"All real estate is Local"
As you may know, the Big Bear real estate market is very different from other metropolitan markets in SoCal. Most of the properties here are 2nd homes for people who have a principle residence somewhere else in SoCal. There aren’t many owners in Big Bear that move across town to a bigger or smaller house. Usually if a seller is a full time resident here, they are selling their home to move away from the snow and cold of winter. The good thing, from my perspective, is that many more folks are buying in Big Bear so they can have a 2nd home in the snow and cold of winter.
Details of the October 2018 Big Bear real estate market:
- Inventory dropped to
about 4.2 months overall
- Still looks like a
- About 1 in 3 transactions
were at or above list price.
- Inventory in the
100-250k range declined a little
- Sales in October grew
to about 115 units
- October sales was about
- Inventory at end of
October is about $184M
- Average sold price rose
slightly over the last 3 months
- About 1/3 of the sales
are above list price
- About 1/3 of the sale
are for cash.
Some homes sell FAST
Last month we had 29 homes close in less than 30 days on the market (out of 115 total). Good homes, priced correctly, are selling quickly here in Big Bear Valley. By the way, about half of the sales activity last month was right where we expected... in the $145k-$320k range.
Inventory is lower than this time last year. We are definitely in a "Seller's Market" right now. One way to tell if it's a Seller's market is by the number of multiple offers on listings. The chart below shows, the percentage of closed sales that were at or above the list price. As you can see, there is a cyclic trend year over year. On an annual average, 34% of the sales closed above the asking price. We don't see as many multiple offers in the winter as we do in the summer. So, is this a seller's market or a buyer's market or a Balanced market? NAR suggests that 6 months of inventory indicates a balanced market... and right now we have 4.2 months of inventory.
The chart above shows that we do have a seasonal "new listing" cycle. Remember that about half of the cabins in Big Bear are on some sort of weekend rental program. So, when the snow melts in the Spring, the rental receipts also disappear... and that's when the cabin owners put their cabins on the market. We didn't have much natural snow this Winter, so I expect the "listing season" to kick in a little earlier than more years. The good news is that we usually double the Jan/Feb inventory during this "listing season".
Another indicator of a "seller's market" is how many multiple offers a property receives when going to escrow. It is difficult to measure how many offers came in for a particular listing (unless you're the listing agent)... but by looking to see if the contract price was higher than the asking price, we can infer that there may have been multiple offers... that's what the chart above represents ............................................................................................
Reporting sources There is one element of our market that is difficult to nail down... that's the real estate transactions that happen outside of the Big Bear MLS reporting engine... including FSBOs, private party transactions, Lender to Lender exchanges and transfers, and some REOs that are listed/sold by "down-the-hill" brokers. I've known for several years that trying to reconcile the differences between SOLD data from Title companies and SOLD data from our Big Bear MLS will give you gray hair. Having studied these differences for the last several months, I've discovered there is about a 20% plus and minus difference in the numbers reported on a monthly basis, and these Title company reports don't show things like Days-On-Market (DOM), timely contract price, etc. Therefore, I'll stick with the data from our Big Bear MLS exclusively.
Historical Sales facts
This chart shows that the current Average Unit Price is about the same now as it was 10 years ago!! As you can see from this chart, the AUP (average unit price- the red line) for Big Bear SFRs is finally headed north... just have a look at the last 4 or 5 months. Notice the black trend line on the red chart line... that's a mathematical forecast for our market.
1) As you can see, the peak in AUP was in October of 2006. The increase from Jan 03 to Oct 06 was a fairly steady climb... aka "before the bubble burst".
2) However, the descent of the AUP has been a ragged curve for the last 7 years. Also to be noted from the chart above, is that the seasonality in unit sales was fairly consistent until 2006 (blue line)... then this crazy market blew up in 2006 and 2007.
3) However, we can see some predictability coming back into the market with dips in the Summer of each year, and peaks in Fall of each year. All of these trend lines are based on dates that escrow closes.
4) And the green line in the chart shows that in 2007-2009 it took an average of 2-3 times longer to sell the average home when compared to several years earlier. The dip in the green line (DOM) dropped significantly in 2010 when the lower priced REOs started hitting the market.
5) Notice also that the AUP for homes today is about what it was in 2003 (14 years ago)… that means that if you bought a home in Big Bear in 2004 for $175k, that same home went to about $350k in 2006, and is now back down to $175k in today’s market. Timing is everything, eh?
This chart shows a little more detail over 3 years... you'll notice that the AUP is starting to level out... This info, coupled with the lower current 6 months of inventory, points to a Balanced market. NAR suggests that 6 months of inventory is a "balanced market".
Current market Snapshot, 11-1-2018
Changes in the Market over the years
It is interesting to note that the major difference between the market now and several years ago, is that now there are few Investors working the Big Bear market... and a few "flippers" as well. Most of the home-buyers now are actual families who want to enjoy the clear mountain air, get away from the freeway traffic, and enjoy the slower pace at 7,000 ft. altitude. A couple of years ago, investors would buy a home for $200k... put $30k into upgrades etc., and sell ("flip") the home at ~$280k... those times and business models have all but disappeared in today's market. Most of the today's buyers are living and playing in their Big Bear getaways instead of thinking of the home purely as a line item in an investment portfolio.
And we are seeing a steady level in new housing starts... there are currently 14 new/under construction homes... ranging in price from $200k to $1.3M...
Available by price range
It must be noted that there are no reasonable listings in Big Bear Valley below about $80k... this is unlike other areas in the U.S. where you can find a small home for, say, $20k in Florida or Arizona. The Big Bear homes that are under $80k will be very small and will most likely need considerable repair. The Big Bear area is simply too popular, too much in demand, and too close to LA/OC/SD to allow lower priced listings.
And the above chart shows the distribution of the SFR inventory by area within Big Bear Valley ... You'll notice that the areas of Big Bear City and Moonridge contain the most units for sale. Moonridge is the area surrounding the Bear Mountain Ski Resort, and Big Bear City encompasses a large part of the eastern part of the Valley. It's also interesting to see that Fox Farm, for example, has lots of inventory as well as the west end of Big Bear by the Dam...
Distressed Properties in Big Bear
There are only 2 available distressed properties: (price ranges from $160k to $490k) in Big Bear at this time... that's less than 1%. What a difference this is from a couple years ago.
Pricing by area within Big Bear Valley
This chart shows that the highest priced homes (usually means the largest homes on the biggest parcels) are in the western part of the Big Bear Valley, the lakefront, and in 2 high-end developments called MeadowBrook Estates, and Castle Glen.
Some homes sell FAST
Last month we had 29 homes close in less than 30 days on the market. Good homes, priced correctly, are selling quickly here in Big Bear Valley. By the way, most of the sales activity last month was right where we expected... in the $145k-$320k range.
Most active part of the market: 2 and 3 bedroom homes:
Here is another way to look at the heart of our market... in this chart, we see that the average price for both 2 and 3 bedroom cabins has risen slowly over the past 3 years. Big Bear generally sees about 8%/year growth... nothing like the wild swings for the rest of SoCal. We see the same seasonality in most other categories as well.
Investment Make Short-term Rentals Ever More Popular
Please click on the link above...The short-term rental market -- largely seconds homes and vacation rentals -- is alive and well, thanks largely to online portals thrusting this unique form of accommodations into the limelight.
How about RENTAL investment opportunities?
If investment in Big Bear is interesting to you ... I have talked to several Property Management companies here in Big Bear, and noted the following details:
1. For rental cabin owners, they can expect most of the annual rental revenue to come in the 3 months of Winter... not a linear cash-flow at all… good income for 3 months, then dropping to almost nothing.
2. Rental rates vary all over the place: from $150/night to $2,500 per weekend depending on the size, configuration, style, and proximity to the ski slopes.
3. On average, the cabin owner can expect the "typical" cabin to rent about 81 nights per year. If we have lots snow, then the renting season could be up to 110 days, but if we have a relatively warm Winter, then the renting season could be as short as 65 or so days.
4. The "typical" cabin-owner should be able to supplement the mortgage, insurance, management fees, utilities, and taxes with the rental revenue cash-flow. Very few properties pay for themselves with rental income, but the rental income can certainly help pay for utilities, taxes, management fees, etc.
5. If you have investor-clients/friends that have expressed interest in the Big Bear Lake area, now might be the time to refer them to me.
“What is the best buy in Big Bear?” Easy question, tough answer. We have such an eclectic mix of old vs. new, large vs. small, flat vs. steep mountain side, tall pine trees vs. desert-like… it’s a tough answer. For example, in most typical urban neighborhoods all of the homes on Elm (?) Street are 5 bedroom/3 bath and have a market value of $650k. Here in Big Bear, almost every neighborhood has a small old cabin built in 1932 right next to a new Log home with 3,000sf on a large lot… and almost everything in between as well. So, the way I approach the answer is to ask “what price range”… then we can see an assortment of homes within that range.
The key message about our Big Bear resort market:
Buyers who want to buy, are buying...
and Sellers who want to sell, are selling.
Fall is almost here in Big Bear valley, and our inventory is steady and robust. We have a good selection of quality listings available today. Visitors to Big Bear over the last several months are now thinking about buying a cabin for use this year and beyond. The distressed offerings are a much smaller component of the sales... this is good news for equity sellers. And it’s a very good time to be a buyer, although the lower inventory tends to point to a Seller's market now. We are not seeing the panic-buying that can be seen elsewhere in metro SoCal.
My best wishes to you and your family for this Fall season... give me a call the next time you are in Big Bear... I will buy the coffee and tell you more about "our shining city on the hill"..
Big Bear information/reference links
For future reference, here are several links that will have current updates on anything happening in Big Bear Valley.
www.kbhr933.com (the local FM broadcast station for Big Bear Valley)
www.BigBear.com (everything relating to eating, playing, and staying in Big Bear)
www.ie511.com (local road conditions getting to/from Big Bear Valley)
www.bigbearscanner.com (has emergency radio communications)
www.bigbeargrizzly.net (our local weekly newspaper)
www.bigbear.com/things-to-do/events-calendar/ (event calendar for Big Bear Valley)
K6BB on 147.330 MHz for local ham radio chat.
www.Bensweather.com very comprehensive weather reports/forecasts for Big Bear Valley