The last day of 2013 is finally here and tomorrow marks the beginning of a whole new year for Big Bear real estate. So let's take a look back at how 2013 fared compared to previous years.

 

Number of Sales 

The number of Big Bear homes that sold continued to improve in 2013 posting 1216 closings. This marks a 12.5% increase in sales over 2012 and marks almost a doubling of sales from the market's bottom in 2008. As demand for Big Bear real estate increases, prices are expected to continue to appreciate.

Big Bear Home Sales

 

Average and Median Sales Price

2013 saw the continued ascent of home prices from their bottom back in 2011. The average sale price of a Big Bear home rose 5.5% while the median sale price rose 12.7%. Since the market's bottom in 2011, based on annual numbers, the average and median sales prices have risen 12% and 18% respectively.

Big Bear Real Estate Prices

 

Average and Median Price Per Square Foot

The average and median sales price of Big Bear homes also continued to appreciate in 2013 showing a 13.9% and 12.4% improvement over 2012's numbers. Since the market's bottom in 2011, based on annual numbers, there has been a 17% and 18% improvement in these measures as well. 

Big Bear Real Estate Price Per Square Foot

 

Days On Market

2013 saw a significant drop in the amount of time a Big Bear home was on the market before selling. The average DOM (Days On Market) dropped from 128 days in 2012 to 98 days this year while the median DOM fell from 77 last year to just 55 this year. The lower the DOM, the healthier the real estate market,

Big Bear Real Estate Days On Market

 

Home Inventory

Perhaps the biggest driver of improvement in the Big Bear real estate market was the remarkably low home inventory we saw in 2013. Anecdotally, agents who have been in the Big Bear market for many decades have said that they couldn't remember a time when so few homes were listed for sale. With buyer demand high and the supply of Big Bear homes so limited, prices should continue to improve. (In the figure below, I included a trend-line as home inventory goes up seasonally each summer and declines in winter.)

Big Bear home inventory

 

Summary and Outlook

It seems like it was only yesterday that most real estate professionals were predicting that we would not see home prices begin to appreciate until 2015 or beyond. So the improvements over the last few years have been a very welcomed surprise.

With demand from homebuyers still quite high and the number of available homes to choose from still near record lows, there should be continued upward pressure on home prices in 2014.

But tempering this upward drive are slowly rising interest rates. With the economy recovering, the federal reserve has announced they are backing off on treasury purchases. This has resulted in an increase in mortgage rates from about 3.5% to 4.5% over the past six months and rates are expected to creep up slowly into the foreseeable future. Higher interest rates put downward pressure on prices.

In this push/pull of market forces, I feel that the market fundamentals of supply and demand will ultimately win out and we will continue to see home prices appreciate through 2014. Although interest rates are rising, they are still near historical lows and are a long-term opportunity to take advantage of. With the economy recovering, more people are likely to be in a more economically advantageous position and thus more likely to purchase real estate. 

Ultimately, only time will tell. But after two years of strong market improvement, I am quite optimistic heading into 2014. That makes it much easier to say, "HAPPY NEW YEAR!"