I was speaking with an agent from Orange County the other day who asked me about how the luxury home market in Big Bear was faring. I often address lakefront homes as being in a totally separate market because these properties historically seem to move in slightly different ways than the overall market does. But I have never really looked at the luxury home market closely enough to be able to say definitively whether or not this market segment had the same rise and fall as the overall real estate market. My gut, just from seeing individual properties resell, is that the luxury market has either run the same course as the overall Big Bear real estate market or perhaps even saw a slightly more exaggerated rise and fall.
Being that the most widely accepted definition of a luxury property is determined by the price point of the top 10% of overall sales, I ran some numbers to see what the sales figures look like for the top 10% of our market.
As you can see, the luxury market has in fact seen a substantial rise and fall in all price measures since 2003.
If you compare these graphs to the graphs of the overall Big Bear real estate market, you'll see some similarities and some differences. Just like the overall market, the luxury home market has seen increases in the average price and average price per square foot. Yet unlike the overall market, the median luxury home price and price per square foot showed continued declines in 2012.
But if you look at a comparison as to where prices currently stand in relation to 2003, 3 of the 4 price measures for luxury homes are definitively higher, whereas in the overal Big Bear real estate market, only one measure is ahead of where they were in 2003 and that is the average sale price which has stayed relatively the same.
Looking at these numbers, I would say that the luxury market has faired pretty well compared to the Big Bear real estate market in general. That being said, the luxury home market still saw record declines in this down market. No real estate segment was exempt from the greatest decline in values since the Great Depression.
Moving forward, I would predict a quicker recovery in the values of luxury homes. Foreclosures and short sales in the upper price ranges seemed to have declined quicker than in the non-luxury market. Being that distressed properties have been largely responsible for the decline in home values, with there being fewer distressed home sales in the higher end price rance, it stands to reason that prices will likely recover sooner.