While in many ways Malibu, California is an outlier. Home prices are through the roof, celebrities run around buying and selling homes, and the market is dependent on many factors that the rest of America never sees. But with all these differences Malibu may be showing us why housing prices are not dropping.

In Malibu the top end of the market is going strong while the bottom of the market is languishing. So while homes for sale are way up, the median and average price of homes sold this year are going to show increases. These numbers are showing up all over America and providing a great deal of confusion for sellers and buyers alike.

If you are selling a lower end home in Malibu and you hear that the average price of a home is up, would you lower the price of your home to get it to sell? That would be the right move as your strata of home is not selling, but it would take a great deal of fortitude when the average prices are going up.

Of course, if your home sold, it would lower these prices so there is a false economy. And if enough sellers on the low end continue to buy into the false economy it will perpetuate. And this is why I think that Malibu represents a microcosm of the national market. The top end of home sales is not hurting, the middle level is dependent on the region, and the bottom end is across the board.

But those on the bottom end are fighting for every dollar and thus NOT selling their homes. So when the average sales prices come out, they are a bit higher than they probably should be. And as the people on the bottom see the average prices not coming down, they are even more resistant to lowering their prices creating a glut of homes on the lower end that are not selling.

It looks like their is a little bit of Malibu in Anytown, USA.

The overall statistical picture of Malibu real estate is pretty good, amazingly. The number of homes sold for more than $5 million and $10 million has already matched recent years and will shatter past records. Though elite properties represent a small percentage of Malibu living, mammoth doses of money are keeping Malibu real estate healthy. As the chart indicates, already this year 33 sales have topped $5 million and 14 have topped $10 million through August, putting us on a projection of 50 and 21, respectively. As a result, 25 percent of all local home sales currently are above $5 million.

In contrast, the numbers of sales in the lower priced neighborhoods have dropped considerably. With only 34 deals concluded in such neighborhoods, the same 50 sales and 25 percent of the market will be represented by the low end. via the Malibu Times

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2. Leonardo DiCaprio Selling His Malibu Home For $8,999,000
3. Lennar Sees Improving Market As It Posts Wider Losses
4. Sales Up, Prices Down For December 2008
5. Where Are The Home Buyers?