I hope everyone had a wonderful time celebrating our country's birthday. Being on a Friday this year, July 4th led to an extremely busy and fun-filled weekend here in Big Bear Lake. The fireworks show on the lake, as usual, did not disappoint.
As We Pass the Midpoint of 2008
With half of 2008 already behind us, let’s check in on what has been happening with Big Bear Real Estate. Overall the drastic and dramatic shift in Big Bear’s real estate market continued. Sales volume and the number of transactions have dropped significantly. In the first 6 months of 2008 compared to 2007, sales volume dropped roughly 40% and total number of transactions was down about 30%. Inventories remain high and buyers are still, for the most part, full of anxiety and reluctance. (There are a few brave souls I have had the pleasure of working with recently, who have snapped up some amazing deals, more on that later…) There are currently 1,235 active residential listings in the Big Bear Valley and 128 listings in escrow.Bank-owned properties have captured the attention of many, and rightfully so, as they are typically listed well under market value. However, only 3% of the active inventory in Big Bear is ‘bank-owned’, while roughly 20% of the listings in escrow are bank-owned. I do have a link to all bank-owned listings on my website for you to check out if you would like. Let me know of course if you would like more information on any.
Where are we in the Real Estate Cycle?
Analyzing the recent data points helps to ascertain where we are now in this real estate cycle. This cycle began when the number of transactions started its major decline. That led to increased inventory and eventually declining prices, which we have seen. June of this year, compared to last, saw the average sales price in Big Bear Lake off by approximately 13% , with areas of Big Bear City, Sugarloaf and the east end of Big Bear Valley dropping some times more than twice that much.
Eventually demand re-enters the market at these lower prices and well before any upward pressure on prices, you will see the number of transactions begin to increase. That is exactly what we have seen recently in the Big Bear real estate market. The change in total number if transactions in June of 2008 compared to June of 2007 overall was flat. That trend had been quite negative in months prior, off by 56% in February and 40% in March. Also, the number of transaction under $250k doubled from 14 in June of 2007 to 28 in June of 08. And the number of pending sales has steadily increased from the beginning of the year when there was 96 to where it is now at 128. This shows renewed buyer interest and that makes sense as there currently are many tremendous opportunities available. Gone are the days, at least for the now, when you could not touch a well-kept three bedroom home in Bear Lake, close to the lake and ski slopes, for under $300k. There are a couple of great deals listed that fit these criteria at the moment. These good deals however are being snapped up quickly when they hit the market, so let me know if you would like to be put on a watch list. Or would like information on upcoming bank-owned homes before they hit the market.
Another factor that is bringing buyers into the market is that the interest rate environment appears to be shifting into a ‘rate increase’ mode. Purchasing a $300k home at 6.25% with 10% down is equivalent from a payment perspective to buying a home at $270k at 7.25%. While these lower rates remain, you can indeed buy more house for the same cost- of-carry and with the prices having corrected to where they are now it is a great time to scoop up a vacation home in Big Bear.