These are the questions I am asked and answer daily…
How is the market for my home? What can I get?
The message from economists and media is changing, mixed, many revisions. A 100 day update for Arrowhead Woods should add some clarity to our expectations for 2014 into 2015. Studying economic forecasts and my 26 years of analyzing, reporting and selling in Lake Arrowhead, the overriding view is there are few obvious downside risks for the U.S. economy in 2014.
INVENTORY is foremost and up. Prices began to rise nationwide in mid-2012 with low inventory and a growing demand fed by an improving national economy. With fewer homes to choose from, we saw multiple bids in some areas of the nation and northern California, less so in Southern California, and virtually no bidding wars in Lake Arrowhead. Inventory has begun to rise in Arrowhead Woods, from 215 homes for sale a year ago to 293 homes for sale today. It is likely, based on my homeowner contacts and questions, we could move to near 400 listings by Labor Day. 400 is a good number for selling more homes, not so good for raising prices as a larger inventory increases price competition.
PRICES have split, up a bit, to really up, in three different tiers driven by price sensitive buyers. They are choosing smaller homes, see 8 to 12 on each visit to the mountain. Disappointed, they leave if there are not enough choices.
First Tier; $100,000 – $500,000. Prices are up 26% from 2012 to the first 100 days of 2014. Sales have flattened in 2014 as buyers reflect uncertainty about the right cost for a vacation home. First tier is 80% of Arrowhead Woods sales.
Second Tier: $500,000 – $1 million. Prices from 2012 to 2014 are up only 4.4%. Most purchases require a jumbo loan, outside the main-stream banking/ lending system to high end investor syndicates. It is still a slow, analytical, detailed loan process. The requirements to get a loan have discouraged some and disqualified others who might have succeeded easily a half dozen years ago. There is much written in the media of the desire of the jumbo lending community to ‘loosen up’ but reality is ‘not much’.
Third Tier; $1 million plus, in lakefronts up to $15,000,000 is quite an asking price. An exciting number at the top perhaps, but we have never had a sale recorded above $7.5 million in Lake Arrowhead real estate history. Arrowhead Woods has a vibrant, active market from $1 million to $2 million with 31 sales in the past 24 months. It is interesting that 9 homes sold are larger estates and luxury homes in the Woods with 22 lakefront sales. There are now 54 homes listed over $1 million, 7 over $5 million, but only 3 sales over a million in the first 100 days of 2014.
HOME SIZES are unchanged in the first tier at 1900 square feet since 2010. The second tier has been selling homes about 5% smaller, about 200 square feet with a 2014 average size of 3300 square feet. Larger, third tier homes over $1 million have dropped to an average of 4100 square feet from 4500 square feet.
QUALITY IS KING AGAIN. The super deal, junky, fix it and make money dream, is dead. The message is clear, you can’t get a silk purse from a sow’s ear… in Lake Arrowhead real estate. Nearly gone, the few bank and short sales are more expensive. Fixer are unpopular. Buyers are shopping for nice looking homes, at the right price. Deferred maintenance turns buyers off. So, fix it now.