By: Melissa McCue

Jumbo loans, also known as non-conforming, are typically loans where the principal balance exceeds the conforming loan limit of $417,000 that is set by Fannie Mae or Freddie Mac, although some areas have higher limits. Jumbo loans have always carried a higher interest rate than conforming loans, until recently. 

In September 2013 the interest rates for jumbo loans were lower than those of conforming loans. Major news sources have analyzed the possible reasons for this occurrence, ranging from the shift showing health and stability in the market to others stating that it is a sign of instability. One article linked the decrease in rates to an increase in the sale of high-end homes, which piqued my interest as to whether Big Bear has experienced any such increase. Since the rate decrease just occurred in September, it seems it would be premature for data to indicate a solid increase. However, I decided to look at sales in different price ranges regardless of whether they are linked to the decrease in loan rates.

Overall the numbers for Big Bear showed very little change in the percentage of sales from 2012 to 2013 in broad categories. For instance, sales over $500k increased just 0.47% from 2012 to 2013. However, when the price range categories are broken down into smaller increments, a larger redistribution is evident.

The chart to the left shows that price ranges are shifting. As you can see, sales under $200k decreased by 8.13% while there was a closely corresponding increase of 7.42% in the $201k - $400k price range, and that trend of upward redistribution continues throughout the rest of the chart. The cause of these shifts is not apparent, but I suspect it is a combination of a market driven increase in prices meeting buyers who have increased confidence in market stability which encourages them to spend a bit more to get the homes that they want.

By: Melissa McCue

Late in 2012 the California Association of Realtors released their Annual Housing Market Survey, one finding in particular that caught my eye was that nearly 30% of all buyers in California paid all cash for home purchases. That was triple the number of the year of 2001, when only about 9% of buyers paid cash. Of course, these numbers piqued my interest as to how the Big Bear area would compare to the state level.

It turns out that Big Bear was slightly above the state numbers, with 35% of home sales being cash deals in 2012. It makes perfect sense that with the tightening of conventional lending, there would be an increase in cash deals. However, cash sales spiked at 32.4% in 2009 (see graph below), at a time when the market was only in its second year of the downturn. That same year, the median home price in the Big Bear area dropped by   -16.60%, then again by -6.87% in 2010 and finally by -16.56% in 2011 before we saw an increase in median pricing of 3.63% in 2012.

Over the years, many investors and second home owners have placed their money in the Big Bear real estate market, either in hopes of realizing investment goals or because of lifestyle choices. Either way, it is encouraging to see that buyers have chosen to invest their cash here, even in a down market, when it is generally accepted that any return on investment would be long term. 

The decision to purchase a vacation home is not always driven primarily by numbers, if so,  home owners in the Big Bear area would be focused on cash flow positive investment property with low vacancy rates. Instead, I live on a street where the large majority of houses are intentionally left vacant and are therefore cash flow negative.  Second home buyers consider not just monetary investment, but also lifestyle, because it has inherent “value”. It’s “price” vs. “value” and while both are important, second home buyers do not always weigh them equally when purchasing. Next time that you think of buying or selling in the Big Bear area, remember that we are a unique market, where financial decisions can be strongly tied in with lifestyle choices. Having a real estate agent that understands this market is important and I make it my business to do just that. Call me at (909) 855-4898.

By: Melissa McCue

Since 2008 many homeowners have delayed selling because, let’s face it, competing in a market flooded by distressed sales at rock bottom prices is certainly not ideal. Fortunately for homeowners, standard resales in the Big Bear area solidly represented the majority of transactions in 2012. 

The numbers are even more interesting when dissected by area, with SFR sales in Big Bear Lake (including Moonridge & Fox Farm) at almost 77% standard resale. As the number of distressed sales continues to decrease we should expect to see prices increase as they continue to become more driven by negotiations between buyer and seller, rather than being driven by lending institutions. California Association of Realtors Senior Analyst, Oscar Wei wrote that “REO properties are sold substantially below market price because they are generally not well-maintained, and may have title clearance issues that are not desirable to home buyers. Also, since banks and lenders are not in the business of property management, they try to get rid of the inventory faster by reducing prices to below-market levels.” 

Whether driven by the decrease in distressed sales or not, an increase in prices is already underway. The 2012 year end numbers showed a gain of 3.6% in median sales price in the Big Bear area. This is another piece of encouraging news, as it is the first price gain in the Big Bear area in five years.  

If you have been waiting to sell your home and think that now may be the time,  please contact Melissa McCue at (909) 855-4898.

By Melissa McCue

The celebration of the New Year in many ways symbolizes hope and change, and this year we have some numbers that can give homeowners in the Big Bear area a real basis for that hope. The 2012 sales volume for single family residential (SFR) units came in at an increase of 28.6% over 2011. This is far above the California Association of Realtors projected statewide average increase of 5.1%.

The increase in sales volume is a positive sign, but to give an indication of real market change it should be accompanied by an increase in price, and for the first time in 5 years, it is! The median SFR price  for 2012 came in at an increase of  3.63% over 2011.

If I were a gambler, I would bet good money that the number of units sold and the increase in prices would have both risen even more if our inventory had not been so low. Since mid-year 2012 it has steadily declined from around 500 homes to around 350 homes.