2020 Posts

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Q2-2020 Market Update by Mike Sannes, Big Bear Real Estate - The Mike Sannes Team, July 25, 2020

Hello to you all and as always, thanks for checking in with us regarding the Big Bear real estate market. What an amazing few months it has been since my last update. Since the end of the first quarter in March, the Big Bear real estate market has been on an absolute roller coaster ride. And as these long days of summer keep flying right by, let’s take a minute and get caught up on how the COVID-19 pandemic has been affecting Big Bear’s unique vacation home market.

April, which is typically a slow month for sales here in Big Bear, started off as slower than molasses on a very cold day. On April 15th, we had 390 active listings and 74 homes in-escrow which translates to a 19% absorption rate* and equates to 8 months of inventory.** How bad was it? The total number of sales in April 2020 vs. April of 2019 was off by 58% (45 in 2020 vs. 108 in 2019) and was also off by 54% from the 5-year average number of closings (97) in the month of April.

These market conditions held through mid-May but by the end of May, a dramatic shift was underway with the absorption rate on the rise to 34% leading to only 4.4 months of inventory (394 active listings vs. 134 homes in-escrow.) Which for reference, is about where we were in February of 2020, prior to the pandemic taking effect.

As the chart below illustrates, this dramatic shift in demand -- which could aptly be described as a tidal wave of demand given the steep rise in the number of homes in-escrow -- continues to build. By the end of Q2 in June, we witnessed an unheard of 90% absorption rate and had under 2 months of inventory (308 Active listings vs. 270(!) in-escrow) -- truly unprecedented.

Absorption Rate & Inventory

What does this all mean for the real estate market here in Big Bear going forward? I have been selling real estate here in Big Bear since 2004 and, even in the hey-day of the bubble market in 2006, I have never witnessed there being substantially more properties in-escrow than there are active listings (312 in-escrow vs. 223 active currently). And in talking with a few old-timers that have been in this business here since the 80’s, this dynamic does indeed seem to be historically unprecedented. It is safe to say that the Big Bear real estate market has never seen anything even close to the level of demand we are currently experiencing and the reasons for this I think are many, including:

  • Big Bear’s affordability vs. down-the-hill pricing
  • A 3% fixed rate on 30-year mortgages
  • The move for many towards continuing to work remotely
  • The trend of not hopping on planes as the preferred method of travel
  • The increasing desire to be able to distance oneself from others, coupled with the social unrest many urban areas have recently experienced

The list goes on and only time will tell if the desire and ability of people to move to and live in more rural areas, father away from populated cities will continue. But in the meantime, it all adds up to increased demand for Big Bear: being a unique four-season alpine resort located within a 3-hour drive (or less) from roughly 20 million people, being a very popular destination and also as very attractive place to invest in real estate that can be used, enjoyed and perhaps vacation rented in order to offset expenses.

Please do let us know if you have any questions on the market overall or ANY properties that you see for sale here in Big Bear, as we have access to ALL listings and look forward to putting our local knowledge and expertise to work for you.

Until next time, happy hunting! If for any reason, you have considered selling your Big Bear property anytime in the last few years, opportunity is knocking as there are currently many more buyers than there are homes for sale. Juts let me know if you would like to understand the current value of your Big Bear property as we are happy to help and always look forward to hearing from you.

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*Absorption Rate: The number of homes in-escrow / the number of active listings. Which shows the percentage of the inventory that gets ‘absorbed’ (a.k.a. sold) in a given escrow period (typically 45 days) Considered the ‘speed of the market’. Historically in Big Bear 20% or less is a very slow market with weak demand. Whereas 50%, (where half of the active inventory is being sold in a 45 day period) or thereabouts is a very fast market with very strong demand.

**Months of Inventory: The time it would take, based on a typical 45-day closing period, for all the active listings on the market to sell, if there were no new listings. Four or less months is viewed as a strong “Sellers Market.” Six months is considered a balanced market and 8 months or more is considered a strong “Buyers market.”

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Q1-2020 Market Update by Mike Sannes, Big Bear Real Estate - The Mike Sannes Team, April 16, 2020

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.

Q1 2020 Sales by AreaAs 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).

Q1 2020 Average Sales PriceWith 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.