SerpApi.Org
MALIBU, Calif.—When Olivia Lynn listed her 2,290-square-foot luxury townhouse with views of the Pacific Ocean to the south and the Santa Monica Mountains to the north, she was asking for $2.295 million.
Nearly a year later, her three-bedroom, three-bathroom home is still on the market. She repainted, refreshed the landscaping, made repairs and cut the price—twice. She’s now asking for $1.895 million.
“I was hoping to get an offer by August, but I don’t think it’s going to happen,” she said during a July open house.
The home, situated in the heart of Malibu, about a mile between Pepperdine University and the legendary surf break at Malibu Point, wasn’t touched by last year’s wildfires that scorched 600 single-family homes in Malibu, and a few thousand more nearby in the Palisades.
But the aftermath is prompting an unusual migration out of one of the most desirable, celebrity-packed stretches of coastline in the West.
In June, the city’s median listing price for single-family homes was down 7.3% from a year ago, compared with a 0.1% decline for all of California, according to Realtor.com. Meanwhile, active listings for all kinds of Malibu homes were up 7.1%, compared with a 5.5% decline for the state. (Realtor.com is operated by News Corp, parent of The Wall Street Journal.)
Malibu now has a glut of luxury homes and empty lots stuck on the market. More than a year after the Palisades fire, the city has been slow to recover, and some of the most sought-after real estate in the country is struggling to get attention.
“Malibu is a great deal right now,” said Malibu agent Jill Reeder. “I think it’s absolutely a buyer market because we have such a plethora of inventory.”
Permitting and building delays, together with surging insurance costs and new construction codes, have prompted owners to sell and deterred potential buyers.
Plenty of homes survived, yet the intensity of the fires rattled even longtime Southern California residents familiar with Malibu’s fire risks. Some owners grew tired of facing the constant disaster threat and stomaching the soaring insurance premiums, real-estate agents said. The prospect of emptied-out neighborhoods full of rebuilding projects weakened Malibu’s heavenly allure.
That means even homes spared by the fire are struggling to find takers. Reaching an open house usually means driving through entirely burned neighborhoods. That can serve as both an unsettling visual and as a reminder of the environmental risk of owning a home in Malibu.
“It’s very disturbing and it definitely gives people pause,” Reeder said.
A scan of online listings shows the extent of the buyer’s market in Malibu. One 4,358- square-foot beachfront home for sale with its own elevator, tall wooden ceilings and stacked terraces just steps from the ocean has seen price cuts worth a total $5 million over the past six months.
Another beachfront home, with five newly renovated bedrooms, glass walls offering sweeping ocean views, and a chef’s kitchen with Italian marble, is now priced almost $7 million below its January listing price.
There are about 37 single-family homes on the market priced between $10 million and $15 million, according to Reeder. That much inventory in that price range is largely unprecedented, she said. “You lose clients who would have taken on that property because there are so many choices.”
Malibu has historically had restrictive permitting regulations to preserve its rural character and intimate community. The city has fewer than 10,000 people who live in a long, thin strip of land along the Pacific. That is just three-fourths of what its population was 15 years ago, a decline that city council member Steve Uhring attributed to the frequent natural disasters.
“We typically have a planning department and a building department that deals with one or two properties coming in every couple of months,” he said. “All of a sudden you’ve got 600 properties that we’re looking at rebuilding.”
The city added staffers and hired multiple consulting firms to help out, which sped things up, Uhring said, but it is still well behind Los Angeles in approving rebuilding permits.
And even once owners do secure a permit, the work has only just begun.
Modern foundation requirements for beachfront properties in California can make it prohibitively expensive to rebuild.
“The foundation alone could cost $2 million on what was a $3 million house,” said Shen Schulz, a Malibu broker.
Those and other costs are hard to stomach, especially given the lack of affordable insurance to protect owners’ investments in a geographic area that faces severe fire, flood and earthquake risk.
David Smick bought a home in Malibu seven years ago that was previously owned by actress Charlize Theron, who sold it to Glee co-creator Ryan Murphy. After Smick’s house burned to the ground in the Palisades fire, he moved as quickly as he could to rebuild.
It took more than a year, but he eventually became one of the first owners to receive a rebuilding permit in Malibu. Now, he’s not sure he wants to move forward after getting a $2.3 million estimate for a new foundation.
Rebuilding is “costing $2,300 a square foot. This is just not a great investment,” he said.
The lack of rebuilding activity has left him wondering how long the town around him will take to get back to normal. “Are we buying into a dead market?” he asked.
Smick is considering selling the property, but knows it may be hard to find a buyer willing to take on the rebuild.
There have been some early signs of buyers returning, especially for the top-end mansions, with the wealthy still drawn by the city’s beauty, real-estate agents say.
“It’s starting to show some signs of life,” said real-estate agent Brian Merrick.
And agents have little doubt that Malibu, a place where flowers bloom year-round and golden mountains tumble into a blue ocean, will eventually bounce back.
As of Monday, Lynn still hadn’t received any offers for her townhouse. But she said that interest seemed to be picking up. “I’ve had several buyers return for second showings, which feels encouraging,” she said.
Write to Nicholas G. Miller at [email protected] and Paul Kiernan at [email protected]