The state of mountain real estate

Things are good in mountain real estate but have slowed a bit. There have been fewer transactions recently.

That was part of the report given by Steve Keefe, owner/broker of Coldwell Banker Sky Ridge Realty, at a meeting of the Mountain Sunrise Rotary Club.

“I’m hearing the market is shifting,” Keefe said. “It’s not changing that dramatically.”

A graph of historic sales by month showed a huge spike in sales in September 2020. On either side of that spike are what Keefe called “fairly good markets.”

The median price of homes hovered around $400,000 until July of 2020. The median price two years later was $725,000.

While inventory was low during the height of the pandemic, more recently Keefe has seen more homes come on the market. June and July are the peaks for inventory each year. This past June, he said, was the highest peak in the last four years for new listings.

In 2018 and 2019, inventory peaked at 300 listings. After falling to 50, inventory has risen to 170.
“We had virtually nothing to sell in January 2021 and January 2022,” Keefe said. “Imagine my panic when we got down to 50 listings. I asked myself how 60 agents would support themselves. Now that inventory is growing on a daily basis – and a lot of that at a much higher price.”

The last two years, he noted, they would receive multiple offers on a property, which would sell as soon as it went on the market. “It was very bad for buyers,” Keefe noted. “It squeezed out a lot who couldn’t compete. Investors came in with cash.

“We need regular people buying, not corporations.” Days on the market has now risen to about 40. “We’re seeing properties sit on the market longer, with the inventory growing. We’ll likely see that trend continuing.”

This year, Keefe added, 27 percent of sales have been of homes over $1 million. “To me, that’s alarming, concerning. The market has pushed values of homes to the point where it’s not affordable for many people.”

On the day of his presentation, Keefe said there were 180 active listings in Arrowhead Woods with a median price of $844,000 and 54 days on the market. In Crestline, there were 94 with a median price of $450,000 and 29 days on the market. For Twin Peaks, it was 22 with a median price of $439,000 and 44 days on the market. And for Running Springs, 73 active listings with a median price of $494,000 and 42 days on the market.

“We are still able to fulfill the need for people who need more affordable housing,” Keefe said, “but not necessarily in Arrowhead Woods.”

Keefe pointed to several changes to the market.

The Rim O’ the World Association of Realtors is no longer a private MLS. They made the decision, Keefe said, to go regional so listings are broadcast throughout California.

“It used to be I would be doing the deal with another mountain realtor. Now agents from elsewhere are doing deals here. That’s a significant change. It means there’s added risk to you as a person selling your home. That agent doesn’t understand mountain real estate – they don’t know what they don’t know. The biggest risk you have is getting sued after the fact. There is a greater possibility of that happening now.”

There has been a shift in occupancy demographics, Keefe said, a partially permanent change. “We saw things swell up. We see more people up here, which puts pressure on the infrastructure.”

It used to be 70 percent of the homes in Arrowhead Woods were second homes. During COVID, the shift edged over to 50 percent being primary residences.

“People deemed it safer here. They were able to work remotely. Some will still do that but our community is not designed for most people. People think it will be a certain way, then realize there’s not the shopping they’re used to, the amenities they want, so they leave.”

Another change Keefe has seen is agents leaving the business. Pre-COVID, he said, there would be 30 agents present in the Blue Jay office on any given day. Now, on average, there are three or four.

“People have become detached from the base office,” he said. They were deemed an essential business during the pandemic and so stayed open, although they encouraged people to work remotely.

As for the current economic climate, Keefe said some people think prices go down in a recession. But, in four of the last six recessions, housing prices increased about 6 percent. It was a special case in 2008 as that was a real estate recession driven by mortgage failures so it’s not comparable, he said.

“Most experts confirm we will see values continue to rise,” Keefe said.