If you are thinking of buying or selling a home in Big Bear, you may want to take a look at the absorption rate of homes that are currently for sale. Knowing the absorption rate is a good way to become more informed on the current real estate market conditions in a particular area.
There is an easy to understand article here describing what the absorption rate is and what it means for the real estate market. In simplistic terms, it is a mathematical equation that tells the amount of time it will take for a specified set amount of properties to be absorbed under current real estate market conditions.
To get the most accurate reading for the Big Bear real estate market, you take the number of properties sold in the past month and divide that into the number of properties currently on the market for sale. Some other ways to figure out absorption rate include looking at it from a weekly and yearly basis. I find the monthly time frame to be the most representative and therefore figure it by price range & location.
You can also tinker around with this by looking at different price ranges, locations, beds & baths, features and so on. The more you tinker, the more accurate your calculations should be for that type of property. If you wanted to know the absorption rate of 3 bed, 2 bath homes in Moonridge or Fox Farm for example, you could.
Generally speaking, the higher the number, the more of a buyer’s market and vice versa for a seller’s market. An absorption rate over 6+ months would be considered a buyer’s market, 3-5 months a normal market, and under 3 months a seller’s market. Based on this, we have not seen a seller’s market in 2-3 years.
That said, there were a total of 50 residential sales in Big Bear during the month of November 2008. Currently, there are 1044 residential properties for sale, which translates into an absorption rate of 20.88 months. This means it would take nearly two years for the current inventory on the market to be absorbed, assuming nothing else comes on the market for sale.
See the breakdown by area & price range below.
Absorption Rate By Price Range
|Price Range||Residential Properties On The Market||Residential Sales Last Month||Absorption Rate – # Of Months It Will Take To Sell|
|$300,000 & below||505||30||16.83|
|$300,001 to $500,000||294||12||24.5|
|$500,001 to $800,000||133||4||33.25|
|$800,0001 to $1,000,000||38||1||38|
|$1,000,001 & above||74||3||24.67|
Absorption Rates By Area
|Area||Residential Properties On The Market||Residential Sales Last Month||Absorption Rate – # Of Months It Will Take To Sell|
|Big Bear Lake West||37||0||N/A|
|Big Bear Lake Central||112||4||28|
|Big Bear Lake East||89||4||22.25|
|Big Bear City||222||13||17.07|
As with the month of October 2008, we can see that properties priced under $500,000 are selling the best while those $500,000 and up are not faring so well. In fact, there were only 8 sales of residential properties sold in the whole month of November in the $500,000+ price range. When you have 245 homes for sale in Big Bear that are priced over $500,000, that means the absorption rate is 30.625 months.
If you are looking to buy a home in this upper price range, make sure to be diligent as there should be a lot of options and a good deal can be found. If you are selling a home in the $500,000 range, you may want to give some thought to having your home priced under $500,000 as opposed to just over it.
It should be noted that all of the $1,000,000+ sales for the month of November 2008 were located in the Castle Glen area of Fox Farm. Sales there ranged from $1,150,000 to $1,600,000.
From a location perspective, the properties in Fox Farm, Sugarloaf, Erwin Lake, & Big Bear CIty sold better as compared to Big Bear Lake, Moonridge, Fawnskin, Lake Williams, & Baldwin Lake. These numbers are a little surprising in that Big Bear Lake & Moonridge are generally considered more desirable. It just shows that the buyers these days are driven more by price and value than location. They are buying in lowered priced areas currently.
These numbers do change on a monthly basis. One month a particular area may perform better than others and then not so good the following month. Click here if you are interested in seeing the absorption rates for Big Bear from some of the previous months.
If you are interested in how the real estate market in Big Bear is performing, be sure to sign up for my RSS feed or email newsletter.
Great Real Estate post … I found it very interesting.