Consequent to my last post celebrating how the average and median sales prices of Big Bear lakefronts showed a 19% and 23% increase, I wanted to share some seemingly contradictory numbers regarding the average and median sales prices of Big Bear waterfront homes. Take a look at the historical graph below of Big Bear lakefront real estate prices.
Although we saw a steep rise in price per square foot of sold lakefront homes this past year, the average sale price dipped slightly while the median sale price slid about 10%. What explains this divergence in the sales figures?
The reason is simple. 2013 saw far fewer of the more expensive luxury lakefront homes sell than in 2012. In 2012, we saw 4 lakefront home sales over 2 million dollars and one over 3 million dollars. In 2013, we saw only one waterfront home sale over 2M. The next highest lakefront home sale closed at 1.375M. With the absence of all the 2M+ sales, the average and median sales prices took a dip.
Does this mean lakefront home values went down? No! In fact, this is a good example of why price per square foot is most often a better indicator of what the current market values are and what the overall market is doing. Because we have so few lakefront home sales each year, a few outlier sales can really sway the data one way or the other. The price per square foot measures divide the sale price by the square footage, the size of the house, to lessen this effect.
So what explains why there were so many fewer high-end lakefront sales compared to 2012? The answer lies in the listings. 2013 saw a huge drop in the number of lakefront homes listed. In particular this year, we saw very few choices in the 2M+ range that were attractive to buyers in this range. Through conversations with my associates, there does not seem to be a lack of buyers in the 2M+ range, but rather a lack of competitively listed homes that meet these buyers criteria to have come on the market.
So the drop in average and median sale prices in Big Bear lakefront real estate this year shouldn't be a reason for concern. The price per square foot measures offer a more accurate look at what the market is doing. So long as the buyer demand stays high and the inventory stays low, we should see the market continue its upward trend through 2014.