In today’s real estate market, there is no urgency to move quickly.
During the last 5 years, buyers had a sense of urgency to buy the property they were interested in. If they did not move quickly, they risked the chance of someone else coming and buying the property or getting into a bidding war. If they missed out, then they would have to wait and hope that a similar property came on the market for sale that was not drastically higher in price.
Now that the active inventory levels have risen to levels 2-3 times that of the last 2 years, buyers seem to be holding off a bit, even when they find something they like. I find they are doing this for several reasons: 1. They are hearing that the real estate market is slowing and now is not a good time to buy. They are worried that if they buy now, prices will drop and then they will lose money. 2. They think more options are going to come on the market and that may lead to lower prices or more motivation to sell for the people who are still on the market, thus they will be able to get a better price or at least more negotiations with the seller.
All of this really is just a roll of the dice. Who knows for sure what is going to happen? What I do know for sure is the properties in Big Bear always goes up in value, it is just a matter of time. Sure, if you are planning to buy and flip the property in the next 1-2 years, that may be more risky in this market. But the fact remains that if you own Big Bear real estate for a 5-10 year period, you are going to do okay. The main point is if you can afford to own the property and carry it, you may lose some money on paper for the short term, but in the long term you can expect a 40% return over a 10 year period, that’s 4% per year. Nothing huge, but also nothing negative. Add this to the fact that you can write off the interest on the loan & property taxes, plus the potential for renting the property, buying a property in Big Bear in a nice investment option.
An important item to note is that there is not a lot of urgency on the sellers side either. Most sellers in today’s market can afford to hold onto their property rather than dropping the asking price drastically to sell it. If they cannot sell their property in the current market, many sellers will either hold out or take the property off of the market and see what happens.
That is the difference with this market as compared to the market in the early to mid 90’s when interest rates went sky high and unemployment was up. At that time, people could not afford to keep their properties, and with higher interest rates, seller were forced to sell and prices were forced down. Interest rates today are still historically low, and at the last two Fed meetings, they did not make any changes to the rate.
This "lack of urgnecy" should continue to keep the market in balance, allowing some sellers to hold out for their price, while also allowing buyers to shop around and find the best deal.