Tahoe Homes: Real Estate Market Boom

While looking for Tahoe homes you’ve probably seen the recent news articles like the one below. But are the headlines accurate? Well, yes and no. First, we aren’t running out of homes for sale. But second, it is busier now than we have seen in a very long time.

So what is really going on, and how does it affect buyers and sellers?

‘We’re running out of homes for sale’ Lake Tahoe brokers say as tech workers flee Bay Area

CNBC – https://www.cnbc.com/2020/07/29/were-running-out-of-homes-for-sale-lake-tahoe-brokers-say.html

CURRENT MARKET SNAPSHOT

What really is driving the current market? There are multiple factors, but the main ones are the fact a lot of people are able to work from home now and can live anywhere, and a lot of folks want to get out of the big cities. Just the idea that they have a quiet home in the mountains to retreat to is a huge factor for most buyers right now. Also, you have to remember that our real estate market was put on hold for over 3 months. So this also is driven by the pent up demand. Of course, historically low interest rates don’t hurt either.

Lets take a quick look into the numbers to show what’s really going on right now. We will focus on Residential listings on the South Shore, since it is the largest market in Tahoe. This includes single family homes & condos. The written information in this blog is as of 5/2/2022. But the graphs shown are live and will update as each month passes. For current up-to-date info we always recommend giving Our Team a call or sending us a message.

91 ACTIVE LISTINGS

That’s right, only 91 active listings. After a record low in February 2022, we have started to see an early Spring uptick in new listings. Historically, the uptick in new listings, after the lull in the winter, occurs between March and June. So we are still seeing normal market behavior.

During a “normal” winter market, we see fewer listings come on the market. This coincides with fewer buyers looking while the snow is on the ground. Last winter that didn’t happen, with the 20/21 winter months being some of the busiest we have ever seen. We had the Tamarack and Caldor fires this past fall and they really had an impact on the market, with fewer people coming to Tahoe due to the smoke and road closures. But right after New Years was over, the market picked right back up and we started to go through our available inventory pretty quickly.

47 PENDING LISTINGS

Out of the 138 total listings, 47 already have accepted offers and are pending sale (aka “in escrow”). That means 34% of the listed Tahoe homes are already in escrow. Just look at the chart below that shows how many listings went pending within each month. From June 2020 through October 2020 we had the highest number of pending listings than any other time in our recorded history. The number of pending listings has dropped since then, but seems to be following the active listings numbers as it usually does.

You can see the jump up in July 2021 and then a sharp drop in August and September 2021. The sharp decline was due to the Tamarack fire which spewed smoke into the Tahoe basin for a month, and the Caldor that closed the Hwy into Tahoe for a month and caused a mass evacuation of our entire town. But as soon as the fires were out and the roads reopened, the market picked back up for October and November. Then in mid-December we had one of the strongest winter storms on record that lasted over a week and kept a lot of folks away. Right after New Years celebrations were wrapped up, our market picked back up.

63 CLOSED SALES

One stat we keep close eye on is comparing the new listing numbers with the pending and closed sales. This gives us the best view on how healthy the market is. If the listing numbers are up, but sales are down, that shows a potential declining market. But as you can see closed sales for April increased right along with the new listing inventory. This bodes well for a healthy and strong summer real estate market in Tahoe.

Remember, closed sales lag behind Pending sales data by 30 to 45 days. As you can see we have seen an uptick in sales in April with a total of 63 closed sales. But with the April pending numbers down, that will most likely mean the May closed sales numbers will be lower.

WHAT ABOUT PRICES?

Ok, now we know how many listings there are, how many are pending sale, and how many have sold already. But what everyone really wants to know is “Are Tahoe homes prices going up?”. Short answer… yes.

The statistical average sales price shows that prices had been steady and somewhat flat from September 2019 till July 2020 at around $475,000. That was right at the previous high price set back before the recession in 2007. So we had fully recovered back to pre-recession prices by the time COVID hit.

Then beginning at the end of July 2020, when Tahoe reopened after the COVID shut down, prices shot up dramatically. As of April 2022 the average sales price is at $700,000. That is the highest median price we have ever seen… HIGHEST EVER.

There were a few “fake” plateaus from April to May 2021, December to January 2022, and a recent plateau in February and March 2022. I call them “fake” because 2 months of data is not enough to show a trend. The minimum I use to see if it’s a trend is 3 months. The April numbers show prices are continuing to rise and we haven’t reached the plateau… yet.

The prices may be rising still, but thankfully they are going up just slow enough so that appraisers can usually get their appraisals to match the purchase price. Previously prices were rising so fast that very few homes would not appraise at the purchase price, causing buyers to have to bring in a lot of extra cash to get the sale to close.

WHAT DOES ALL THIS MEAN FOR YOU?

Now you have all the data, the history, and a picture of what’s happening in the real estate market right now. But what does this really mean for you? Well, that depends on if you are a buyer or seller and what your specific situation is.

LOOKING TO BUY RIGHT NOW

For buyers who are looking to by as soon as possible, you will need to make sure you are ready to go before looking at homes. This means you will need a pre-approval letter from a lender and have written proof that you have the purchase funds. Our Team can assist you in finding a local lender who can get you a pre-approval letter within just a few hours. The proof of funds needs to show you have the cash on hand for the down payment and closing costs. If you are purchasing with all cash (no loan) then all that is needed is the proof of funds.

Interest rates have gone up a little recently, and it looks like they will continue to go up a little over the next couple years. So locking in at a good rate with a trusted mortgage lender is more important than ever. If you don’t have one yet we can refer you to a few trusted local lenders. Once you have your pre-approval and proof of funds, it’s time to start looking at homes. We can register you up to receive automatic email notifications for properties that fit your exact criteria, just give us a call or send us a message to get started.

With the limited number of listings currently available and some homes selling very fast, it may take a few trips to Tahoe before you find the right place. Instead of having to drive up every week, we can go to the property for you and do a Preview/Review, a detailed walkthrough video of the property. Our videos make is seem like you are there walking through the home with us. We point out any visible flaws, damage, positive aspects, interesting features, neighborhood characteristics, and so on.

When you find the right place, it’s time to put in an offer. The strategy for an offer will depend on many things. Mainly if the seller is looking at offers ASAP or if there is an offer deadline date. If the house has only been on the market for a week or two, we recommend being aggressive on the offer price. If it’s been available for over 2 weeks then you may be able to submit a less aggressive offer. But don’t expect to get any home for a lot lower than the asking price anytime soon.

We also have a few special secret “tricks” up our sleeves to help our clients position their offers to have the best possible chance to get accepted. Give us a call today to get more info.

LOOKING TO BUY IN THE NEAR FUTURE

What if you aren’t really sure if you are ready to buy in Tahoe right now? What will the market be like in a few months? While we don’t have a crystal ball, we can let you know what usually happens in the market throughout the year.

In a normal year, we historically see the number of buyers slow down toward the end of September and sales slow by the end of October. Then the market stays flat during the winter and picks up again around May. But we all know these aren’t normal times. However, if we see a slow down in May through July I would view that as a sign that things may be settling.

Since prices are still going up, you should anticipate you will be paying more for a home if you wait. But how high prices will go is still unknown. Again, we aren’t physic. Things could start to settle with rising interest rates. Just don’t plan on prices dropping anytime soon. Plus unless you are a cash buyer, even if the prices do drop a bit, as interest rates rise that wipes out any benefit of the lower purchase prices.

LOOKING TO SELL

For sellers, it’s pretty simple. Now is a GREAT time to sell Tahoe homes. If you have been thinking of selling, you should contact us ASAP to take advantage of the current market.

Since prices are going up, what are the benefits of selling now vs waiting? Well, we know what the market is doing right now, and we don’t know what it will be doing a month from now. Right now, if a property is listed right, sellers are in control and have their pick of terms they want. If the market slows then waiting might cost you in the long run. Also, if we get more inventory that means you will have more competition.

But you still have to be reasonable. We can give you an estimated value for your property, tell you if your desired sales price is attainable, and let you know what to expect for your specific situation. If you wait to sell with the hopes that prices will go up even further over the next couple months, there is no way to know if we will still have a high demand from buyers, or how the economy and interest rates will affect the real estate market.

WHAT PROPERTIES ARE IN HIGH DEMAND RIGHT NOW?

With the massive increase in buyers looking to leave the city and move to Tahoe full or part time, there are a few different specific features that are in the most demand. All Tahoe homes are unique, but the following features are key for many of the buyers we have worked with recently.

Many buyer want a larger home with a large yard in a quiet neighborhood. Two features that are almost a necessity right now are a good home office and high speed internet. So even if you don’t have a specific room that is currently used as a home office, before listing your home for sale it would be beneficial to set up a room as a home office just so when buyers see it in person (or video) they can see it. They mostly want a house that has been recently updated and usually won’t be interested in anything that needs a lot of repairs or looks like it is stuck in the 80s or 90s.

But don’t fret if your property doesn’t fit any of the styles or features mentioned above. You might not have multiple offers on your home, but if priced right it will sell quickly.

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