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Feb. 5, 2018

January 2018 ~ Big Bear Real Estate Market Update

January's numbers are in! Although the number of Big Bear homes sold dipped a little, prices and other market indicators showed appreciation and improvement. 

Let's take a look...

January Number of Big Bear Homes Sales

The number of sales of Big Bear homes slipped a little this January. This is likely due to the lack of snow we've had this year. Less snow means fewer visitors which means fewer sales. As well, the lack of home inventory has hampered sales as many buyers are having trouble finding the type of home that fits their wants and needs.

January Big Bear Home Sales Prices

Although there was a dip in home sales, both the average and median sales prices of Big Bear homes continued to rise to their highest point in almost a decade. This is likely due to a strong economy and continued low interest rates.

Big Bear homes - price per square foot

The average and median price per square foot of Big Bear homes showed continued appreciation as well. These price measures have risen about 75% since the market's bottom in 2011.

Days On Market - Big Bear Homes

The average and median number of days that a home was listed for sale, better know as D.O.M. (Days On Market), continued to decline as homes sold at their quickest pace in 4 years. This is due, once again, to the lack of home inventory. With fewer homes on the market, buyers are quick to act when a home that meets their wants and needs lists for sale.

Big Bear Homes - sales price to list price ratio

The Sales Price to List Price ratio of homes stayed steady, as buyers were willing to pay about 97.5% of list price this January. Sellers conceding only 2.5% off their list price on average in negotiations is evidence of a continuing strong market.

BIg Bear Home inventory

Lastly, as mentioned in previous posts, perhaps the strongest sign of today's Big Bear Real Estate market is the low inventory of homes. With only 250 Big Bear homes for sale as of February 1st, listings are near record lows. This lack of supply and continued buyer demand suggests that prices will continue to rise for the foreseeable future.

 

Paul Zamoyta ~ Info@Zamoyta.com ~ 909.557.8285

 

Posted in Market Reports
Jan. 30, 2018

Big Bear Cash Home Sales Offer Market Insights

I oftentimes get my ideas for blog posts by overhearing statements made about the Big Bear real estate market that I am not quite sure are fact-based. In this regard, today's post was compliments of a conversation I heard about cash sales.

In this conversation, the following claims were made:

1) Cash sales are rare. Fewer than 10% of Big Bear homes are purchased with cash.

2) Buying a home with cash allows you to purchase the home for far less than you could than if you had purchased with a loan.

3) Most people who buy with cash are affluent, so it's usually the higher-end homes that sell for cash.

All three of these seemed like reasonable assertions. But I turned to the Big Bear MLS to test these claims.

Take a look at the figure below showing the number of cash sales over the past 11 years.

Big Bear Homes - Cash Sales

Back in 2007, you see very few homes purchased with cash. This was at the height of the record real estate boom when just about anyone could qualify for a home loan. As the real estate market collapsed, loans became more difficult to qualify for and cash sales increase not only in number, but also grew as a percentage of all Big Bear home sales.

But our first claim was that cash sales made up less than 10% of all sales. Take a look below.

At Big Bear real estate's lowest point, only 10% of all sales were cash. This was at the market's height when prices topped out. Conversely, cash sales as a percent of all sales peaked in 2011 at the bottom of the market. Savvy investors who were sitting on cash took advantage of the 50% drop in Big Bear home values resulting in cash sales making up 35% of all sales. As the market recovered, cash sales have settled back down to about 20%-25% of all sales.

So our first claim was debunked.

Let's look at the second claim; that purchasing with cash allows you to pick up a Big Bear property at a discount price.

I ran the numbers on Big Bear home sales going back to 2011 and found that the average sales price to list price ratio for cash purchases was 95.87% while the ratio for non-cash purchases was 97.26%. This suggests that cash purchasers have a 1.39% advantage in negotiations. Based on the average sale price of Big Bear homes from the last quarter of $356,000, this results in about a $5000 advantage for cash buyers. 

Is $5000 a major discount on a $365,000 purchase? Some might say that $5000 is significant while others will say that getting a 1.39% return on your cash investment is ridiculously low.

I will leave judging the legitimacy of this claim up to you.

Lastly, there was the claim that only affluent people purchase with cash, therefore most cash sales are in higher-end, luxury homes.

Once again, looking at the numbers going back to 2011, the average sale price of homes purchased with cash was $263,639 compared to $271,504 for non-cash sales. Being that these sales prices are so similar (less than 3% apart), this suggests that cash sales do not occur predominantly in the higher price ranges, but are more likely are distributed throughout all price ranges.

So claim three is debunked as well. 

To me, the interesting takeaway in looking at cash sales is how they may give valuable insight into the Big Bear real estate market.

Cash sales were lowest in 2007 when prices were highest and buyers had ridiculously easy access to mortgages. This set up the market collapse in 2008. So a low number of cash sales may signal a market high-point.

Cash sales were highest when the market bottomed in 2011 and prices were at their lowest. So a high number of cash sales may signal a market turnaround.

In the last few years, we've seen qualifying for loans become much easier. In fact, we are starting to see stated loans and "hard money loans" creep back into the market. Although we are far from the free-flowing credit of the mid-2000s, the lending market definitely seems to be moving in that direction. It will be interesting to see how cash sales evolve over the next few years and if they may help us predict which way the Big Bear real estate market is headed.

 

Paul Zamoyta ~ Info@Zamoyta.com ~ 909.557.8285 

 

 

Posted in Market Reports
Jan. 25, 2018

Fewer Big Bear Homes for Sale Makes for a Strong Real Estate Market

As I frequently mention in my blog, real estate often boils down to Economics 101, particularly in regards to the theory of supply and demand.

When there are a lot of homes for sale (high supply) but very few people who are looking to buy those homes (low demand), prices will fall as sellers will have to drop their prices to make their homes more appealing to buyers. 

But when there are very few homes for sale (low supply) while there are many buyers looking for homes (high demand), prices will rise as sellers command a stronger position in negotiations due to there being more competition among buyers vying for the few homes that are for sale.

Currently, the Big Bear real estate market has the fewest number of homes for sale dating back at least a decade and likely much longer than that. Take a look at the figure below.

Big Bear Homes for Sale

As of this morning, there were only 256 Big Bear homes for sale in the entire valley per the Big Bear MLS. This represents a whopping 70 percent drop in listings since I started keep track in 2011. Anecdotally, most agents remember there being about 1200 listings back in 2009 when the market turned for the worse. Based on that number, we are seeing an incredible 80 percent fewer listings.

As far as buyer demand, here is a figure that shows the number of listings from a given month divided by the number of sales from that month. This measure is referred to in the business as "Months of Inventory". It is the best way to display supply and demand in the market.

In a normal market, there is usually about 4 to 6 months of inventory. Right now, we are close to just 2 months.

All this is good news for the Big Bear real estate market. With prices rising as buyers compete for the few homes that are for sale in Big Bear, with interest rates still near the 4% mark, and with all other economic news trending towards the positive, I would expect another great year for Big Bear real estate in 2018!

 

 

Posted in Market Reports
Jan. 19, 2018

2017 Big Bear Real Estate Market Report Update - Annual Numbers

After reviewing my last post, a few readers reached out and asked if I could break Big Bear home prices down on a yearly basis. Here are a few graphs in this regard.

Here's the yearly average and median sale prices of Big Bear Homes per the Big Bear MLS data.

Big Bear Home Prices

I went ahead and did the math for you on the percentage of increase over the prior year for the sales prices and graphed it below.

Big Bear home prices - percentage increase

Here are two graphs showing the annual increase in price per square foot of Big Bear homes sold in both sales price and percentage increase over the previous year.

Price Per Square Foot - Big Bear Homes

 

Posted in Market Reports
Dec. 30, 2017

2017 - Big Bear Real Estate - Year End Market Summary

With the last business day of 2017 behind us, I reviewed the market numbers for this year to see how we fared compared to last year. I also took a look at where we are from a longer term perspective.

Here are a few graphs that tell the big story.

Average and Median Sale Price of Big Bear Homes

Compared to 2016's numbers, the average sale price of a Big Bear home rose 9.5% to $338,973 while the median sale price rose 5% to $268,500. For a longer term look, check out the figure below.

Big Bear Real Estate Values - 2017

You can see that Big Bear real estate has been steadily recovering since the market's bottom in mid-2011, but we're still about 15% behind the market's peak in early 2007. The market is definitely moving in the right direction with several positive influences that will likely spur future appreciation. More on that later.

 

Price Per Square Foot of Big Bear Homes

Compared to 2016's numbers, we saw the average price per square foot rise 7% to $223 this year while the median rose 6% to $214. Here's a figure showing the longer term trend for the price per square foot measure.

Big Bear Real Estate - Price Per Square Foot - 2017

Once again, we see the price per square foot of Big Bear homes peak in 2005 - 2006 with the market bottoming out in 2011. Although these measures have risen steadily about 70% since the market bottom, we're still about 20% behind peak prices. 

 

Big Bear Home Sales

Big Bear homes sales were up an impressive 23% over last year with 1425 closings in 2017. Here's a look at sales going back over a decade.

Big Bear Homes Sales 2017 HIstory

Sales of Big Bear homes were the highest they've been in over a decade in 2017, more than double what they were in 2008 when "The Great Recession" hit. With buyer demand at a 10 year high, the Big Bear real estate market is in a very good place right now.

 

Big Bear Home Inventory

Buyer demand is one part of the economics equation. Supply is the other. Take a look at the figure below showing the number of listings on the market over the last 7 years.

Big Bear Home Listings HIstory

With the number of Big Bear homes for sale the lowest they've been in well over a decade, we have very little supply of homes for sale to meet the highest buyer demand in over a decade. This bodes very well for Big Bear real estate prices moving forward into 2018! Also, you can see the annual trend of listings peaking in summer then hitting their lowest point in the winter.

 

Months of Inventory

The most popular way for real estate economists to look at the supply and demand of a market is to do so in terms of "Months of Inventory". They derive this number by taking the number of current listings and dividing that by the number of sales from the previous month. This theoretically suggests how many months it would take for all the current listings to be sold at the current rate.

Big Bear Months of Inventory

A normal market has about 4 to 6 month of inventory. Currently we are at 2.2 months of inventory. This is the strongest indicator that the Big Bear real estate market is in a very good place. Lots of people want to buy a Big Bear home while very few are listed for sale. This means sellers will have more buyers competing to buy their home, and as such, prices should rise.

 

Other Factors Affecting Big Bear Real Estate

In addition to strong market numbers, the recent purchase of the local Big Bear Resorts, Bear Mountain and Snow Summit, by Aspen Ski Company/KSL Capital Partners has been received as a big positive by most buyers I have talked to.

Mortgage rates are still hovering around historical lows hanging around the 4% mark. The stock market had impressive gains in 2017, unemployment is the lowest it's been in 15 years, and the recovering real estate market has resulted in additional equity for homeowners. 

All these positive factors suggest a continued stable and strong market with further appreciation expected for Big Bear home values in 2018.

Posted in Market Reports
Dec. 26, 2017

Big Bear Lakefront Price Per Square Foot Numbers Show Flaws in Valuing by Just One Measure

Price per square foot (p/sf) can be a deceptive thing. I often run across clients who look at this price measure as the most legitimate indicator of home value, often projecting the price per square foot of one property onto the square footage of another to derive value.

Per the remarkably high price per square foot measure of the latest lakefront sale, 39035 North Shore at $1146/sf, I searched the Big Bear MLS for the highest p/sf properties to have sold. Not surprisingly, all of the top properties in the p/sf category were lakefronts.

Take a look at the highest sales in Price Per Square Foot, all over $1000:

BIg Bear Lakefront Price Per Square Foot

The measure of note here is the square footage of all these homes. Not one of these lakefront properties are over 2000 square feet, exemplifying the rule that the smaller the property (and all other things being equal), the higher the price per square foot.

The reason for this can be seen in separating the land costs. For instance, looking at 164 Round, the land value alone of this property was probably around 1.1 to 1.2 million dollars. The structure itself had very little value. This assumption applies to all the other lakefronts as well; the land value of Big Bear lakefront properties exceeds that of the physical structure the majority of the time.

So if I were to own a neighboring lakefront home to 164 Round, and my home was 4000 square feet, if I applied the price per square foot of my neighboring property, I would compute the value of my home to be almost 5 million dollars - a totally unrealistic price.

A more accurate way to look at the price of my property would be to back out the structure value of 164 Round realizing that the lot is worth 1.1 million dollars. Then I would have to value my structure. Since my house is newer, I know that the cost to build would be about $300/square foot which gives me a $1,200,000 structure value. Add that to the $1,100,000 of the lot value and my home is estimated to be $2.3 million. As you can see, this is a quite different valuation from the valuation derived from simply applying the price per square foot.

But this method by itself is not entirely accurate. Several different methods must be looked at in estimating a home's value, especially a lakefront property. Ultimately, there is a good deal of subjectivity in valuing a Big Bear lakefront home. There's just too many intangibles that come into play when evaluating lakefronts, such as water depth, wind exposure, architecture type, lot and/or house orientation, floor plan, feel, etc. That's why having an experienced agent specifically familiar with lakefront properties to guide you in the valuation process is essential.

 

 

 

 

Dec. 22, 2017

Big Bear Lakefronts - Where can I put my dock?

When it comes to Big Bear lakefront living, although the views of the lake are often spectacular, having a private boat dock just steps away for one's home is perhaps the biggest perk. Along with questions about the size, length and condition of a dock, another common inquiry is about where a lakefront home owner can put their dock along the shoreline.

When it comes to the placing of a dock in the water, there are a few guidelines set by the lake's governing body, the Big Bear Municipal Water District. In general, if you imagine your property lines extending out onto the lake bed and into the water, the area between those lines is where you dock should be placed. 

This seems simple, but imagine you're in a small cove and your imaginary property lines intersect out over the lake forming a pie shape.  As the lake level recedes and you and your neighbors move your docks out further to meet the waterline, eventually some docks are going to get squeezed out.

Here is a picture of a cove on Big Bear Lake where Big Bear lakefront homes experience this issue when the lake's water levels are low.

Big Bear Boat Dock Hopscotch

You can see in this picture an example of how a receding lake leaves far less shoreline on which to place one's dock in this cove. In fact, you can see how one lakefront homeowner's dock is fully beached.

So what happens when a lakefront's dock is "squeezed out"?

Ultimately, it comes down to the decision of the Big Bear Municipal Water District.

Currently, in certain places the BBMWD will allow lakefront homeowners to "hopscotch" their docks, by letting them skip over the neighboring docks down the shoreline until there was enough elbow room for placement of their dock in the water. This lakefront homeowner would then have to walk some distance along the lake bed to access their dock which would be located in front of another lakerfront property.

In other years, they would not allow hopscotching. In this case, if you were not proactive in moving your dock out to meet the waterline, you were more likely to end up with a beached dock. The reasoning behind not allowing hopscotching is that Big Bear lakefront homeowners who purchased properties with more shoreline and in locations that were not likely to have dock placement issues paid more for these homes to avoid such problems. It was then considered unfair to have other lakefront homeowners occupying the shoreline in front of their properties.

As you can see, this can be a touchy subject and many people have expressed their feelings to the BBMWD on both sides of the argument. But either way you look at it, the key to keeping your dock in the water in compromised locations is to make sure you move your dock out first whenever you see the water receding. Although the BBMWD will have the ultimate decision when room disappears, it stands to reason that if your dock has a strong position in the water, it will be more likely that it will be allowed to remain in that spot. If you don't make the move to stay competitive for dock space, once you're "squeezed out", the chances of getting your dock back in the water diminish greatly.

 

Dec. 21, 2017

Big Bear Lakefront Home Sale - December 2017

39035 North Shore - Big Bear LakefrontIt's not only December, but it's the first day of winter and the first day that our high temperature is not expected to go above freezing, but Big Bear lakefronts are still selling. As I have always said, with lakefront homes being the most desirable properties in the valley, they will sell in any season!

This Windy Point home sits just west of Fawnskin at 39035 North Shore Drive. Although just 2 beds, 2 baths and 1353 square feet, this 1927 lakefront vintage cottage was remodeled with timber beam accents and a river rock fireplace that offers that cozy, authentic, Big Bear feel that most buyers desire. With north facing views, almost 200 feet of lake frontage and a rare sandy beach, the waterfront exposure of this lakefront home is tough to beat.

Big Bear lakefront - FawnskinListed briefly at $1,595,000, this lakefront home sold for $1,550,000 cash at an impressive $1146 per square foot, which just might be a record!

So if you're looking to sell your Big Bear lakefront home, this shows that the right property will sell any time of year and at or above market prices. For those looking to buy, keep on top of the market even in wintertime as lakefronts will list and sell even in the coldest of months!

Dec. 21, 2017

Big Bear Lakefront Follow-Up

Per my previous blog post, here are some graphs that help visualize the history and current state of the Big Bear lakefront real estate market.

Big Bear Lakefront sales per year

You'll can see in the above figure that sales rebounded from last year's 15 year low. This slow sales rate was due to the low water levels of Big Bear Lake. In 2004, the lake was also experiencing low water levels. But when the lake nearly filled after a snowy and rainy early 2005, sales hit a record high. I would expect the same trend to occur with sales increasing significantly when Mother Nature finally arrives and the lake returns to full.

 

Big Bear Lakefront prices

 

You can see that lakefront home prices have consistently improved since the market bottom in 2010. But we are still about 10%-20% behind peak prices experienced during the artificially inflated 2006-2007 market.

Big Bear lakefront price per square foot

The price per square foot of Big Bear lakefronts appears to be recovering but more slowly than sales price. This seems to be due to larger homes selling which by nature have a lower price per square foot. Many of the smaller homes are built in shallower water areas, so I would expect this number to jump when the lake fills up again.

 

Dec. 6, 2017

Big Bear Lakefront Real Estate - 2017 Review

With the year near its end, I wanted to take a quick look at the Big Bear lakefront real estate market to see how activity and waterfront home values fared compared to last year. 

The number of lakefront home sales is up 33%, from 14 last year to 21 this year.

Most price measures of Big Bear lakefront homes showed improvement as well. The average price rose 11% to $1,371,233 while the median sale price slid 2% to $1,100,00. The average and median price per square foot rose 5% and 10% to $475 and $425 respectively.

Days on market rose slightly from 187 to 192 while the average sales price to list price ratio rose 1% to 94%.

Higher end lakefront sales were exceptional this year, with two rare sales over the 3M dollar mark and five sales over 2M dollars. Previously, there had only been two other times that a lakefront had sold for over 3M in the Big Bear MLS and the 5 sales over 2M dollars ties the previous record for 2M dollar+ sales in a calendar year.

The number of Big Bear homes for sale has remained relatively high this year. This is mostly due to the lake's water levels being well below average. Although the lake has historically seen the lake levels cycle up and down (see figure below), many buyers hesitate to purchase shallow water lakefronts during down years. Savvy buyers in the past have purchased shallow water properties at a discount when the lake is low and resold once the lake filled up. This can result in some nice profits but comes at the risk of not knowing how long it will be until the lake tops off again.

Big Bear Lake Water Level

Overall, other than that low water levels of Big Bear lake, the Big Bear lakefront real estate market rebounded nicely from last year's lull. If Mother Nature shows up this winter with lots of snow and the economy keeps moving in the right direction, I would imagine next year could be a record year for lakefront sales.