Seeing The Light (Saber)

First of all, is it just me?

Address: 42533 Moonridge Rd #4, Big Bear Lake, CA 92315

Redfin: https://www.redfin.com/CA/Big-Bear-Lake/42533-Moonridge-Rd-92315/unit-4/home/4114382

Beds/Baths: 2 bed, 2 bath, 950 squares

Purchase Price (5/2023): $440,000

Asking Price: $458,000

Difference: +$18,000

Commission (5%): -$22,900

Total Gain/Loss: -$4,900

Here is yet another dreamer in for a rude awakening. They purchased in May 2023 for $440,000 and just nine months later tried to list it for $475,000.

These clever souls figured if they listed for 35 grand more than they paid, they could cover their sales commissions and closing costs and sneak away with a little cash in their pocket. Easy peasy, right?

Of course, this obtunded strategy ignored the fact that the market has declined considerably since they purchased, and hardly any 2023 buyers are escaping without a major haircut. It’s simply not happening.

In March they dropped the price to $460,000 (which meant no profits, but at least they wouldn’t have to pay anything out of pocket), and in May they cut a meaningless $2,000 hoping that would move the needle.

And at that point, like a petulant Child, they stopped reducing the price on this refrigerator box altogether.

They figured losing five grand is plenty and are refusing to lose a penny more.

“We’re not going to just give it away!”

So they sit.

And sit.

And contribute to the ongoing standoff between delusional sellers and broke buyers. Something’s got to give, but it won’t be this dude’s resolve. Not today at least (give it a few months).

On a positive note, this place looks pretty sharp. It has been given the AirBnB Standard Sprucing (ASS), with the ubiquitous white walls, industrial light fixtures, open shelves for dishes and cutesy mountain-inspired artwork.

The good news is that other than relocating the (kind of cheap, crappy) kitchen, our seller didn’t invest too much into fixing this place up – the previous owner took care of most of the ASS updates.

And wait a minute? Where is the oven? The cooktop? What the hell kind of kitchen is this?!

Anyhow, the rooftop deck is fantastic, a two-car garage is a plus and that little loft is a nice bonus.

Throw in this good pupper and you’ve got yourself a deal!

This place is decent, but it’s just too damn expensive for today’s market.

For the sake of argument let’s assume a magic buyer comes along and thinks this is a steal. What will their payment look like?

Purchase price: $458,000

Down Payment (20%): $91,600

Monthly Payment: $3,405/mo (@7.4%)

Whether we like it or not, most Americans only care about the monthly payment. Especially with cars and houses, they tend to focus less on the sales price or total interest paid over the life of the loan and more on whether they can swing the monthly nut.

And at 125+ days on the market, clearly there aren’t enough buyers out there who can make this payment work.

And those who can afford it probably aren’t interested in condos that look like discarded Star Wars combat vehicles.

I feel bad for sellers like this, but the fact is they got caught up in a speculative frenzy and it’s going to cost them. When people see prices increase rapidly and FOMO (Fear Of Missing Out) kicks in, they don’t think critically about why values are shooting up so fast (a bubble fueled by cheap money that can’t possibly last) and only focus on getting in so they too can get their hands on some of that easy loot.

But that’s the thing about speculative bubbles: conventional wisdom (e.g. “real estate only goes up,” “you can always rent it out if you get in trouble,” etc.) means fuck all once the shit hits the fan.

The party’s over in Big Bear and recent buyers who suddenly need to sell are going to get hurt. It sucks, it’s not fair, but sometimes that’s just how the Wookie crumbles.