July Sales are Down 50%, But…

So I am going to start with some bad news about July, and explain why July was so ugly. Then give you some hopeful news about the future, starting with August. First lets get July out of the way. If we look at the first graph of Sales vs Active listings in the 0-$800,000 range we get a steady decline in sales from 102 in March to 57 in July. This line should be going the exact opposite way with sales increasing in the summer. If we look at the second graph of Sales vs Active listings in the $800,000+ range we get sales staying in the range of about 20 per month from March to June and then dropping to 11 in July. If we compare July of 2022 to the hot market of July 2021 we can see that sales are down 50% in both price ranges. Obviously something happened in the Big Bear real estate market in July sales. But just to make things worse is when we look at pending sales for July, we only have a combined price range number of 9. So what happened in July? Did the Big Bear real estate market bubble bust? The first graph tells the story the best. Because of the slow down in the economy and the rise in interest rates, sales have been declining. This combined with the fact that we are a second home market we are going to have sales slow down before and faster than the primary housing market. One thing to remember is the sales numbers have a lag time. The sales for one month are the pending sales for 45 to 60 days before. As you know I prefer to use sales in my data instead of pending sales because pending sales can fall out of escrow. But because we are in this transitioning market I need to use both. In the last newsletter I talked about how fast the market is going down. And the number of pending sales was standing at 9 in July, which looks like a free fall. The one thing I haven't talked about that took place in July is the price reductions, so let's see what happened to the market with reduced prices. Remember in the 0-$800,000 market we had price reductions on 50% of the listings with an average of $40,000. And in the $800,000+ market we had 36% of the listings had a price reduction average of $205,000. I said that we will have to see how this affects the market. That leads us to August.

In August as of 8-5-2022 we already have 12 pending sales. Since nothing else has changed I would have to think that this must be influenced by the price reductions that took place in July. So have we found the bottom in the Big Bear real estate market? It is to early to tell "But" it looks like the owners who were the most aggressive on their price decreases are being rewarded with offers. If this is the bottom that is great news that we found it in such a short time frame. The problem is the economy isn't cooperating. Friday the unemployment numbers came out. What looks like good news is news that is too good. The amount of new jobs was double what the government expected. This gave us a unemployment number that is the lowest in over 20 years. Normally this would be great news, but it shows that the economy is considered over heated and might need to slow down. What this means to the Big Bear real estate market is that in order to slow down the economy, the fed is going to raise interest rates. This may cause the real estate market to be forced to lower prices even more to compensate for the rise in mortgage interest rates. Maybe we haven't found the bottom yet. As always I will keep you posted.