Thirty to 40 percent value decrease may be in the works.
By Rick Wallace / Special to The Malibu Times
1993, the real estate market was lousy. It was bad throughout
California, in our local region and in Malibu. That year, the
California Association of Realtors reported a 4.5 percent drop in the
median price for homes sold in the state. It was the worst drop in
This year, it is certain the state median will be
down between 30 percent and 40 percent. In one year, the median price
drop in California will be the worst ever-by a factor of at least
seven. In one year, California will see a higher percentage loss in
real estate values than in all the percentage losses combined for all
the years that prices went down since 1968.
obviously, has major implications for Malibu. At a frequent rate, homes
are reporting price reductions locally. With hardly any sales to study,
price reductions are the only source from which to analyze local
Of the 50 lowest priced homes listed in the 90265
ZIP code that have been on the market since before Aug. 1, for example,
38 of them have had at least one price reduction reported in the
multiple listing service. The average price reduction for all those
listings has been 18 percent, so far. Add a 10 percent drop average
from last list price to final sales price for the few homes that are
selling, and the downward spiral is more clearly visible.
to what price adjustments have been in the region, however, it appears
listing prices have not changed nearly enough to compensate for the new
realities of the market. Thus explained is why the total number of
sales in Malibu this year, projected at about 90 homes out of 4,000
that exist will be, by far, the fewest in more than 30 years. The last
two years the number of sales was about 175 each.
phenomenon took place in the early '90s, but that down market was a
slow burn. It took about five years for some homes to sell at 40
percent less than they had before. The entire spectrum of housing in
Malibu this time, from the lowest-priced condo to the largest estate,
has been increasingly vulnerable. Last week's national financial crisis
unmasked our strife.
The adjacent chart focuses on the 50 lowest
priced, single-family homes in the 90265 ZIP code, listed by their
asking price as of Sept. 18. Only homes that have been on the market at
least since Aug. 1 are included. Many homes have had market activity
since 2005 with varying prices. The highest price in their history is
noted, even if there was a pause in the market activity or a new
listing was established with a new broker, for example. Many homes have
had at least six price reductions.
Malibu generally follows
regional trends, not leads them. The market in Malibu ultimately
responds to the activity of lower price ranges. If outlying environs
with lower ranges are producing higher prices and greater equity,
buyers are moved up the ladder and local demand is bolstered. If the
lower ranges are depressed, as duly noted in recent times, the
foundation of Malibu values is weakened.
If we are indeed
inescapable from the fate of the Southern California region, it may be
that values are in the process of a 30 to 40 percent drop along our
shores. Fewer observers deny such a projection. We are not in Kansas
and it is not 2006 anymore.
Overall, the inventory of all homes
for sale is at about 210, not particularly excessive. The statistic has
begun its seasonal decrease. In any other time of normal buying
activity, prices would be holding. In a time of one, maybe two, homes
closing escrow each week, however, values are collapsing.
the loan industry in a crisis and the money flow at a trickle, the act
of buying a home has never been more difficult. Prices are suffering
more than necessary as a result. It is not so much the marketplace that
is deflating values-though it is unquestionably a period of natural and
inevitable correction-but it is the framework of the entire industry
caught in a readjustment that is giving all property owners an
It may be that serious sellers now face
three gruesome choices: Sell at a very disappointing price as soon as
possible, sell at a worse price later, or wait the many years it may
take to return to price levels that were enjoyed before the crash of