I received a comment regarding the extent of the drop in sales of Big Bear homes. A reader was startled that there were 36% fewer sales this November as compared to last November and felt this might be a portent of a significant market change. There is no doubt that after 8 years of a bull market in Big Bear real estate that the market is shifting. But will the market "crash" like in 2008 - 2010? Let's look at the numbers to put things in perspective.
Here's a graph that shows the rate that Big Bear home sales have slowed. Because sales are seasonal in Big Bear, I compared the sales from a particular month to sales from that month from the previous year.
Solely looking at this graph, you would think that the shift in the Big Bear real estate market suggests a dramatic drop might be happening. But let's put the sales for the year in perspective by looking at a longer trend shown by this other graph. (I projected the sales for 2018 through the end of the year. Being that we're in December, it should be a quite accurate estimate.)
Considering this longer term look, we see that 2017 was an exceptional year for sales and that his year's drop brings our market back to where things were in the strong recovery years of 2015 and 2016.
Ultimately, it's no secret that the market is shifting. But there are two factors which suggest we are reverting back to a more normal market rather than towards a significant market drop: interest rates have risen but are still at historically low levels, and the supply of homes for sale is still low which suggests prices should continue to rise, albeit perhaps at a slower rate. So long as rates stay low and the number of homes for sale stay low, the market will retain its stability. There are no other known market conditions, like the sub-prime loans in 2008, that would suggest a more exaggerated shift may be happening. A reversion to the norm is a much more likely prognosis for the Big Bear real estate market.
With our second winter storm moving through the area today, we should see a lot more activity in the real estate market as many holiday visitors will become Big Bear home buyers. I hope this will result in a jump in the sales numbers and a strong start in 2019!