Big Changes - Sales and Short Term Rentals
The last few weeks we have had expected and unexpected changes in the Big Bear real estate market. The expected was that the market was going to slow down. How much of a slow down was the question. We are now starting to see how much this slow down is going to be in part of the market. The unexpected part is that sales in the $800+ market is almost as strong as last year. And the real unexpected part of the market is that the county supervisors of San Bernardino have jumped into the STR (short term rental) situation. And jumped in with both feet. Basically all new STR permits in San Bernardino County are put on hold for 45 days. They have issued:
INTERIM URGENCY ORDINANCE NO. 4436
An interim urgency ordinance of San Bernardino County,
State of California, to preserve the status quo and place a
temporary pause on the approval of new short-term
residential rental unit permits.
The news Release is below.
Let's get back to what is happening with sales so far in the second quarter, then I will talk about the STR situation. There are usually several stages to every slow down. We are of course witnessing the first stage of our current slow down with a surprise. The second quarter of sales vs listings is showing a steep decline in sales in the 0-$800,000 market, the surprise is that the $800,000 + market is so far holding close in sales compared to last year. Also we are continuing to see price decreases. Let's look at some numbers. There is currently 317 listings of those 242 are 0-$800,000 of the 242, 90 or 37% have price reductions for an average price reduction of $30,000. Also in the 0 -$800,000 market we have a steady line of sales decreasing the last 3 months where we should have sales increasing. With the first graph we can compare the second quarter sales in 2021 to 2022 and this is what we get. In 2021 we had sales of: April 121, May 138 and June 154. In 2022 we have sales of: April 98, May 76 and so far in June 41. With the third graph we can see because of the price reductions in listings we have an average sales price of $498,000 so far in June. Where in May the average was $514,000 and the peak was in March at $533,000.
When we look at the $800,000+ market we have 75 listings with 34 or 45% with price reductions. Where the average price reduction is $117,000. While we have price reductions like the lower priced market so far, the sales are lower but have stayed close to the same as last year. The second graph shows: 2021 April 32, May 20 and June 23. 2022 April 22, May 18 and June so far 13. Again because of price reductions in the list price we are seeing lower prices in the average sold price. In the fourth graph it shows: so far in June $1,139,000, May 1,192,000 and April we had 1,293,000.
So what we have is the market going through a normal first stage of a correction. With sales and prices going down. We will have to see how far they will go down this summer. With the possibility of a recession and the increase in interest rates the market will continue to be weaker with more pressure for sales and prices to adjust downward.
Now let's address the STR market situation. In the short term this will affect the market in Big Bear but unlike what is happening to Big Bear Lake with the city considering limiting the amount of STR permits overall, this will have minimal effect on Big Bear City and Fawnskin area once the changes are passed. If you look at the changes they are suggesting you will see that they aren't limiting the number of STR permits overall.
Because of the 45 day waiting period this will also slow down the market in Big Bear until the changes are official. Buyers will be hesitant because they could add changes. So until the changes are made official this Ordinance, Inflation, interest rate increases and the possibility of a recession are going to put a lot of pressure on sales and prices to adjust downward.
