2007 Posts

It is a great time to be looking to buy real estate in Big Bear.  Interest rates are still low; there are many well-priced properties to choose from, many are accompanied by motivated sellers; and the unique dynamics that make Big Bear an attractive investment real estate market are all still in place.  As the first half of 2007 is now behind us, let us review what has transpired in Big Bear’s real estate market, take a look at where things currently stand, and ponder the direction going forward.

Historical Market Statistics

From strictly a “number of transactions” standpoint, the first half of 2007 was quite sobering in comparison to what the valley has seen in the two years prior.  From January 1st through June 30th in 2005, 806 homes were sold with a median list price of $275K and a median sale price of $273K, with 78 being the average days-on-market. In 2006 respectively, 597 sold, $325K was the median list, $319K the median sale, and 75 was the average days-on-market. In 2007, 409 sold, $329K was the median list, $320K the median sale, and the average days-on-market jumped to 122.

Big Bear Real Estate: Market Statistics, as of June 30th, 2007 (taken from Big Bear mls data)

Jan - June
Jan - June
2005 to
Jan - June
2006 to
No. of homes sold 806 597 -26% 409 -31%
Median list price $275K $325K 18% $329K 1%
Median sales price $273K $319K 17% $320K 0%
Sales, as a % of list 99% 98% -1% 97% -1%
Average DOM 78 75 -4% 122 63%

In summary, the first half of 2007 saw volume of transactions decline 31% over 2006 while prices remained steady year over year.  In addition, homes are taking 63% longer to sell year over year reflecting reduced demand which we discuss further below.

That said, in Big Bear we typically list 2/3 of all homes listed for the year in the first half of the year, and we sell 2/3 of all the homes sold for the year in the second half of the year. So, hopefully an analysis of the 3rd and 4th quarters of 2007 will show marked improvement in number of transactions. What came as a surprise to many experts in the market, including myself, was the strong demand for high-end properties seen in the first half of 2007.  The market for lakefront homes and large, beautiful, new, log-style construction listed over one million dollars has been quite brisk year-to-date.  (Of note: these sales do indeed affect the avg. dollar per sq/ft. comparable prices which, on paper, have held up nicely in Big Bear Lake thus far.)

Current Environment

It is a great time to be looking to buy. There are many homes to choose from -- as of today there are 1,356 residential listings on the market -- and interest rates are still holding near historical lows.  Buyers do indeed have the upper hand in the present market and, with the diligent efforts of your resident expert (me), fantastic opportunities await as some sellers, mind you not all, are presently willing to entertain offers substantially under their public list prices. Those sellers who really do need to sell, these are not the majority of second home owners in Big Bear, are becoming increasingly motivated.  Others, who may want or like to sell but do not ‘need’ to, are currently playing a waiting game.

In a nutshell, the market is extremely price sensitive at the moment. Those homes on the market, which are ‘best-in-show’ and very aggressively priced, still attract plenty of interest and often go into escrow.  For sellers, the market here remains challenging as the competition has greatly increased. There still persists a disconnect between list prices and demand. The demand that is out there remains well under where most of our market prices are lingering. That beautiful ‘equilibrium’ -- the point where the buyers and sellers meet, the market clears and transactions are brisk -- remains elusive for the time being.

What the future holds?

It would sure be wonderful to have the power to see into the future, wouldn’t it?  Based on what typically happens in the 3rd and 4thquarters transactions are expected to rise. Prices thus far have held up and Big Bear’s real estate market will likely be trading sideways during this adjustment toward a more ‘normal’ market. This I believe will occur when the overall psychology becomes more optimistic. You can not read the paper or watch the news these days without mention of sub-prime loan defaults, foreclosure rates rising, ‘housing slump nationwide drags on economy,’ etc. The negative impact this has had on the perception and psychology of real estate markets in general has greatly diminished optimism for the future. Even in Big Bear’s resort market, which is not as directly affected by much of the troubles currently found in many ‘primary’ home markets, this leaves many able and willing buyers remaining on the sidelines for now.

That said, the sun keeps shining here in Big Bear, which is of course as beautiful as ever. All of the dynamics that makes this market so special and unique are still in place which bodes well for the future of real estate in Big Bear. There are some tremendous opportunities available, so give me a ring or send me an email today to find out more.