Hello from Big Bear! Wow, hard to believe summer has already come and gone. Hope you all enjoyed the season. Summer in Big Bear is hard to beat. Winter is still by far the busiest season for tourism with lots of folks coming up to enjoy our two fantastic ski resorts. There is certainly lots of fun and excitement to be had in the snow. But summer in Big Bear, with abundant sunny days, mild temperatures, our big public lake and miles of forest to explore, is tons-of-fun as well. Let’s get caught up on what is going on in the Big Bear real estate market, take a look at what has transpired so far this year and what that indicates going forward.
There’s never a dull moment when it comes to the topic of real estate these days. The Big Bear real estate market, which is primarily driven by vacation and second home sales, is certainly no exception. The optimism in the economy and the market overall that we were tracking coming out of spring and into summer, with respect to an increase in transactions and prices, has faded as we approach fall.
Residential Sales: a few key market numbers to digest:
- Overall, residential sales from January through August 2011, as compared to 2010, have decreased 5.2%.
- On a month-by-month basis, summer was quite a rollercoaster ride. In June sales were off 33%, July was relatively flat and August saw sales up 27%. Will that trend continue and lead to a big decline in September? Stay tuned to find out, but as of now it looks that way. (October and November are historically the biggest months for closings in the Big Bear real estate market.)
- As far as what is actually selling: 72% of all sales were under the $250,000 mark.
- Roughly 31% of homes sold in this period were foreclosures, even though only 6% of our active inventory are foreclosures, (i.e. lots of competition for those), 15% of the closings were short sales, and 52% were traditional resale.
There are currently 802 residential listings on our Big Bear MLS, equating to roughly 5.3 months of inventory. This is a decrease from the end of July, when there were 834 active listings. The absorption rate, a key statistic that illustrates market demand – calculated simply by dividing the total number of ‘in escrow’ homes, (I exclude short sales awaiting bank approval as those very often do not close) by the total number of active listings – has increased to 19%, up from 14% at the end of July. So, in short, the speed of the market has recently picked up.
- The average residential sales price from January through August of 2011, compared to 2010, decreased 9.1%. Based on this, it would be possible to say that the market year-to-date is losing about 1% a month. However, again, it was a quite a ride and that would not tell the whole story.
- Through May of this year prices were actually flat, and even rising in some sub-areas of Big Bear. The 9% year-to-date decline has occurred only since July. Will this recent slide continue? Impossible to say, but August saw a big increase in closed sales, although at lower prices. If the trend of increased sales continues, it should, in turn, produce more stability in prices as well.
- Another factor that bodes well for price stability is that interest rates have dropped well below their 60-year lows … truly incredible. I had a client lock a 30-year fixed-rate mortgage on a second home (paying 1 pt.) at under 4% last week. The Federal Reserve is doing everything it can think of to ensure that these long-term rates will remain at low levels going forward, much to the chagrin of the stock markets, with the idea being that super low rates and drastically reduced prices must in turn eventually boost the real estate markets. Quite possible - we shall see.
As worrisome as the economy seems right now, buyers are recognizing that the current state of affairs in the Big Bear real estate market offers an amazing opportunity for them to invest in a tangible asset that their family can use and enjoy for years to come. The combination of the extraordinary value being offered and unbelievable financing rates is incredible. Let me know if you would like more information on what is for sale that might fit your needs. Until next time – All the best and Happy Hunting.