Since late 2011, we have seen the real estate market in Big Bear claw its way back from the bottom of the worst drop in home prices since the Great Depression. For the last three years, with the help of record low interest rates, we have seen prices appreciate at healthy double digit rates as buyer demand increased while the inventory of Big Bear homes for sale neared all time lows. This healthy recovery was predicted by few but welcomed by all.

It's been almost three years since the turn-around began and we're just beginning to see a leveling off of the market. Sales are slowing and the number of Big Bear homes for sale is starting to rise. This is reflected in the figure below showing months of home inventory since the 2011 market bottom.

Big Bear Home Inventory

A normal real estate market is said to have about 6 months of inventory. Last month's 7 months of inventory is slightly above average but is still a far cry from the 13 months of inventory we saw in 2011.

Although sales have cooled and inventory has risen, prices are still appreciating per the figure below.

Big Bear Home Prices

Although this figure shows continued appreciation, from an economics perspective, prices will likely cool down somewhat if the number of Big Bear homes for sale remains high and sales remain slow.

These slowing trends are not unique to Big Bear real estate as they are being seen on a statewide level in most other California markets. I don't see these trends as reason to panic nor do I see a likelihood of prices falling. Like most other economists are predicting, this is a cooling down to what has been a surprisingly hot market over the past few years. Many real estate professionals are expecting appreciation of homes to return back to the "normal market" rates of approximately 6%-8% annually.