1. Banks or REO sellers will take a lot less than the list price.

2. The listing price for a bank owned property is going to be aggressive.

Click here to see embedded video.

The fact is bank owned homes in Big Bear are selling closer to the list price than organic sales, 97% vs. 95%. Many times, banks will price their properties so aggressive that they receive multiple offers that go over full price.

Also, just because a property is a bank owned does not mean the price is in line, or aggressive. Banks, like many sellers, make the mistake of overpricing their properties.

The key to both of these assumptions is look at each one individually to determine the correct market value. That is good advice for buying any property in Big Bear.

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First off, home sales in Big Bear for 2009 through October.

Some key takeaways -

• Bank owned properties dominated what was selling in the first quarter of the year, but have since dropped off
• When the total sales dropped, organic sales rose while bank owned sales dropped along a similar pace.  Seems to me the market pace is following the bank owned sales more than the organic sales.  If you compare the lines of bank owned and the total sales, they are almost identical
• As reported earlier this month, Sept. home sales in 2009 were the highest we’ve seen, not only this year, but over the past 2 years
• Short sales make up a small amount of what has closed escrow

No huge buildup of bank owned properties as nearly all of the bank owned listings that have come on the market have sold.

Year to date, there have been 279 bank owned listings hit the market in Big Bear, and 269 bank owned sales.  So, the market seems to be keeping up with the pace of bank owned listings. As I stated here before however, there are 100’s of properties in Big Bear that are in pre-foreclosure (notice of default or notice of sale filed).  What happens to these properties over the next 6-12 months will have a lot to do with the future of the real estate market in Big Bear.

As referenced in the top chart, organic sales are making up the majority of what is selling in Big Bear this 2009.  By organic sales, I am referring to anything besides bank owned or short sales.  YTD, they make 53% of what is selling, followed by bank owned properties at 38%, and short sales at 9%.

But, when compared to what is currently under contract or in escrow, organic sales only make up 42% while bank owned properties are at 19%. Shockingly, short sales make up 39% of what is currently in escrow. This will be interesting to see how many of these actually close or, rather, end up going back to the bank.  The more short sales that close, the less properties that go back to the bank – that would be good for the market.  But, if you know anything about short sales, a good percentage of them never close escrow.

Lastly, those properties currently for sale.  Organic sales should dominate what is selling as they make up a huge percentage, 85%, of what is for sale.  Bank owned properties on the other hand, make up only 7% of what is for sale yet 38% of what has sold this year.  This is important to keep in mind if you are buying one – you are bound to run into competition from other interested parties as these are the hot ticket. Short sales round it out at 8%, more in line with the amount that is selling.

That’s about enough stats for one day.  If you would like to know any other stats that I did not cover, like days on the market, average sales price, median price, list price to sales price ratio, or any others, feel free to leave a comment here and I will see what I can do.

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* Note: The charts above represent single family homes in the Big Bear area, including Big Bear Lake, Big Bear City, Moonridge, Fox Farm, Sugarloaf, Erwin Lake, & Fawnskin. Data courtesy of the Big Bear MLS. These numbers do not include raw land or condos nor does it include homes in the Big Bear MLS that are located out of the Big Bear area.

There’s been a dramatic shift in the number of vacant land sales over the past several years.  In 2003, our MLS recorded 602 total vacant land sales. ‘04 we had 514 vacant land sales.  ’05 we had 482.  It wasn’t until the turn of 2007 that we saw a dramatic drop in number of sales.  We went from 365 total vacant land sales in 2006 to 186 in 2007.  And to top it off, 2008 dropped sharply with only 72 total vacant land sales.  It’s easy to understand as land values increased, the number of sales decreased.

Prices on average for vacant land rose all the way through 2008 but turned for the worse in 2009….the average sales price is down over 50% from last year.  To say it’s a bad time to sell would be an understatement.  So if you’re in the market to sell a vacant lot, don’t sell it unless you have to sell. And if you have to sell, price it aggressively so it stands out as a good deal.

As inventory levels decrease, demand for vacant land will increase…and as they say “they’re not makin’ any more land”….but it might take a while before we see the kind of activity we saw in 2004 (in both price and number of sales).

The foreclosure filings in September 2009 (180) were down 18% from August 2009 (219).  Year over year, however, filings were up 122% from the September 2008 (81) numbers.

Good news – we are seeing a slow down in the foreclosure numbers.  Bad news – the numbers are still too high to be overly excited about the market getting better.

Foreclosure filings are made up of three parts – Notices of Default, a recorded document that starts the foreclosure process. Notices of Sale, a recorded document that sets the date for the Trustee Sale.  Trustee Sales, properties that go back to the bank or sold to third parties, generally on the court house steps.

Here’s how the foreclosure numbers broke down for September 2009.

Notices of Default (NOD) - 72 total, down 28% from August but up 200% from September 2008.

Month over month, this was a big drop.  Given NODs are the start of the foreclosure process, any consistent reduction in the amount of NODs filed could be the reprieve everyone is looking for.  Let’s face it, until the foreclosure numbers slow down, the real estate market recovery is still a big question mark.  Once we consistently start to see these numbers start to shrink, we will see a slow down of bank owned properties hitting the market in Big Bear.

Notices of Sale (NOS) – 60 total, down 19% from August but up 140% from September 2008.

This is the second straight month that the NOS numbers have dropped.  One explanation for this decrease is the amount of banks that are trying to work with homeowners in foreclosure.  Banks would much rather sell the property as a short sale or modify the loan to keep the homeowner in the property than to take it back through foreclosure.  Taking a property back involves more money and liability to the bank, something they don’t want.

Trustee Sales (Properties that went back to the bank) – 48 total, up 9% from August and up 37% from September 2008.

This is pretty consistent for what we’ve been seeing the whole year, around 40 properties per month in Big Bear are becoming bank owned. These properties will inevitably hit the market for sale.

What can we expect from the near future? There are still hundreds of properties in Big Bear in foreclosure limbo-land, those properties that are in default or even have a notice of sale filed, but are not yet bank owned.  Many call this shadow inventory.  I’ve seen banks postponing the sale dates on properties for over 6 consecutive months.  These properties should be bank owned and on the market for sale, or even sold by now, yet they are not.  I also know one Big Bear homeowner that has not made a payment in over 6 months and the bank has not filed a notice of default yet.

The fact is there are so many hands getting involved with the real estate market (read =government), and with these kind of delays in the foreclosure process, it is hard to draw any concrete conclusions.  One thing’s for certain, it is still going to be a bumpy ride.

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And the most common statements or questions I hear relating to this are -

“We don’t want to give it away”

“Let’s start higher, we can always go down, can’t go up.”

“Buyers are going to want to low-ball the price, so why not leave some room?”

My recommendation to sellers is always to price firm, regardless.

I understand not wanting to give it away.  In fact, I’ve never met a seller that wants to give their home away.  In this market though, the selling prices are such that many sellers feel they are giving it away.

Today’s buyers are all about getting a good deal, and the asking price is the first thing they are looking at, even over the location and property amenities.  So, if the price is out of line, most buyers today are not even going to look at homes that have too much cushion or flexibility in the price.  And sometimes the difference between a properly priced property and an overpriced property is the cushion the seller has in place. My advice, remove the cushion.

As for starting higher on the price and having flexibility to come down later or leave more room for negotiation, you might be waiting a long time for this to happen.  The average list price to sales price ratio in Big Bear for today’s sales is 95%. That means if you are correctly priced at $100,000 for example, you can expect to sell for $95,000.   And at $500,000, you could expect to sell for $475,000.  The problem is, most sellers will price these same properties at $125,000 or more and $550,000 to $600,000 respectively.  If you leave 10% or 20% in the price, you will most likely not sell.

Remember, you don’t want to miss the buyer train. The stats show that if you initially overprice your home, you will be chasing the market down, eventually selling for less than if you priced correctly in the beginning.  I’ve seen this happen many times to sellers.

And low-ball offers? As a seller, you can determine what you want to sell the property for, not the buyer.  What would you rather have, 10 low ball offers with a chance of getting someone that will give you your price, or no offers at all with zero chance of getting the price?  Or, to put it another way, would you rather dance with somebody or nobody at all?  Unfortunately today, many sellers are sticking to the latter, with little or no chance of selling.

Properties that are priced firm and correctly stick out like a shining star to buyers and other real estate agents. That’s why they get the buyers’ attention, the showings, and ultimately, the sale. How else can you explain some listings getting 15-30 showings per month, while others in the same area are getting less than 5?  Or how some listings sell in 7-30 days will others take 180 days or more? Agents will claim it is their brilliant marketing, but it really all about the price.

Related Posts

Actions Speak Louder Than Words In Real Estate

The Right Asking Price Makes All The Difference

What Do You Mean We Already Have An Offer?

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But looking from a different angle, I thought I would take a look at the supply side of the equation and see if there’s anything that stands out as far as inventory levels (what’s currently on the market).  The information I got was directly from our MLS, but the data encompasses all residential listings (including Onyx Summit and homes out of the Big Bear area that are reported through our system)…so the numbers might be slightly higher from what Tyler reports but it’s more inclusive of what the Big Bear Association of Realtors reports.

What Sticks Out to Me

Looking at the graph, 2009’s residential inventory has been relatively flat compared to previous years.  As a matter of fact, we’ve seen a 25% drop in the number of homes currently on the market compared to last year.  Typically during the Summer months, the inventory builds up until late September or early October and new listings slow down as the holidays approach so this is rather surprising.

You would expect inventory levels to rise in a slower market, not hold steady.  I assume there’s a couple reasons for this:

1. If a Seller DOESN’T HAVE TO SELL, they won’t sell in today’s market.  I’m sure there’s plenty of Big Bear property owners who would like to sell, but if they’re not happy with the realistic price of their home they’ll hold off until they see more stability in the real estate market and prices level off.
2. Bank owned properties in Big Bear are selling quick so they’re not affecting the numbers that much.  They’re on and off the market within 30 days if they’re priced aggressively, so you can’t blame the banks with the argument that they’re “flooding the market”.

The X Factor

There’s been a lot of talk lately through the media about all of the “shadow inventory” that’s going to be coming on the market over the next six months to a year. According to the theory, lenders are sitting on hundreds of thousands of foreclosed homes throughout the country that they have not resold or put up for sale yet. The fear is that the amount of inventory that hasn’t hit the market is much higher than anyone really anticipates or is measuring.

I’m not sure if this really applies to Big Bear. Yes, I think there’s a lag time between when the bank takes a property back and when it hits the market, but I don’t think there’s a huge amount of local inventory that the bank currently owns and is sitting on it.  They want to get rid of that liability as quickly as possible to make their books look stronger.

The big question mark in my opinion is what happens to the Notice of Defaults in Big Bear over the next year, which are still at record highs, and how it affects the inventory levels at that time.  Only time will tell, but I would expect the inventory level to rise next Spring.

In typical fashion for today’s volatile real estate market, September home sales in Big Bear hit a 2 year high with 92 homes sold.

Home sales rose 19% when compared to the August numbers (92 v. 77), and were up 12% when compared to September 2008 (92 v. 82).

The peak selling season is July thru October so increased sales are not to be unexpected during this time frame.  But, the last 4 months have also been the strongest stretch we’ve seen in quite a while.

I believe this increase in sales is a direct response from lower priced bank owned properties that are hitting the market.  That, along with organic sellers starting to get realistic on their asking price, has increased sales.  If prices were higher, sales would be lower.

33, or 36%, of the 92 home sales in Big Bear were bank owned. This is a just a touch higher than last month.  7 of the sales, or 8%, were short sales, which is 3 more than last month.

That means 52, or 56%, of the sales in September 2009 were “organic”, or traditional sellers – another strong month for them, though this number has been slowly decreasing.

Bank owned properties currently only make up 6% of what is for sale in Big Bear, yet they continue to make up between 30% to 40% of what is selling every month.

Big Bear Home Prices

The median sales price in September 2009 was on the rise.

It rose a modest 9% from the August number ($190,358 vs. $170,400), though it is still down 15% from the September 2008 median ($190,358 vs. $224,500).

Prices continue to be up and down, depending on the month.  With limited sales, this can be expected.  One thing is for sure though – the lower prices are driving the activity level of buyers. Without the lower prices, the buyers would still be on the fence.

There is nearly $120,000 difference between the median asking price of $310,000 and the median selling price of $190,358.

Homes Currently on the Market

This is the most important number for the Big Bear real estate market right now. The number of listings for sale in Big Bear is down nearly 300 homes, or 27%, from last year.

This is important for several reasons.

One, the lower the amount of inventory means less competition for other sellers on the market.  And two, limited selection for interested buyers.  If this continues, it should help stabilize prices and maybe even a rise for selected properties.   But, my previous posts about the large amount of properties in foreclosure show that there is still way too much uncertainty in this market.

Big Bear Home Sales – Thru Sept 2009

Third Quarter Comparison (7/1 – 9/30)

Year To Date Comparison (1/1- 9/30)

Big news here as this is the first sign that 2009 may end up better than 2007 sales.  If it does hold up, it looks like 2007 and 2008 will be the low point for home sales.  Prices however, may be low for the next 1-2 years.

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* Note: The charts above will be updated on a monthly basis. It represents single family home sales in the Big Bear area, including Big Bear Lake, Big Bear City, Moonridge, Fox Farm, Sugarloaf, Erwin Lake, & Fawnskin. Data courtesy of the Big Bear MLS. These numbers do not include raw land or condos nor does it include homes in the Big Bear MLS that are located out of the Big Bear area.

Related Articles

Big Bear Home Sales – August 2009

Big Bear Home Sales July 2009

Big Bear Home Sales – June 2009 And Second Quarter 2009

The foreclosure filings in August 2009 (219) were down 10% from July 2009 (244), but were still up 27% from August 2008 (173).

Foreclosure filings are made up of Notices of Default, a recorded document that starts the foreclosure process, Notices of Sale, a recorded document that sets the date for the Trustee Sale, and lastly, Trustee Sales, properties that go back to the bank or sold to third parties.

Here’s how the foreclosure numbers broke down for August 2009.

Notices of Default (NOD) - 101 total, up 2% from July and up 37% from August 2008.

The NOD have been hovering around 100 for the last 7 months, which means every month nearly 100 property owners in Big Bear are starting down the foreclosure road.  Sad, but very true.

Until we see this number start to shrink, we will continue to see bank owned properties hitting the market in Big Bear.

Notices of Sale (NOS) – 74 total, down 27% from July but up 15% from August 2008.

As you can see from the graph above, this was a pretty sharp drop from the 101 NOS we saw last month, the highest we have ever seen I might add. The August numbers are more in line with the numbers from May and June, and still quite high historically speaking.

Trustee Sales – 44 total, that same number from July and up only 5% from August 2008.

This number remains on the higher end of the scale and is consistent for what we’ve seen the past 6 months for properties in Big Bear that are going back to the bank.

What do all these numbers mean?  In my opinion, more bank owned properties on the market, and in turn, more competition with organic sellers, and prices continuing to stay depressed.  Overall, still some good opportunities for Big Bear home buyers.

Related Articles

Big Bear Foreclosure Numbers – July 2009

Big Bear Foreclosure Numbers – June 2009

Big Bear Foreclosure Numbers – May 2009

Big Bear Foreclosure Numbers – April 2009

Big Bear Foreclosure Numbers – March 2009

Big Bear Foreclosure Numbers – February 2009

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I believe it could be.

The current state of the real estate market in Big Bear reminds me of a scene in the movie, “The Perfect Storm”.

Near the end of the movie, after the fishing boat and its crew battle huge waves and horrible weather, things clear up.  They think they made it through.  But, the storm comes right back even stronger and eventually sinks the ship & crew.

This is similar to the current state of the real estate market in Bear.  We’ve seen rough waters over the past 2-3 years, and things appear to be clearing up – sales are picking up, prices are leveling out, and inventory is going down.

But there are some big clouds on the horizon in the real estate world.

Foreclosure filings are at the highest levels we’ve seen.

What is going to happen to these properties?  I suspect nearly all will be coming on the market over the next 12 months, and that’s many more than we’ve seen so far.  I believe these will continue to put downward pressure on prices, even with the huge drops we’ve already seen.

I do anticipate that this will have a bigger effect on properties priced over $350,000 as they are getting less activity currently.   These properties make up 60% of what is currently for sale, yet only 22% of what is selling.

Conversely, I expect this will have less impact on those properties priced under $350,000, as they have seen a big drop in prices already, and there remains strong demand from buyers today.  They make up 78% of what is selling yet only 40% of what is currently listed for sale.

By no means am I saying that this is the end of the world for real estate in Big Bear, or all sellers are going to drown.  I am not trying to promote doom and gloom.

But, to deny or not be aware of what we are possibly heading into seems foolish to me.

What do you think?

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Foreclosure Numbers

So, We’ve Hit Bottom In Big Bear……..Not So Fast!

Bank Owned & Short Sale Homes Taking Market Share In Big Bear

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Big Bear home sales dropped in August from the 2-year high we saw in July.

Home sales fell 14% when compared to the July numbers (75 v. 87), but were up 25% when compared to August 2008 (75 v. 60).

Even with the drop in sales month over month, sales are still pretty strong all things considered.  They are certainly not close to the sales numbers we saw 4-7 ago (averaging about 175 per month).

It is typical to see sales pick up in the June to October time frames as that is our selling season.

24, or 32%, of the 75 home sales in Big Bear were bank owned. This is a just a touch lower than last month, and still well below the 50% mark we were seeing earlier in the year.  4 of the sales, or 5%, were short sales, which is down just over 50% from last month.

That means 47, or 63%, of the sales in August 2009 were “organic”, or traditional sellers – another strong month for them.

It is important to keep in mind that bank owned properties currently only make up 5% of what is for sale in Big Bear, yet they are making up between 30% to 40% of what is selling every month.  That is what the fish (buyers) are biting on!

Short sales in Big Bear, however, seem like more of a waste of time than anything else. Sure, there are a few closing escrow here and there, but more than 50% that go on the market never end up closing escrow.  There are a variety of reasons why – unrealistic price, no hardship by the seller, lack of follow up and preparation by the agents, and uncooperative banks.  My advice to buyers is to try and find an organic seller or bank owned property first.  Save yourself the headache.

Big Bear Home Prices

The median sales price in August 2009 was the lowest we’ve seen in the past 2 years.

It dropped considerably, down 24% from the July number ($170,400 vs. $225,000).  Even more dramatic, it is down 40% from the August 2008 median ($170,400 vs. $282,500).

This is the second straight month we’ve seen the median price drop.  See the chart below for the historical median prices.

With the limited amount of sales and wide variety of prices, it is still too difficult to make any concrete determinations about the real estate prices in Big Bear. One thing is for sure though – the lower prices are driving the activity level of buyers.  Without the lower prices, the buyers would still be on the fence.

There is a $142,600 difference between the median asking price of $313,000 and the median selling price of $170,400.

The median asking price for bank owned & short sales properties in Big Bear is $199,450.  More importantly, it is $113,550, or 36%, below the median asking price for “organic” sellers. That is a big reason why they are getting a lot more activity.

Homes Currently on the Market

The number of properties on the market for sale in Big Bear stands at a total of 864, down 45 from last month.   This is one of the most important numbers to keep an eye on.

Why?

Because if you compare this to last year we had nearly 1150 homes on the market for sale at the same time.  Less homes on the market equals less competition for home sellers (good thing) and less options for home buyers (bad thing).   And this number will go down even more in the winter months as sellers take them off the market for the slower market conditions.

One wildcard is the number of bank owned properties that hit the market over the next 6-12 months.  As mentioned earlier, they only make up a small amount of what is currently for sale in Big Bear.

Big Bear Home Sales – Thru August 2009

Year To Date Comparison (1/1- 8/31)

Year to date, sales in 2009 are up 27% from the 2008 number, and down only 5% from 2007 (gaining).  But, prices are still down 19%  & 18% respectively for the median & average sales prices.

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* Note: The charts above will be updated on a monthly basis. It represents single family home sales in the Big Bear area, including Big Bear Lake, Big Bear City, Moonridge, Fox Farm, Sugarloaf, Erwin Lake, & Fawnskin. Data courtesy of the Big Bear MLS. These numbers do not include raw land or condos nor does it include homes in the Big Bear MLS that are located out of the Big Bear area.

Related Articles

Big Bear Home Sales July 2009

Big Bear Home Sales – June 2009 And Second Quarter 2009

Big Bear Home Sales – May 2009