Big Bear Bummers

A $150,000 price cut, just like that. Pretty soon you’re talkin’ real money!

Assuming it sells for this price (spoiler: it won’t) our seller would “only” walk away with $633,030 after paying their listing agent. I still think it’s egregiously overpriced but at least they finally seem interested in joining reality.

***************ORIGINAL POST BELOW***************

Address: 42290 Heavenly Valley Rd, Big Bear Lake, CA 92315

Redfin: https://www.redfin.com/CA/Big-Bear-Lake/42290-Heavenly-Valley-Rd-92315/home/4112940

Beds/Baths: 5 bed, 6 bath, 5,881 squares

Purchase Price (3/2019): $1,500,000

Asking Price: $2,350,000 (LOL)

Difference: +$850,000

Commission (5%): -$117,500

Total Gain: +$732,500

This is an enormous home on a huge plot of land with a pool and tennis court – very rare and special in Big Bear. 

Unfortunately, the interior is wildly outdated. And not outdated in a cute/vintage/rustic way, but in a 80s Honey-Oak-and-beige-paint-everywhere kind of way. Feast your eyes:

Kitschy time capsule or deferred-maintenance nightmare – you decide!

This primary bathroom is pretty wild:

What is even more fascinating is the pricing strategy. Our seller purchased in March 2019 for $1.5 million and watched as the cheap money and limited supply of the pandemic years caused Big Bear values to skyrocket. They didn’t even have to put a dime into this place – the house just magically appreciated 10-15 percent per year in its dreadfully original condition. 

The sad thing is, if they had listed in February 2022 before the Fed raised rates, I think getting around $2 million was within the realm of possibility. That’s how crazy things were during the lockdown frenzy.

But the gravitational pull of his ever-expanding paper gains was too distracting and he ignored how recent interest rate increases decimated buying power, killed affordability and sent Big Bear values back to ~2021 levels (especially for properties that have not been improved or updated in 30+ years).

This seller didn’t get the memo and is pricing it as if rates didn’t more than double in the last 24 months.

For perspective, let’s compare the 2019 numbers to what today’s buyer is looking at:

2019

Purchase price: $1,500,000

Down Payment (20%): $300,000

Monthly Payment: $7,691/mo (@4%)

2024

Purchase price: $2,350,000

Down Payment (20%): $470,000

Monthly Payment: $15,874/mo (@7.3%)

The down payment requirement is up more than 50 percent and the monthly nut basically doubled. That is a massive hit to affordability and will shrink the buyer pool significantly. What planet is this guy on?

Look, maybe I’m just incapable of comprehending his stellar investing strategy but this asking price seems detached from reality. It’s certainly a unique property, but as we keep seeing over and over again the few houses actually selling in Big Bear are going for, at best, 2022 prices. This means anybody listing right now who wants to be competitive needs to assume there has been no appreciation during the last two years and price accordingly.

Based on their 2019 purchase timing the odds of walking away with solid profits are astronomical — but only if the asking price comes back to earth. At this point $2,350,000 just seems like way too much for a house that will need $300,000 – $400,000 in renovations to bring it up to snuff. I can’t blame him for shooting for the stars, but his dreamed-up profit of nearly three-quarters of a million bucks doesn’t seem remotely realistic.

This listing reminds me of one my favorite Talking Heads songs, Heaven:

Oh Heaven, Heaven is a place
A place where nothing, nothing ever happens
Heaven, Heaven is a place
A place where nothing, nothing ever happens

https://www.youtube.com/watch?v=JAa7J10D8Qw

I predict that nothing happens until they realize their price is reserved for a fully renovated trophy property, not a bland 1980s relic.