REAL ESTATE A Brief Overview of Malibu’s Real Estate Market in the Last Five Years and the Definitive Answer to “Buy, Sell or Hold?”

e three-year inventory story: how dwindling inventory has a ected sale prices in Malibu’s real estate market.

By KELLY PESSIS GUEST COLUMNIST Compass | CalDRE #01254996t

Whenever I am at a cocktail party, my doctor’s o ce, or most annoyingly, my shrink’s, I am posed with a question that goes something like “So, what is real estate doing?”

I don’t even know what that means, exactly, since real estate is inert and does not do anything. We do something to it when we bank it, improve it, trade it, and assign value to it. And yes, I do realize that this is really a “should I be buying or selling” question. e answer is just never that simple, and why I hate that question in the rst place. People, to sell or not to sell is not simple fodder for small talk, not to a real estate nerd. Unless you want to spend hours listening to me geek out on stats, ask you a million questions about your needs and goals, and drone on and on about the “intangibles” that Zillow, appraisers, and all algorithms miss, don’t even go there. So, for my rst installment in e Malibu Times, I am going to give you a brief overview of the last ve years of our Malibu real estate market, the three-year inventory story, wrap it up in a bow, and with the de nitive answer to the question, “Buy, sell or hold?”

We all know the mantra; location, location, location, but the three-year story really is inventory, inventory, inventory. Prices are almost always inventory-driven, and that is usually the case, but in keeping with our new bizarre world, landside Malibu saw both record sales volume and near all-time record prices in March and April 2022, with a $5,021,800 average sale price, and a rolling 12-month sales volume of 320 units — just for landside homes. e total rolling home and condo sales at that April peak was a whooping 461 units. Compare that to Malibu’s typical 225-250 total unit sales volume. It is important to note that the Fed began raising interest rates in March 2022, the rst hike since 2018. at 25 bases point increase inspired consumers to take advantage of expiring mortgage rate locks, and this likely accounts for a ve-year volume spike.

Not surprisingly, the previous inventory peak was late spring/early summer of 2018, before the Woolsey Fire, and before COVID-19 pandemic did strange things to our mindset and our real estate market. en we had 241 landside, and 87 beach homes on the market. e height of the landside condo market was July 2020, with 56 units on the market. e decline in inventory from January 2020 to present is striking, with steady drops to levels around half of that of the same period just three years prior. is is the case for landside single family homes, and though condo availability rebounded this year, they are still 44 percent of our 2020 numbers for that same period. e inventory is a bleak 72 percent of 2020 levels if you are in the market for a beachside condo.

Of course, you can guess what diminished inventory has done to sale prices: upward pressure and record sales. We experienced the highest ve-year average sale months in Q4, 2022, with 20 landside sales in the months of September and October, averaging a $10,670,458 closed sale price. ese two months were spectacular, but a bit of an anomaly, and it is important to note that the 12-month rolling average sale price for a landside single-family home is currently at $5,072,155.

So the smart money would have been on acquiring beach houses, where a well-placed investment would have doubled your money. Not bad, especially if you got a loan and leveraged that investment across three or four properties. And yes, that is precisely the problem if, and when, that bubble bursts. But for now, it is all sunshine and rainbow unicorns.

Conversely, investing in the Dow Jones Industrial Average (DJIA) from Jan. 31, 2020, to Jan 31, 2022, you would have modest gains of just a smidge over 20 percent for the same three-year period, or only around 6.5 percent annualized. at is an unrealized gain of some $12 million, if starting with that same $9.943 million investment.

Of course, I would have predicted a bubble at some point, but my crystal ball had a large crack in it and I kept missing the mark. It failed to clearly show what our new world had in store for us; work and schooling at home, rising crime in the cities and the ability to turn every home into a hotel with a near-zero vacancy rate. And don’t get me started on how quickly one might be able to launder boatloads of money through real estate. We (the U.S.) continue to be a safe haven for a world searching for stable investments in stable countries. Jokes about our government aside, we are still the best the world has to o er. Add to that the fact that Malibu is beautiful, close to all, and with no annoying hurricanes, and you can understand why this is such a coveted real estate market. within 5 feet of a structure. e following items and materials will not be allowed within 5 feet of a house as of Jan. 1, 2024, and must be removed by that date: synthetic lawn, trellis, pergola, shade covering, wood planters, privacy wall, attached combustible fence or gate, combustible storage structures, woody mulch, combustible boards, lumber or round logs, railroad ties, creosote-treated or pressure-treated wood, wine barrel, wood pots, plastic, wood piles, dead plants, pine needles, and leaves. e following are allowable within 5 feet of a house: rock, pavers, statuary, fountains, cement, mature tree with trimmed branches, parallel fence, irrigated and mowed lawn no higher than 2 to 3 inches, irrigated non-woody plants, and potted plants no taller than 2 feet in a noncombustible pot (ceramic, metal, cement). According to UC Agriculture & Natural Resources Department, “Zone Zero is an excellent location for walkways, or hardscaping with pavers, rock mulch, or pea gravel.”

So, there you have it: all the best Monday morning quarterbacking money can buy. As for the de nitive answer to buy, sell or hold? Take your goals, needs, equity position, net income stream, how much enjoyment you get from your property, multiply by 1.0, divide by zero and it depends.

*Data analyzed using recorded sales prices and volume from the Combined Los Angeles Area MLS, areas 32 and 33, and represent 12-month rolling data as of the end of January of that given year rounded to the nearest $1000. Future data will include o market sales from public records.

**January had only two landside condo sales resulting in an anomalous data point.

Items requiring education and expert advice if they’re within ve feet of a house: garbage and recycling receptacles, vehicles, HVAC, heat pumps, outdoor kitchens, attached patio covers, portable BBQs, pet, and animal structures.

Defensible Space Zones 1 and 2 currently make up the 100 feet of defensible space around a structure required by law. e new Zone 0 was introduced in Assembly Bill 3074 in 2020, requiring a third zone — Zone 0 — to be made part of the defensible space. Malibu’s State Senator Henry Stern was a co-author of the bill. Zone 0 will reduce the chances of a structure catching on re because it reduces the potential for ames or embers to ignite combustible materials right next to the house.

One of the most important lessons learned from the Woolsey Fire and other highly destructive wild res in the state over the past few years, is that ying embers hitting ammable material is one of the major ways that can cause a house to catch re and burn down. e Board of Forestry & Fire Protection pointed out that in the past 10 years, in California, one of every eight acres has burned, 173 lives have been lost, and over 43,000 structures have been destroyed. e board also pointed out in a presentation that “plant placement is more important than plant type.” It also noted that “all plants can burn, regardless of how they are marketed; and that re safe landscaping requires maintenance (pruning, irrigation, and clean-up).” e board recommends selecting “low-growing, open-structured, less resinous, higher-moisture-content plants,” and have endorsed well-maintained native and drought tolerant plants. e re department writes: “During a wild re, thousands of embers can rain down on your home and property like hail during a storm. If these embers land in receptive fuels or become lodged in something easily ignited on or near your house, the home may be in jeopardy of burning. is area is commonly referred to as the Ignition Zone.”

Experts now realize that embers can be carried more than a mile ahead of a wild re in strong winds, igniting homes that aren’t even close to the ame front. Zone 0 is the horizontal area within the rst ve feet around a house and any outbuildings and attached decks, and stairs. e zone also includes the area under attached decks and stair landings. To be most e ective, the zone should also incorporate a 6-inch vertical area between the ground and the building’s exterior siding.

In the past, defensible space strategies focused almost entirely on reducing direct ame contact with the house. Zone 0 is a di erent approach that will help prevent res started by embers and/or radiant heat exposure.

The City of Malibu, using public safety staff and certified volunteers, offers no-cost, no-obligation “Home Ignition Zone Assessment” appointments to residents with individual recommendations on what to do to protect against fire. Visit the online scheduling system at veribook.com.