November 2018 Market Update by Mike Sannes, Big Bear Real Estate - The Mike Sannes Team, November 9, 2018
Hello from Big Bear and thanks for checking in with us regarding Big Bear real estate. There is quite a bit to catch up on since our early summer update, so let’s dive right in.
What a roller coaster ride 2018 has been for the Big Bear real estate market. If you recall, we ended the 1st quarter (Q1 market update) with a solid 10.8% year-over-year average sales price gain. The perfect storm of historically low supply, combined with higher than normal demand for that time of year due to our complete lack of a snow-filled winter, fueled the 1st quarter increase. In fact, by the end of May the increase in the average sales price here in Big Bear peaked at 15% (3% a month for 5 months straight!). As is typical, late Spring into early Summer brought lots of new inventory and many very optimistic sellers to the market. It was at this time, in our last market update in early June, that we speculated as to whether the Summer market would be able to “absorb” all this new inventory especially given these new and ambitious prices. In looking at the absorption rate chart to the right it is safe to say that the answer to that question is… not exactly.
Note: The absorption rate is often thought of as the "speed" of the market. For example, if we have 100 active listings with another 50 homes in-escrow, the absorption rate would be 50%. This would be akin to doing 100 mph in your car, as a 50% absorption rate in Big Bear is a very fast market, whereas 25% is quite slow.
Through the 2nd quarter and into the 3rd of this year, the market simply stalled quite dramatically as the chart below, which details the number of closed residential transactions, illustrates. The larger than normal spread that developed during this time, between the average $ per sq/ft on new active listings vs. similar properties sold in the last 30-60 days, was simply too much for market to bear. And as such sales, and in turn prices (and also the leaves) began to fall as we headed into Fall.
Which brings us to where we are now: Year-to-date (through October) vs. 2017, the total number of sales decreased by 19.5%, or 234 homes. Each month of 2018 has seen declining year over year sales; however, in looking at the last 3 months (August, September, October) compared to the same period in 2017, sales are off by a substantial 35%. A dramatic slow-down to say the least.
Due to this slow-down the market gave back much of the price gains for the year as the average price increase now sits at 4.3%, an average decrease of over 2% a month for the last 5 months straight from its peak of 15% at the end of May. The chart to the right illustrates just how thing have changed since May of this year.
So to summarize: The market was hot, and then it was not. However, October did bring with it a wave of price reductions from motivated sellers looking to find the market and we are seeing a significant uptick in activity overall as we head into November. So perhaps the amazing number of sales we saw in the last half of last year and the amazing run-up in prices that defined the beginning of 2018, was a bit of an anomaly and we are settling into a more normal, slower-but-steady, (but not stagnant) market as we look towards 2019. There is currently 5.6 months of supply, which indicates a balanced market, (as opposed to the strong seller’s market we saw in Q1.
It has been an interesting ride indeed and we will keep you posted going forward. So please do let us know if if you have any questions on the market, on any homes you see for sale here in Big Bear, or on your homes current value.
For Buyers: There are currently many great homes at reduced prices to choose from and our new MLS Search, which has new filters added such as recent price drops, new listings, days-on-market, and recently sold properties, can help. So, be sure to check it out.
For Sellers: The market, although volatile, is still up year-to-date and the tremendous online exposure our marketing provides will help ensure great results and a top-dollar sale. Contact Mike for more info.
Until next time, thanks for reading and Happy Hunting!