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?
CURRENT MARKET SNAPSHOT
So what 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 now more than ever. Just the idea that they have a quiet home in the mountains to retreat to is a huge deciding 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 whats 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 9/9/2020 at 5pm. 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.
118 ACTIVE LISTINGS
That's right, only 118 active listings. Compare that with what the number was back in May when we had 197 Active listings. It's even more drastic of a change when you look at last year when we had 363 Active listings in August 2019!
So yes, we have fewer listings than we have seen in a very long time. The furthest back our local data goes is 2003 (before that we didn't have a digital record) and we have NEVER had a month that has had fewer than 141 listings until now. And even that 141 number was in February which is historically our low point for listings and was during a severe winter.
The number of new listings coming on the market was low up until July 2020, but now it is above average. 150 new listings in August 2020 means we are now at a number that should keep up with the current demand.
139 PENDING LISTINGS
So out of the 257 total listings, 139 already have accepted offers and are pending sale (aka "in escrow"). That means over 54% of the total listings are in escrow already. That may not seem like a high percentage, but compared to the past years it is very high. Just look at the chart below that shows how many listings went pending within each month, and see that the last 3 months have seen more listings go into escrow than any other time in our history. The next highest amount was only 107 pending listings back in July 2015. Even during the busy 2005 season we only saw a maximum of 95 pending listings per month.
Many of these homes and condos are going into escrow with days of being listed for sale. Some do sit on the market for a week or more, usually because there is something odd or in need of repair at the property or they are vastly overpriced. But the good homes that are priced just a little above market value are selling quick.
Most are also selling OVER asking price. This is due to many properties having multiple offers and the different buyers trying to over bid each other which drives up the price. Many sellers have specific set dates when they will review all offers and make a decision. Usually this is a date about 5 days after the listed date. So even if you put in an offer the day it is listed, if they have a set date to review offers you will have to wait until that date to get a response from the seller.
155 CLOSED SALES
With the high number of pending sales, it's no surprise that the number of closed sales is also high. We saw 155 closed sales in August and 142 in July, which is HUGE! Again, lets compare to previous years so you can see how high that number really is.
Before the last two months, the previous high number of closed sales for a one month period was October 2015 when we had 97 closed sales. Last August we only had 67 closed sales for the month. So we are well over DOUBLE the number of closed sales when compared to last year.
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 prices going up?". Short answer... yes.
The real estate market has picked up so suddenly, starting in mid-July, that prices for closed sales took a month to catch up. This caused some issues with properties appraising at the value they were being purchased at, which caused problems for some buyers and sellers. But now that more sales have closed, we have seen the sold prices start to catch back up with the values buyers are paying.
The statistical average sales price shows that prices had been steady and somewhat flat since September 2019 at $475,000. There was a slight increase in July 2020 to an average of $480,000 and a big jump in August to $500,000. That is the highest median price we have ever seen.
Based on the delay in data for closed sales prices, and the fact many homes are selling for more than what they are listed at, we had anticipated (in a previous version of this blog from last month) that the August 2020 sales data would show a pretty significant rise in the median sales price. And it looks like our crystal ball was right on the money this time.
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 funds for the purchase. 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 any additional closing costs. If you are purchasing with all cash (no loan) then all that is needed is the proof of funds.
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, if 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, as we point out any 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. Right now since we are seeing so many multiple offer situations, we recommend being aggressive on the offer price. You can write an offer without viewing the home in person, since you still have a buyers inspection contingency that will allow you to cancel if you get to the house and change your mind.
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 towards the end of summer and beginning of fall.
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. So, if this year was normal we should start to slow down a bit around mid September. But we all know this isn't a normal year. We may see the market continue to be busy through fall. Once the snow starts to fall it is a safe bet that things will calm down. A lot of people won't want to go out and look at homes when they have to hike through 3 feet of snow.
Since prices are currently going up, you should anticipate you will be paying more for a home if you wait. But how high prices will go, and how fast they will climb, is still unknown. Again, we aren't physic. One thing is almost a given... if you wait until it starts to snow you probably won't have to compete with as many buyers and might not have multiple offer situations.
LOOKING TO SELL
For sellers, it's pretty simple. Now is a GREAT time to sell a property in Tahoe. 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 week or a month from now. Right now sellers are in control and have their pick of what sale terms they want. Now, 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, there is no way to know if we will still have a high demand from buyers, if there will still be multiple offers, or how the economy 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 styles of homes and specific features that are in the most demand.
For full time buyers, they mainly want a larger home with a large yard in a quiet neighborhood that is close to the forest and/or within walking distance to a local school. 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 part-time buyers, most will want the ability to rent out the home when they aren't using it. This is similar to the average buyer Tahoe has always had... the second home owner. But the recent change is that instead of focusing on how much income they can make when renting the home (when they aren't living in it), now buyers focus on their own comfort and view the income as secondary. So once again, a home office and high speed internet is very important. Also important is the bedroom count, since allowed vacation rental occupancy is determined by bedroom count (and parking spaces). Due to local restrictions, these buyers will be looking outside the South Lake Tahoe city limits.
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 right now.
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