Hello from Big Bear! And thanks for checking in with us on the Big Bear real estate market. I hope you are all staying safe and sane through these trying times. As you can imagine, the pandemic and resulting stay-at-home orders have had a tremendous impact on buyer activity and as such, the market overall here in Big Bear has slowed to a crawl. April is indeed the cruelest month, as T.S. Eliot stated in his famous poem. But before we look at the effect COVID-19 is having on our real estate market, let’s catch up on what transpired in the first quarter of 2020.
As our Q1 results indicate, the real estate market in Big Bear was primed for an incredible year prior to the pandemic. Although March was when things began to drastically change from a public health standpoint, the effects of the Coronavirus pandemic didn’t fundamentally impact the real estate market until April. Meaning, most of the deals that were already in escrow, did close as expected in March (e.g. myself and my team closed 12 sales in March and had only 2 cancel for job-loss reasons). As such, when looking at Q1 2020 vs. 2019 you will notice a surprising and substantial 9.2% overall increase in total number of sales (261 in 2020 vs. 239 in 2019). Sugarloaf showed an inspiring 39% bump and, as mentioned, sales in the month of March increased by a solid 20% (98 in 2020 vs. 82 in 2019).
With all this activity and demand in the market, prices were on the rise as well. The average price of all the homes sold in Q1 2020 vs. 2019 improved by 6.2% ($388,371 in 2020 vs. 365,673 in 2019.) The Moonridge and Fox Farm areas showed the largest increase in average price due to a few higher-end homes closing in these areas.
And then came Corona: In the middle of February, based on a typical 45-day closing period, we had roughly 4 months of inventory on the market and an absorption rate of approximately 40% (340 Active listings vs. 131 in-escrow). As it stands right now, in the middle of April, we have roughly 8 months of inventory and an absorption rate of 20% (390 Active listings vs. 74 in-escrow). This dramatic change does have a bit to do with the 14.5% increase in supply (which is typical in the Spring in Big Bear), but even more to do with the decrease (-77%) in the number of homes currently in escrow. There were 45 closings between 4/1/2019 and 4/15/2019, whereas over the same period in 2020 we have seen 23. So, it is certainly safe to say that it is a new world and a new market we are living in now.
What does all this mean going forward? In my opinion, this too shall pass; the stay-at-home orders will eventually get lifted; and we will all gradually get back to work and get back to being good consumers again (best guess: early-to-mid June?). With interest rates remaining historically low and the stock market gradually working its way back, I do expect to see a resurgence of demand and plenty of great opportunities to choose from. I also expect to see a substantial increase in supply. It might be optimistic to think we will pick up right where we left off. And we may see, initially at least, a gap between what buyers are willing to pay and what sellers are willing to accept as the market struggles to find its footing after this unprecedented stall, but find its footing it eventually will. So buckle your seat belts, as it may be a bit of a bumpy ride on the way back to the stable and efficient market we had pre-Corona. We certainly do live in interesting times and we will keep you posted as we progress.
For those of you that have an interest and perhaps some extra time on your hands, our website does allow you to search by price-reductions and also by days-listed in addition to all the normal criteria. Do let us know if you have questions on any properties you see for sale here in Big Bear. And although we are set-up for, and encourage, virtual showings, residential real estate has been classified as an essential activity so if the mandated guidelines are followed, in-person showings can also be arranged. Until next time – Stay Safe! And Happy Hunting.