Late season run on Big Bear Lakefront homes

After an uneventful summer with respect to real estate sales, we've seen several lakefront homes go pending in just the last week or so. In fact, we haven't seen this many Big Bear lakefronts in escrow for quite some time. I will update you with specific information on these listings in an subsequent post.
I attribute the increased activity in the lakefront market to summer buyers who after perusing the market for a few months found what they were looking for. It helped that a couple of these properties came on the market at very competitive prices resulting in immediate offers and opened escrows. There were also a few price reductions at summer's end that prompted Big Bear lakefront buyers to make their move.
 
I have a feeling we'll see lakefront activity continue strong through the fall. It seems like there are a lot of buyers out there waiting for the right property to hit the market, or waiting for a reduction on a current list price, before making their move. And I think we'll see both these events happen as winter approaches.

Lakefront short sales slow market recovery

The most recent Big Bear lakefront to close escrow was 136 Lake Drive - a 2934 square foot, fully remodeled, 4 bed, 2.5 bath home with a one car garage, which at the sales price of $700,000 sold at a remarkable $238/sf. To put this in perspective, the lakefront that sold just prior to this was a 3 bed, 2 bath, 1506 square foot home that was relatively dated and without a garage and closed at $735,000 or $488 per square foot.
 
Although you can justify such a wide range in values by one property being in substantially better shape than the other, or perhaps in a substantially better location or with a better view than the other property, in my opinion, this is not the case here. This is simply another case of a property being sold at a below market price as banks are more aggressively working to liquidate their inventory of distressed properties. Unfortunately, this hinders a market looking for signs of recovery, as these bank approved sales become new comparable properties for future buyers and appraisers to refer to.
 
Fortunately, we have not seen an overwhelming number of lakefront distressed sales. Yet even the presence of just a few of these sales has done its part in keep values subdued. Looking at some of my resources which track future distressed homes, it does not appear that the Big Bear lakefront real estate market will see an increase in distressed sales in the immediate future. Although we can't predict too far into the future, my feeling is that we have most likely already seen the majority of lakefront distressed sales that we'll see through this real estate downturn. With fewer short sales and bank owned Big Bear lakefronts coming to market, we'll likely see the market recovery we've been looking for.

Different markets segments, same results?

A common question from buyers of Big Bear lakefronts is about how the lakefront real estate market behaves differently than the real estate market on a whole. Some figure that lakefront prices would be immune to market declines as they are the most desirable properties in Big Bear. Others feel that the price point in which most lakefronts are listed leaves them more vulnerable to market declines.
 
Both these points of view seem to make sense. So let's go to the numbers to see who is right!
 


Looking at the graph above, most people's first take is that the ups and downs in the Big Bear real estate market affect lakefronts and luxury homes more so than the overall market. But this graph is deceiving as it is listed in terms of dollar amounts instead of percentages. Although the dollars gained and lost are greater with respect to the lakefront and luxury properties than with the overall market, this is simply because higher priced property will show more gains dollarwise when markets go up, and more losses dollarwise when markets go down.
 
But if you look at it from what I consider the more fair perspective of percentage of increase and decrease, the numbers tell a different story. In looking at the market declines in the average sale price of homes in terms of percentage loss from peak to trough, Big Bear lakefronts have seen a 40% drop while Big Bear luxury homes have seen a 37% drop and the overall market a 43% drop.
 
So getting back to the question at hand, I would be compelled to say that regardless of whether we're talking lakefronts, luxury homes, or your average Big Bear property, across the board, we've seen about a 40% decline in values regardless of what market segment we're looking at.
 
That doesn't mean that every property in every location in every style of home has seen a 40% drop. Certainly each property has it's own strengths and weaknesses and can't be assessed by market numbers alone. But as a general overview of the market's activity, I wouldn't say that lakefronts or luxury homes have done any better marketwise than the market on the whole.
 
That being said, the logical next question will be about the market recovery. Will certain segments increase in value quicker than others. Being that it's the future, we can't really look at supporting numbers. But on a gut feel, I think lakefronts will see the greatest appreciation moving forward simply because of their superior desirability coupled with an above average number of qualified Southern California buyers in the higher end price range looking for an exclusive mountain home.
 
There's a little bit of crystal ball here, but when we see the first hints of an economic recovery, I get the feeling that there will be many prospective, capable buyers in the higher end price ranges that who will take advantage of purchasing property at the market bottom. And lakefronts will be their first pick!
 


High End Lakefront Sales

I had a client inquire about the extent to which the highest-end Big Bear lakefront homes have been affected by the real estate market downturn. So I decided to take a look at the five highest priced lakefront sales from each calendar year going back to 2003 with regards to average price and average price per square foot. (Being that we're just past half way through the current year, I used the three highest priced sales so far in 2011.) Check out the graph below.
 
 
You can see that the highest end Big Bear lakefront home sales have not been immune to market declines and are mirroring Big Bear lakefront sales on a whole. In quantifying these numbers, the average sale price dropped 49% from it's highest average to lowest average since the declines began. With 2011 seeing a rebound in values, that drop has been mitigated to a 38% decline. With regards to average price per square foot, Big Bear lakefront homes saw this measure decline 47% before rebounding this year to a 35% decline from the market's peak.
 
With record declines stretching across the board, if you follow the "buy low, sell high" philosophy, now may be worth considering as quite an attractive time to "buy low".
 

All-Time Mortgate Rate Lows?

Per my last post, I had some inquiries as to the history of mortgage rates. Some commenters stated that they had secured rates back in 2004 that were lower than the stated 4.37% from my last blog entry. I wanted to clarify that I am refering to all-time lows with regards to the "average rate". The average rate is an average taken from many lenders and does include paying points. (Most lenders will offer to lower the interest rate in exchange for paying "points" up front as a closing cost. A point is 1% of the loan amount.)
 
So most likely, if you've beaten today's 30 year fixed interest rates anytime in the last 35 years, you most likely got a better than average rate and/or paid points in order to lower your interest rate.
 
Here is a graph I made from information provided by ITC Title Company with regards to interest rates:
 
 
You can see that rates are the lowest they've been since pre-1965. These incredible interest rates coupled with Big Bear lakefront property values having declined approximately 35-40% since 2007, it certainly seems like an opportunistic time to buy.

Mortgage interest rates approach all-time lows!

With the stock market showing some vulnerability this week, interest rates benefitted with declines of almost a quarter point in 30 year fixed conventional loan rates. This spring, rates were pushing 5% and as of this morning, Wednesday, August 3, the national average was 4.37%.
 
It wouldn't surprise me to see more investors move their money into the housing sector as rates are low and there seems to be fewer other investment options that seem worthwhile. With Big Bear property values approaching 2001 levels, it seems the time to "buy low" may be now. Otherwise, your investment options are reserved for a stock market that is suspect, gold which many believe is the next big bubble, or treasuries yielding next to nothing.
 
The question remains if low interest rates and prices are enought get prospective buyers off the bubble. Only time will tell!


Cash purchases of Big Bear lakefront homes are on the rise

Just a quick, interesting factoid that I looked into after a recent conversation with a client...
 
Since the beginning of 2010, cash sales of Big Bear lakefront properties have made up 46% of purchases. But if you look at sales in the calendar year of 2011, so far 83% of all Big Bear lakefronts have been cash. This compares to 34% of all non-lakefront sales being cash buys. 

Latest lakefront sale shows impact of distressed sales on the market...

Just this week, a Big Bear lakefront short sale located in Eagles Knoll Estates, one of Big Bear's nicer lakefront communities, closedescrow at below market value, further suppressing lakefront prices. Because of the continued negative impact of distressed properties on the market, prices of Big Bear lakefronts have continued to be under siege, making this the best buying opportunity for as far back as any real estate professional I know can remember.
 
42062 Eagles Nest Drive sold for $650,000. It is a 4 bed, 2.5 bath home at 2500 square feet with a 2 car garage. Built in 1990, the home had an open floor plan and a nice woodsy feel to it. Overall, the home was in very good condition. The sales price of $260/square foot is well below the 2010 average of about $375/square foot.
 
Of the three true-lakefront properties to sell this year on the lake, one was a short sale and another a foreclosure property.The traditional non-distressed sale sold at $472/square foot, whereas the foreclosure sold at $197/square foot and the aforementioned Eagles Nest short sale at $260/square foot.
 
This disparity in pricing shows the downward pressure foreclosures and short sales have on the Big Bear lakefront real estate market. Banks are still selling at discounted prices forcing traditional sellers to follow suit in the pricing of their properties. Lakefront homes are selling at pre-2002 values with regards to price per square foot making lakefronts more affordable and historically a great value for buyers. Coupled with still historically low interest rates, and considering that the lake is ABOVE full, (Yes, I watch water spilling over the top of the dam yesterday!) this summer may be a very opportunistic time for prospective buyers of Big Bear lakefronts homes.
 
To see more recent sales of Big Bear lakefronts, click here.
Do Big Bear lakefront price declines have anything to do with home size?
 
With lakefront prices dropping substantially in 2010, one might wonder if this price decline might reflect smaller, less expensive homes having been sold rather than a true decrease in property values.
 
If you compare the median price of Big Bear lakefront homes sold in 2010 to their overall average size, you can see that there is a relationship between the two. The average size of lakefront homes purchased last year was down about 25% from the previous year, yet the median sales price fell almost the same decreasing 30%.
 
This suggests that much of the decline in home prices can be attributed to less expensive smaller homes being purchased on the lake last year rather than the larger estate-like lakefront properties we had been accustomed to selling during the market's peak.
 
So far, this year's lakefront sales have averaged just over 1.4M with the homes averaging about 4000 square feet in size. This may be a sign that 2011 will see a shift towards larger, more expensive homes on the lake being purchased as buyers take advantage of a market heavily weighted in their favor.

2010 Showed Continued Drop in Lakefront Prices

The price per square foot of sold Big Bear lakefront homes declined for the fourth year in a row, falling well below 2002 levels. These continued price declines  have  resulted in one of the strongest buyers markets in recent history.  
 
Although prices are down, the Big Bear lakefront real estate market is showing signs of improvement.
 
The inventory of lakefront homes is down while the average days on market dropped sharply in 2010, California has been seeing a surge in the purchase of higher-end luxury properties, and with Big Bear Lake currently near full, the scene has been set to see somewhat of a market rebound for lakefront properties.
 
Although there is still an overall air of uncertainty as to what direction the Big Bear lakefront real estate market may take, this year seems to offer more reasons to believe a change may be in the making than in years past.
 

Big Bear Lake fills up from record storm...

After a week of precipitaion in Big Bear and a recorded 7 inches plus of rainfall, the Big Bear Municipal Water District is releasing water from the dam in preparation of future snowmelt filling the lake completely.
 
As of Monday, December 13th, the lake was down almost 5 feet. Currently Big Bear Lake is about 12 inches from full and the BBMWD plans on letting enough water out of the lake to keep the lake steady at this level. The reason for keeping the lake a foot from full is to moderate incoming watershed and protect low-lying homes in the east end from flood concerns.
Precpitation is always good news for Big Bear and Big Bear real estate. The lake levels are traditionally seen as an indicator of the valley's environmental well-being. It was drought that caused the Bark Beetle problem a few years ago and a big precipitation year means a greener, more attractive spring and summer.
 
For Big Bear lakefronts in particular, a full lake not only makes homes and the lakefrontage itself more attractive, but it also quells fears of the lake drying up. As unrealistic a scenario as a dried up lake might be, you would be surprised how many potential buyers of lakefront homes consider this a distinct possibility. 
 
For more information and a history of lake levels, you can visit my FAQ page!
 


Big Bear lakefronts for sale are spending fewer days on market...
 
One of the more dramatic trends that has occurred in the Big Bear lakefront home market this year has been the number of days properties were on the market before selling. Lakefronts have been selling remarkably faster than the previous years, with the current average DOM (days on market) being just over 100 days whereas last year that number was nearly 175 days. More noticably, the median DOM is a mere 30 days compared to nearly 175 days the previous year.
 
What can explain this dramatic drop?
 
    
 
It seems that Big Bear lakefront home owners have become much more motivated this year to sell their homes, listing them at aggressive prices in order to get them moved quickly. Equally as infulential have been lakefront foreclosures, which often are priced to sell within days of listing.
 
The message here is two fold:
 
First, if you are in the market to buy a Big Bear lakefront home, when a property is priced right, being the most desirable real estate in Big Bear, it will sell quickly. You need to make a strong offer quickly to "be in the game". It is important to be pre-qualified by a lender if you will be getting a mortgage. If you are paying cash, you will need to have "proof of funds" ready to present with your offer. This can be a letter from your bank verifying you are able to liquidate assets up to the amount being offered. A copy of financial statements showing liquidatable accounts with sufficient funds to purchase the home will work as well.
 
Secondly, if you are a seller, one needs to realize that in today's market, you need to be priced aggressively in order to get sold. When selling a property, you are always trying to find a balance between getting the highest offer possible while not spending an extraordinary amount of time on the market. Whatever price you choose, it is important to realize that the longer the time your home stays on the market, the better the chance it will be affected by market forces.
 
If prices trend upward, you're in luck. If they trend downward, then listing at that higher price will certainly cost you. In today's market, it's anyone's guess, but over the last few years, listing at a high price hoping for an offer has certainly hurt more sellers in the long run than helped them.
 
(If you have any questions or comment about this post, please email me at blog@zamoyta.com !)


November 1, 2010
 
What time of year is busiest for Big Bear lakefront home sales?
 
Many people believe that Big Bear lakefronts only sell during summertime. After all, that is when the focus is on the lake, not the ski resorts! That being said, you might be surprised to see that lakefront sales are more consistent year-round than most people think.
 
The graphs below show the number of sales per month and per quarter. This data represents lakefront sales as reported in the Big Bear MLS from 2002 to present.
 
                  
 
Keep in mind that these sales are closings. Usually, that means the property went into escrow 30-45 days prior to the reported closing date. So it is the people looking at property and making offers in July and August that are resulting in September and October sales. Conversely, it is the lack of people looking for lakefronts when it gets colder in November and December that result in the lower number of sales of Big Bear homes seen in January and February.
 
In general, you can see a slow rise in lakefront property sales from January though October, then sales tale off heading back into the new year. Although summers are, in fact, busier for Big Bear lakefront home sales, you can also see that there is really no annual dead period for lakefront sales.

September 1st
 
Recent Big Bear Lakefront Activity
 
Seems like the sale of Big Bear lakefront homes is finally starting to pick up. After a slow start to the year, we've seen a few properties on the water close recently while pending lakefront sales are suggesting interest in the lake is the highest it's been all year. 
 

Latest Sales

Address

Sold Price

Beds

Baths

Square Ft.

41346 Condor

$1,360,000

4

3.5

2962

41988 Eagles Nest

$975,000

3

2

2154

39832 Lakeview

$995,000

4

3

2825

39997 North Shore

$1,549,000

4

3.5

5484

In escrow

Address

List Price

Beds

Baths

Square Ft.

136 Round

$1,150,000

3

1.75

1712

39592 Forest

$1,250,000

3

2

2274

159 N Eureka

$1,800,000

4

3.5

3889

483 Cienega

$1,189,000

4

3

2574

 

 

 

 

 

 

August 31, 2010
 

With summer coming to a close, Big Bear lakefront sales have proved to be a little slower than expected. We have had 9 lakefront sales so far this year, compared to the 14 lakefront sales we had at this time last year.  This dip in sales is not exclusive to the lakefront market. In same month comparisons, the overall real estate market saw a 25% drop in sales in July and 30% in August.

 

Although sales have been sluggish in the overall market, the rate of decline in prices has slowed significantly. This suggests that buyers are still looking for bargains while sellers are holding more firmly to their list prices. The winner of this standoff will most likely determine the future direction of home prices.

 

On a more positive note, we have seen a few lakefronts go into escrow just in the past few weeks. Looking at the lockbox activity of my personal lakefront listings, showings have been increasing lately, and traffic on my website has been the busiest it’s been all year.

 

Last year, the market’s busiest months for closings were October and November. Perhaps we are setting up for a big fourth quarter!



August 30, 2010

With summer coming to a close, Big Bear lakefront home sales have proved to be a little slower than expected. We have had 9 lakefront sales so far this year, compared to the 14 lakefront sales we had at this time last year. This dip in sales is not exclusive to the lakefront market. In same month comparisons, the overall real estate market saw a 25% drop in sales in July and 30% in August.

 Although sales have been sluggish in the overall market, the rate of decline in prices has slowed significantly. This suggests that buyers are still looking for bargains while sellers are holding more firmly to their list prices. The winner of this standoff will most likely determine the future direction of home prices.

On a more positive note, we have seen a few lakefronts go into escrow just in the past few weeks. As well, the office has been quite busy as of late. My lockbox showing records have also confirmed that there have been more showings lately and my website traffic is as high as it's been all year.

Last year, the market’s busiest months for closings were October and November. Perhaps we are setting up for a big fourth quarter!
 
Looking at prices, here are a few graphs that put into perspective the latest in Big Bear lakefront real estate values. With prices back at 2003 levels and interest rates at 4.5%, it sure does seem like a buyer's market.
 
     
 

June 21, 2010

Big Bear lakefront homes in escrow...

Summer is off to a quick start with three Big Bear lakefront homes for sale  going into escrow over the past few weeks. Seems like there are a few people looking to be moved in by the Fourth of July!

39997 North Shore Drive ~ 4 bed, 3.5 bath, 5484 sf, 4 car garage, built in 1991, true log architecture 
List Price: $1,549,000

41346 Condor Drive ~ 4 bed, 3.5 bath, 2962 sf, 2 car garage, built in 1982
List Price: $1,397,000

39832 Lakeview Drive ~ 4 bed, 3 bath, 2825 sf, 2 car garage, built in 1970
List Price: $999,999

Average list price per square foot: $369
Median list price per square foot: $354

From left to right below ~ North Shore, Condor, Lakeview

                  

June 16, 2010

Property values in Southern California on the rise

Just read an article in the LA Times stating that not only are sales up, but that May prices are up 22.5% over May of last year. If you look at the accompanying graph, you'll see there's a definitive up trend in Southern California home values that hasn't been seen in quite some time.

Just more data suggesting that the market may have taken a definitive turn. 

The article claims home buyer tax credit and extremely low interest rates may be responsible for the significant up-tick in sales and prices.

Being that Big Bear's real estate market depends on the health of the entire southland's market, this is certainly a good sign. As property values recover further I'm suspecting we'll see banks listing their foreclosed homes at more competitive prices. 

When the real estate foreclosure crisis began, it seemed banks were letting properties go at bottom dollar. Now that banks have stabilized, I am seeing them listing their properties at much closer to market value. There doesn't seem to be the rush to unload their inventory as quickly as there had been in previous years.

So perhaps seeing moreBig Bear lakefront foreclosures might not hurt values as much as I've previously expected. Only time will tell. 

But asI have mentioned previously, between the low number of existing Big Bear lakefront homes for sale, interest rates approaching their historical lows, and sales steadily expected to increase heading into our busy summer buying season, we just might see conditions this summer where things become less of a buyers market as market forces stabilize


June 15, 2010

Big Bear lakefront real estate market positioned for a busy summer

With June half over, schools getting out this week and many people planning their summer vacation in the mountains, we are fast approaching our busiest time of year for home sales. You can see from the 2009 internet activity graph below that interest in Big Bear lakefront homes for sale jumps in late June and stays high through September.

 

This supports similar information found in a 10 year history of sales of the overall Big Bear real estate market which shows the busiest months for home purchases being July, August, and September.

This year brings a few other factors that should specifically benefit lakefront home sales. The lake is the fullest it has been since 2005 (down only 2' 5"), mortgage interest rates are incredibly low hovering just under 5%, and prices have dropped considerably adjusting back to about 2003 levels.

June 1, 2010
 
A Monthly Update of the Big Bear Lakefront Real Estate Market 

With real estate prices having posted record declines since the market’s turn in early 2006, it is nice to finally see some signs that the market may be bottoming out. The number of Big Bear lakefront homes currently for sale is slightly lower than last year, the number of sales is up moderately, and the lake should be near full by mid-June. Over the last few weeks, we have also seen interest rates drop almost a half point, with today’s mortgage rate posting at 4.85% for a 30 year fixed conventional loan.

Although it is nice to see all these positive signs suggesting a market recovery, the overall outlook for Big Bear lakefront real estate remains uncertain. This is mainly due to the somewhat unpredictable and continued downward pressure of distressed properties on the lakefront market.

Lakefront short sales and foreclosures have sold for significantly less than traditional listings over the past 12 months. These “discounted” properties suppress prices as appraisers and buyers alike will use them to justify lower values. Over the past year, lakefront short sales and foreclosures have averaged $307 per square foot while traditional lakefront sales have averaged $457 per square foot.

Currently, there are no short sale or foreclosure lakefront listings in the Big Bear MLS. But looking at distressed lakefront properties using an on-line resource, there are currently three pre-foreclosures, three properties with an auction date set, and one bank-owned property currently for sale. Comparing these numbers to where we were at last year, it is evident that we are going to have more distressed sales on the lake this year than last year.

Most likely, these distressed Big Bear lakefront homes will most likely keep prices from rebounding. But with the lake being near full, the attractively low interest rates, and the fact that we are heading into the busiest lakefront buying season of the year, it is not unreasonable to remain optimistic that we will see a competitive buying environment that keeps prices stable and home inventory low.

 

May 28, 2010

Big Bear lake levels continue to rise

 

 
After a winter in Big Bear that featured more than twice the average snowfall and a single storm the size of which hadn't been seen in over 40 years, Big Bear lake is now reaping the benefit as the snowmelt runoff has been filling the lake at a rapid pace.
 
Currently, the lake is down 2'8" from full, which is the highest level we've seen since April 2006. With several feet of snow still present on the sun protected south shore mountainsides, it appears the lake will continune to fill for at least the next several weeks. The lake is up from a 2010 low of 7'6" from full and a 12 month low of 8'3" from full.
 
For Big Bear lakefront homes, a lake that is more full is always a positive thing. Although many lakefront home owners will have to fish their dock's walkway from underwater and move it towards the new, higher shoreline, it is a small burden to bear in exchange for the security of a higher waterline. Many lakefront properties have their lake access restricted when lake levels drop substantially. When the lake approaches full, nearly all Big Bear lakefronts have convenient accessibility to the lake.
 
For those with Big Bear lakefront homes for sale, a higher watermark makes the shoreline more attractive and results in fewer concerns regarding receding lake levels. It is certainly a more optimistic time to sell a lakefront home when the lake is full.
 
However you choose to look at at, the lake will be near its prime this summer and activity on the lake should be the best it's been in years.