Q1 2018 Market Update by Mike Sannes, Big Bear Real Estate - The Mike Sannes Team, April 19, 2018
Hello and thanks for checking in with us regarding the Big Bear real estate market. The first quarter of 2018 is in the books, so let’s take a look at what transpired and what to expect going forward.
Q1 was a Supply-Side Story
Big Bear’s unique resort home market, like all markets, is driven by supply and demand. The story in Q1 of 2018 was on the supply side. The lack of quality inventory in our market overall had two main effects.
Lack of Quality Inventory Meant Fewer Homes Sold
First, fewer homes sold in the first quarter of this year (Jan-March), then sold in the same period of 2017. In fact, closed residential sales for the first quarter of 2018 were off a substantial 10.8% vs. 2017 (240 in 2018 vs 269 in 2017). The primary reason for the decline in the number of homes sold was a lack of well-priced homes for sale.
It is not uncommon for the inventory of active homes listed for sale in the winter months to drop. However, in February of 2018 we only had 262 active residential listings vs. 320 in February of 2017. As the chart to the right illustrates, this year the inventory in each of the first three months of the year, dropped off much more than it has in years past. In fact, in each of the first three months of 2018, active residential listings were at their lowest monthly level of the past 5 years.
Nor is it uncommon for sales to slow during the winter months in Big Bear. But the difference this year as compared to prior years, was our complete lack of a winter. Typically, with snow on the ground and roads being more challenging to navigate, you will find fewer homes listed for sale in the winter. But, you will also find fewer buyers looking at these homes. However, given the very mild winter we experienced this year, the number of buyers looking did not drop off nearly as much as it normally does. This created a “perfect storm” for sellers, with a combination of low inventory (a.k.a not much competition) and high demand. Which leads to the second effect mentioned above…
Lack of Quality Inventory Also Meant Average Prices Rose
Secondly, although fewer homes sold in the first quarter of this year than last, those that did sell, sold for more money. The average price of all residential homes sold in Q1 of 2018 vs. Q1 of 2017 increased by an impressive 10.8% ($346,710 in 2018 vs $312,779 in 2017). It was not uncommon to see multiple offers on well-priced new listings in the first few months of 2018 and many of these were bid up well over the asking price.
To put this into perspective, in April of 2017 (vs. 2016) we saw a 1.6% increase in number of homes sold and a 4.1% increase in the average price of all those sold. So, the new year brought us a new and different market indeed.
As spring turns into summer, I expect to see a large increase in the number of homes listed for sale and would expect the demand for those homes, at the very least, to remain constant.
There are currently 364 active residential listings on our Big Bear MLS (vs. 262 in February of this year), indicating that “listing season” has begun and “selling season” should quickly follow. Based on a typical 45-day closing period and the 127 homes currently in escrow, this leads to 4.3 months of supply. Which means, for the time being at least, it is still a sellers’ market overall here in Big Bear. Please do let us know if you would like a current valuation on your Big Bear property. You may be pleasantly surprised!
With interest rates (again, for the time being, as they are trending up), still at historically low levels and the expected seasonal increase in the number of homes for sale to choose from, it is a still a great time to buy the “right” piece of real estate in Big Bear. Let us know if you have questions on the market or any properties that you see for sale here in Big Bear.
We are happy to help and always look forward to hearing from you. Until next time, happy hunting and all-the-best to you from all of us at The Mike Sannes Real Estate Team.