It’s been a long time since I’ve put an emailer together or summarized the Malibu Real Estate market. Just like everyone else, life has been busy trying to keep afloat in our economy today. Before I share my news with you, I’d like to share a few discussions I’ve had with several clients and the outcome of these discussions.
First, I had a conversation with a potential seller, almost a year ago, about the home marketplace and his property. At that time, the desire was to lease his property and to sell, “only for the right price”. I indicated to him that I felt his lease price was approximately $2,000/month more than the market would bare. We then began a lengthy discussion about the economic environment, how the market has changed, and that, even though he had enjoyed the high lease prices in the past, these prices are not realistic for today's market. I asked him if he would or could afford to have his place vacant for an undetermined amount of time or would he prefer to have some income coming in. Long story short, he never leased his property and in the end he was forced to foreclose on the property and the bank now owns his beautiful ocean front condo near Zuma Beach (if anyone wants more information about this property please call me).
The other interesting conversation I had was with a seller that, approximately 2 years ago, had an unsolicited offer on their property and had entered into an escrow for his property. After the escrow was far enough along and all the contingencies were removed, the seller went ahead and purchased a new home in another state. Unfortunately for this seller, his buyer still canceled the escrow and left this seller with 2 homes. Now, the seller is trying to sell both but is having a hard time understanding why no one will offer him a price anywhere near the price he negotiated in his past escrow. This seller calls this market a “fake” price market and claims that his house is worth more money if it weren’t for the "buyer's market". To try and help the seller understand more about our economy today, I used the following example. “Imagine that you are in a place where everyone has plenty of food and doesn’t need more. You have grown oranges, you have too many of them, they are perishable, and you desire to sell them. The only way someone will be interested in buying these oranges from you is if you discount the price, such that people feel it’s worth paying for oranges even when they already have food.” I then went on to explain that today's real estate market is similar. Price is determined by what buyers are willing to pay, not what other homes in the area are listed for. We have more homes listed on the market today than we have had in many years and the average days on market is over 1 year. If you want to sell your home in today’s market then you must reduce your home’s price. Outcome of this story is still unknown:)
What’s the Good News?
My Coldwell Banker office manager recently did a quick review of the sales as recorded in the MLS for the 1st 5 months of 2009 as compared to the 1st 5 months of 2008 and here’s what he found:
- For Single Family Homes on the beach, there are 5 sold homes and 4 pending sales for 2009. In 2008, there were 16 homes sold during the same 5 month timeframe.
- For Single Family Homes on the landside, there are 30 sold homes and 22 pending sales for 2009. In 2008, there were 30 homes sold during the same 5 month timeframe.
Good News: Malibu is seeing more market activity this year over last year.
What’s the Bad News?
Home inventory is high (approximately 260 homes for sale currently), days on market has increased (average DOM is a little more than 1 year), lending practices have tightened, and reports that we might still be having another run of foreclosures hitting the market are just some of the factors that are effecting the housing market today. Rick Wallace's recent article in the Malibu Times summarizes our marketplace very well. (http://www.malibutimes.com/articles/2009/06/22/news/news8.txt)
What Should I DO?
If you are a seller in this marketplace, you should ask to see all the recent home sales for your area prior to determining the listing price. If you are a Malibu seller, I would also ask to see the homes that sold in 2004 in your area and the sold prices then. Once you’ve done this, you can determine a listing price that is closer to what buyers are paying. Also, it’s good to set out a plan prior to listing your home for price decreases. No one wants their home to become ‘stale’ on the market and in today’s world re-assessing the listing price on your home every 2 weeks is a wise strategy.
If you are a buyer in this marketplace, determine what you are looking for in a property or home and then start looking at every option. Don’t be afraid to look at properties that seem to be out of your price range because everything is negotiable in this market. Also, start your loan process now. Find a mortgage broker or bank and start working with them so that you have a really solid understanding of your purchasing power. Many sellers are accepting offers for much less than the list price because the buyers are coming in with a financing package already put together and the seller knows that in this market that is very difficult to do.
As always, feel free to call me (310)924-4631 or email me janet@callmalibuhome.com, if you have any questions, I’d gladly talk to you in more detail about your specific needs.
