Big Bear Bummers

Address: 230 Leonard Ln, Sugarloaf, CA 92386

Link: https://www.redfin.com/CA/Sugarloaf/230-Leonard-Ln-92386/home/4122460

Beds/Baths: 3 bed, 2.5 bath, 1,216 squares

Purchase Price (4/2022): $455,000

Asking Price: $389,900

Difference: -$65,100

Commission (3%): -$11,697

Total Loss: -$76,797

On BigBearBummers I mostly focus on properties in Big Bear Lake and Big Bear City (primarily Moonridge) because those are the areas I’m most interested in personally.

But occasionally Redfin will suggest properties in Sugarloaf and Fawnskin and it makes me wonder: When prices come down in prime areas of Big Bear, how badly does that impact the less desirable, far-flung areas? I imagine quite a bit but let’s see if that’s true.

Admittedly I don’t know much about Sugarloaf other than it’s pretty far out there and the lower cost of entry made it popular among investors when prices shot up in more preferable areas of Big Bear.

I also know there are a ton of sellers in a relatively small area – roughly 90 listings in just one square mile! I guess those short-term rental “investments” didn’t pan out and now it’s time to bail. Too bad everyone had the same idea at the same time:

Yikes.

Logically, the dampened desirability of Sugarloaf combined with the glut of inventory means serious sellers need to be extremely sharp on price to attract the handful of buyers who actually want to live so far from Big Bear proper.

Which brings us to today’s featured seller. Due to paying top dollar in 2022 ($455,000 – OUCH), the current asking price of $389,900 will result in a brutal $76,000 loss…the bulk of their down payment. Good on them for getting aggressive, but is this price low enough to stand out among the competition not only in Sugarloaf, but in Prime Big Bear?

The interior looks…fine.

The exterior looks…um…

…like it has potential?

I’m trying to be nice here.

Although you clearly get more square footage for your money in Sugarloaf, this payment doesn’t seem like a significantly better value than comparable houses in more desirable areas like Lower Moonridge and Gilner Point.

Purchase price: $389,900

Down Payment (20%): $77,980

Monthly Payment: $2,585/mo (@7%)

So if there isn’t a dramatic price benefit to living in the boonies (other than a little extra space), why wouldn’t you just buy for similar money in a more desirable spot? Especially if you’re even mildly concerned about future resale value or viability as a short-term rental – you want to be where the renters want to be.

Hence why I expect prices in more remote parts of Big Bear to absolutely crater in the coming years. And what does that mean for all the distressed sellers in the sticks who can’t afford these properties anymore but also can’t find buyers?

Will short sales become more popular?

Will banks preemptively offer payment assistance/loan recasts?

Will the government bail out underwater borrowers?

I don’t have the answers and anyone who says they do are full of it. But we do know that a tsunami of foreclosures is off the table. It is basically impossible for banks to foreclose in California, and the current laws allow distressed owners to extend-and-pretend for years.

But what if underwater sellers don’t want to invest the effort into playing those games and just want to get it over with? The “Jingle Mail” trend from the last crash, where sellers simply mailed the keys back to the bank, could easily resurface considering many of these Big Bear properties are second homes and aren’t essential sources of shelter.

Or maybe we’ve already reached the bottom and 2022 prices are as low as it will go.

We’ll just have to see how this unfolds.