Big Bear Bummers

Address: 667 Talmadge Rd, Big Bear Lake, CA 92315

Link: https://www.redfin.com/CA/Big-Bear-Lake/667-Talmadge-Rd-92315/home/3503775

Beds/Baths: 4 bed, 3.5 bath, 2,221 squares

Purchase Price (5/2022): $800,000

Asking Price: $799,000

Difference: -$1,000 (LOL)

Commission (5%): -$39,950

Total Loss: -$40,950

The sales history is a great demonstration of how AirBnB and cheap mortgages fueled the real estate frenzy in Big Bear.

In February 2015, Buyer A unloaded this place to Buyer B for $350,000. With 2,000+ square feet that sounds like a good deal for Buyer B.

Five years later in October 2020, in the early innings of the pandemic craze, Buyer C coughed up $535,000. That allowed Buyer B to walk away with $158,000 in profit – a solid 7.8 percent in annual appreciation. 

In May 2022 – mere months after the Fed started hiking rates – Buyer C managed to pass it to Buyer D for an astounding $800,000 (nearly 30 percent appreciation per year for Buyer C)!

I don’t know if Buyer C is an absolute genius or just got extremely lucky, but holy crap did he ever play this perfectly. Thanks to his impeccable timing he strolled away with +$225,000 in cash for just 1.5 years of ownership.

Unfortunately, Buyer D got screwed on this whole deal.

Instead of being able to walk away with big winnings like his predecessors, Buyer D got stuck holding the bag. It stinks, but that’s how it goes when speculative bubbles pop: somebody inevitably ends up with the hot potato. 

On June 21, 2024, he listed with an asking price of $799,000 – exactly $1,000 less than he paid in 2022. That price conveniently limits their losses to just sales commissions, roughly $40,000, and nothing more. 

But something about that $1,000 “discount” from their purchase price reeks of a petulant child who refuses to admit the game is over and they lost.

Although most Big Bear properties are selling for 2021 prices these days, I have actually seen a few high-quality, dialed-in homes transacting at 2022+ prices. So maybe the pricing is on point and this is one of those special properties?

Let’s investigate!

Welcome to the Taj Mehhhh-hal. The kitchen and primary bedroom seem fine, but everything else looks kind of tired. 

By the way, do they know Amazon sells cord concealers for like $13?

And although the peek-a-boo lake view is cool, is it really worth $800,000?

Oh, sorry, $799,000.

Considering that a new buyer’s monthly payment would be $5,500 after a $160,000 down payment, this seller is out of their mind if they think their price is competitive. That is a monster financial commitment for such a mediocre property.

I would ask what comps the seller is looking at to justify this asking price, but it’s clear the pricing is solely based on a desire to avoid admitting they made an expensive mistake. Psychologically it’s much easier to convince themselves that “transaction fees” aren’t technically a loss and therefore as long as it sells for what they paid they’re still “winning.”

Someone with this denial-driven mentality is highly unlikely to reduce the price any more than their extremely generous $1,000 discount because that would mean losing part of their down payment (or all of it if they wait too long to pull the trigger). And that is simply unacceptable!

I expect this one to sit for a long time.