Tahoe Real Estate Market

CURRENT MARKET SNAPSHOT

What really is driving the current market?

A quick recap… In 2020 and 2021 there were multiple factors driving the market, but the main ones were 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. Of course, historically low interest rates didn’t hurt either.

But then we saw that high demand lessen as 2022 headed into summer and fall. The prices fell a little, and the number of sales dropped dramatically. This coincided with the Fed raising interest rates. We saw the same market thru 2023 and into 2024 as interest rates continued to stay at high levels. Also, a lot of would-be-sellers decided to hold off on selling their current home with a 3% interest rate loan due to the fact their new home would have a 7% interest rate.

Lets take a quick look into the current 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 6/1/2024. 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.

192 ACTIVE LISTINGS

That’s right, 192 active listings. After a normal low of 108 in March 2024, we are seeing a normal early Summer uptick in new listings which usually peaks in August. The numbers are exactly the same as in July 2022. But still way lower than pre-COVID years.

In the “normal” market, we would see listing numbers increase through August and then flatten and begin lowering in September.

60 PENDING LISTINGS

Out of the 252 total listings, 60 already have accepted offers and are pending sale (aka “in escrow”). That means 39.5% of the listed Tahoe homes are already in escrow. This is a higher percentage than the past few months, which shows inventory is still rising but demand is catching up.

A good sign for the market is that we have seen a steady amount of pending listings for a while now, with a normal dip in winter months.

Based on calls Our Team have received from potential buyers there is still a lot of interest out there. Most of them are waiting to see if prices or interest rates will drop. But we have seen an uptick in investors looking to buy due to prices softening a little with long term rental income still very high. We have an entire page dedicated to investor purchases/sales in Lake Tahoe with links to multiple articles, for more information click on the link below:

PURCHASING INVESTMENT PROPERTY IN LAKE TAHOE

60 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 and lets us know how many pending sales are actually closing vs how many cancel. If the total active listing numbers are up, but pending and closed sales are down, that shows a potential declining market. If pending sales are much higher than closed sales, then we know quite a few are dropping out of escrow and not closing.

Remember, closed sales lag behind pending sales data by 30 to 45 days. As you can see the number of closed sales has stayed pretty close to the trend line of new and pending listings. This shows a healthy market.

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… not right nol.

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 in July 2020, when Tahoe reopened after the COVID shut down, prices shot up dramatically. We reached the “COVID Peak” in May 2022 at the historical all time high of $719,900. Soon after that prices started to settle over the rest of 2022, before starting a slow downtrend in spring 2023. But then something odd and unexpected happened. Prices started going up a little in fall 2023 and continued a slow rise in 2024. As of the end of July 2024 the average sales price is at $697,000. That is up Year over Year by 5.3% compared to July 2023.

CLICK HERE to view our new blog about the 2024 California Real Estate Market Forecast including data from professional economists.

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 stayed pretty firm, with very small adjustments from time to time. 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, 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. 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. Average time on the market are currently around 70 days, so don’t expect to get any home for a lot lower than the asking price unless it’s been sitting on the market for around 2 months.

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. One “trick” is asking the seller to buy down your loan to get a better rate. This is explained in our article “Loan Buy-Downs in Purchase Negotiations” and is a very handy tool for buyers to get much more favorable terms on their loan. 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 an actual 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. This year does appear to be back to a “normal” market year, so I anticipate the market staying fairly flat over winter.

Since prices have dropped a little but mainly staying flat, you may get a lower price if you wait. But with interest rates going up you will be paying more in monthly payments even with a slightly lower purchase price. Buyers who waited since spring have seen interest rates almost double, and will now pay almost $1000 more per month on a purchase of $600,000 with 80% down (based on data from local lender). Same purchase price, but much higher monthly cost.

The good thing about the market shift is buyers are more in control with offers and negotiations. Now you can offer lower than asking price (on most properties if they have been on market for at least over 14 days). Sellers are much more likely to accept an offer with an FHA first time homebuyer loan, contingency to sell buyers current home, and other contingencies and terms.

LOOKING TO SELL

Since prices have been going down a bit, the benefit of selling now vs waiting is pretty obvious. You will sell for more money now vs a few months from now (based on current market trends). Right now, if a property is listed right and the property is in good condition, properties are selling within a few weeks of being listed. But the average time on market before receiving an offer is getting longer, currently close to 55 days. So sellers must be patient and listing agents are setting longer listing terms to accommodate this added marketing time.

During winter we see fewer homes on the market which means sellers have less competition. You have to deal with people walking thru the snow into your home, and need to keep the driveway and walkways clear of snow for showings. We have some local snow removal companies that we have worked with and highly recommend that cost around $100 to $200 per snow clearing (depending on size of driveway and if there are any stairs to clear).

You do need to be very reasonable with pricing. 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. Usually we recommend listing just under market value to make your home stand out from the rest which may be a little higher priced. List lower to start so you aren’t chasing the market after getting no offers and few showings for a month.

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.

For investors, most are going to be looking for a home that fits the needs of most local renters… 3 bedrooms, 2 bathrooms, a garage, close to bus routes, fenced yard (most locals have dogs). We have seen an uptick in demand for rentals that have been remodeled inside. These properties are getting quite a bit more per month vs the properties in “original” condition. The bottom line will be the deciding factor for investor buyers since they mainly care about return on investment and potential annual income from the property.

If your home needs a little “refreshing” or has some defects that should be addresses, our office offers the perfect tool for you. Compass Concierge is a program that can help your home get an upgrade with repairs and staging, which will help it sell for more money.

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.