The question on everyone’s mind who is considering buying Big Bear real estate these days is “where are we now in the cycle?”  In reality, looking back is the only way to accurately determine the top or bottom of any market.  As they say, hindsight is 20-20 and that certainly holds true for Big Bear real estate.  Trying to assess the present and postulate on what may occur in the future is always speculative. But analyzing historical data to see what has actually occurred and comparing that to what occurs in a typical real estate cycle, can shed light on what lies ahead.

A typical real estate cycle, for this example, begins when low inventory and increasing demand lead to upward pressure on prices. This was the case in the Big Bear real estate market from 2004 through mid to late 2006.

What comes next is a drop in demand which initially leads to a big drop in transactions. That was very evident in the early part of 2007.

That in turn leads to increasing inventory which eventually causes downward pressure on prices. This very thing has happened here in Big Bear real estate from 2007 to date, to the tune of 20-35%, depending where in the Big Bear Valley you look. Eventually prices drop to a point where demand begins to return and the first sign of that happening is an overall increase in transactions. Long before you will see the inventory began to tighten significantly or any upward pressure on prices, you will see an overall increase in transactions.

And we are beginning to see just that in Big Bear real estate, although not in all price ranges. In June of this year, 31 single family residences closed under $250,000, whereas in June of 2007, only 14 closed, that is a 121% increase. However other prices ranges are not faring so well.  For example, for homes priced between $750k and $1 million, there was an 83% decrease in the number of transactions, year over year. Overall, the total number of transactions was up 7% in June of ’08 from June of ’07. Not huge numbers, but a sign the market may be stabilizing a bit. In fact from the earlier part of this year, when we were averaging 30 to 40 closed deals a month across the entire Big Bear Valley (ouch!), we have improved and have averaged in the 60’s for the last three months. It will be very interesting to see how the coming months shake out in terms of number of transactions.  Stay tuned; I’ll keep you posted.  And let me know if you would like more information on some of the great opportunities for buyers that currently exist in the Big Bear real estate market.