone up 156 percent since 2000).
Second, a modest house in Corral Canyon listed just over $1 million had last sold in 2015 (the listing is 33 percent higher in price from its last sale; prices in Malibu have gone up 17 percent since 2015).
Third, a nice house in the Broad Beach area for over $3 million had last sold in 2012 (the listing is 19 percent higher in price from its last sale; yet prices are actually 42 percent higher since year 2012).
From the looks of things, the third choice may be a very fair price and could sell quickly.
Year-to-year price comparisons can be applied to any listing that comes on the market to give a first clue to its current value. It often represents a great way to find deals — if you have the information. Some of that information is given in the adjacent chart. It indicates the change in the median value for a house in Malibu (in the 90265 zip code) for each year since 2000.
Possibly the first move in pricing a home could begin with this step.
It is not realistic that one neighborhood area — or any one home — breaks from the norm to any great degree and just magically becomes far more valuable than it was (though almost every homeowner wants to believe that).
Practically all local real estate follows the same graph, at least over time. If prices have doubled in one neighborhood or condo complex over a period of time, it is almost certain another locale has had a similar result.
Another truth is this: This theory has an obvious flaw. When homes are dramatically improved, they break from the past and become a different product.
Thus, observe a recent new listing in Malibu Park for about $3.2 million — that last sold in 2013 for about $1.1 million. It may be a fair price currently, considering a sizable amount of money was obviously spent on its complete remodel. In fact, if it happened to be $1 million that was spent (as an example), then the current owner is into it for $2.1 million (in hard costs, though there are also soft carrying costs that the marketplace ignores) and with the appreciation since 2013, its current value should be yet higher by 39 percent. If $1 million had indeed been spent, a price of $3.2 million might be appropriate.
Thus, making year-to-year comparisons in the price of the same home is a good first step, but by no means a complete science. Of course, many variations occur between sales, including the motivations of buyers and sellers involved, and just plain investment luck. A price this year may be very representative, but the last sale price may be offset for some unknown reason.
The greatest variable is the amount of improvement that has come to the house, though note this: The comparisons take into account the aggregate improvements that have occurred each year in numerous houses. If a property is 25 percent more valuable this year than in 2009, that takes into account that many properties have had significant remodels between 2009 and now, and added to the value increase noted, as an average. A home last purchased in 2009 may indeed have a far better renovation than the average, and may be worth far more than the 25 percent average increase, but other renovated properties are accounted for, as well.
Homeowners who attempt to get far more in sale price than the natural appreciation of the market usually get punished. Listings that go years without selling, and there are many of them, typically can be traced to asking prices well above the market trends outlined here. Price reductions back to alignment are often inevitable.
The same day of this writing, a new listing hit the market in Malibu for about $3.3 million. The same house sold in 2014 for about $2.3 million. No mention in the listing of any upgrades. The price is 46 percent higher than last sale, while the market is 21 percent higher. Let’s see how long it takes to sell. And how close it comes to the approximate $2,770,000 value it should be worth — according to the prevailing trends.