Big Bear Bummers

As I hoped, this seller is starting to get serious. On June 20 they reduced the price by a substantial $30,000 and I applaud that aggressive move.

Here are the updated financials:

Purchase Price (8/2022): $694,900

New Asking Price: $649,000

Difference: -$45,000

Commission (5%): -$32,450

Total Gain/Loss: -$77,450

As you can see, if this new price can finally attract a buyer then the seller’s losses just grew to over $77,000. Brutal, but that is the state of things if you truly need to sell in Big Bear.

It is also important to note that the current asking price is well into 2021 territory. This means if the seller manages to close a sale, then everyone else in the neighborhood has a new comp firmly in 2021 pricing. That’s bad news for anyone nearby who bought in the last several years and needs to get out.

Anyhow, let’s recalculate the numbers for our new buyer:

Purchase price: $649,000

Down Payment (20%): $129,800

Monthly Payment: $4,429/mo (@7.4%)

Unfortunately, due the 7+ percent interest rate the payment only changes by like $250 a month (from $4,684 to $4,429/mo). That might not be enough to entice a buyer.

But I am rooting for the seller because of their willingness to stop living in denial and accept that they will take a substantial financial hit.

Let’s see how it plays out.

******************ORIGINAL POST******************

Address: 455 Crane Dr. Big Bear Lake, CA 92315

Redfin: https://www.redfin.com/CA/Big-Bear-Lake/455-Crane-Dr-92315/home/3504641

Beds/Baths: 3 bed, 3 bath, 1,381 squares

Purchase Price (8/2022): $694,900

Asking Price: $679,000

Difference: -$15,900

Commission (5%): -$33,950

Total Gain/Loss: -$49,850

This is a cute house that looks to have been updated nicely and given the AirBnB Standardized Sprucing (ASS):  White paint, cutesy animal decor and mountain-inspired versions of Live, Laugh Love everywhere.

My least favorite aspect of the ASS treatment is open-faced kitchen cabinets with no doors.  Especially with a vacation home that goes unused most of the time, I can’t think of anything less enticing than constantly re-washing dishes due to dust buildups. 

It’s a trend that needs to die a horrible, excruciating death.

The flowery, over-the-top listing description is indicative of someone in deep denial about what’s happening in Big Bear right now.  Here are the first two sentences: 

“Discover the epitome of vintage charm and modern luxury in this exquisitely remodeled Maltby gem, capturing the essence of Big Bear Lake living. Located within walking distance of all the attractions that make Big Bear special, this property is a harmonious blend of nostalgia and contemporary comfort.”

Calm down, LOL.

This kind of hippy dippy description reeks of desperation, with the seller practically begging buyers to bail them out of their woefully ill-timed purchase.  This seller bought in August 2022 and exactly one year later they panicked and put it on the market for four grand more than they paid.  Optimism!

And by January 2024 they dropped the ask to $679,000, and it has been sitting at that money-losing price ever since.

And why haven’t they dropped the price any further?  Because they refuse to accept reality. And I understand how hard it is to admit that finding a buyer will require even more financial punishment than the 50 grand they’re already guaranteed to lose.

So they kneel at the altar of the price discovery gods and pray for salvation.

The good news is that if they put down 20 percent in 2022 ($139,000) they would still get a good chunk of that back if they sold today.  But if they only put down 10 percent then it’s pretty much all wiped out.  Bummer.

And, of course, getting out with only a $50,000 loss assumes the property sells today for full boat.  Given the roughly 450 properties for sale in Big Bear Lake right now, and the fact that this particular seller has been asking $679,000 since January with no luck, there is absolutely no way this sells for current ask.  Much more pain is on the way. 

Interested in buying?  Here is what you’re looking at:

Purchase price: $679,000

Down Payment (20%): $135,800

Monthly Payment: $4,684/mo (@7.5%)

You could surely cover some of the monthly nut by renting it out, assuming you have plenty of free time to deal with the inherent hassles and headaches of being a short-term landlord.  The fact is this place is really clean with nice updates and looks ready for AirBnB guests to fuck it up – I MEAN, enjoy the harmonious blend of nostalgia and contemporary comfort.

The guest house is a plus, and as a short-term rental I think it was a good move to convert the garage into a game room.  

The best part is this place is walking distance to Carl’s Jr.! 

Which will come in handy given the comically small kitchen.  Oof.

If the dishwasher door gets stuck in the down position would your kid just have to live in the kitchen forever?

Overall, I think this is an attractive home at a wildly unattractive price.  I’m sure the seller, like many other pandemic-era buyers, is hoping the Fed will drop rates soon to make their asking price seem less ridiculous.  However, every month that goes by waiting for that pipe dream to come true is another month of lighting cash on fire. 

If the seller doesn’t get serious soon, then it’s all aboard the Pain Train (on Crane). Because all it will take is a few desperate neighbors ripping off the Band-Aid and selling for big discounts for this seller’s $50,000 guaranteed loss to potentially turn into $100,000 overnight.

I feel bad for the position they’re in, but no amount of denial or optimistic thinking can overcome the reality of this declining market.