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 AreaCNBC – 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 8/1/2022. 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.
211 ACTIVE LISTINGS
That’s right, 211 active listings. After a record low in February 2022, we have seen a normal Spring/early Summer uptick in new listings. Historically, the uptick in new listings, after the lull in the winter, occurs between March and July. So we are still seeing normal market behavior. From March to July 2022 we have averaged around 95 new listings per month, with 94 in March, 78 in April, and 90 to 103 for May thru July.
During a “normal” spring/early summer market we see more listings come on the market as sellers position their homes for the summer rush of buyers. In the “normal” market, we would see the number of total listings peak in July and then start to drop in August and September as the number of buyers catches up with the number of listings. So, if this is normal market behavior, we will see the number of new listings taper off in August which will cause the total active listings to drop as well as more go into escrow.
48 PENDING LISTINGS
Out of the 259 total listings, 48 already have accepted offers and are pending sale (aka “in escrow”). That means 19% 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. This was due to the super high pent up demand from the COVID closure of town. Once things opened up, buyers took off and were picking up all the available properties for sale.
The last year has shown a normal curve with the pending listing numbers following along with the active listings numbers, as it should in a healthy market. But as we see the number of new listing go up and pending sales staying flat over the past couple months, that usually means the market is shifting. So keep your eyes on this trend as we go into August and September.
50 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. As you can see, we did see the number of closed sales drop this past month, even while the number of active listings went up.
Remember, closed sales lag behind pending sales data by 30 to 45 days. As you can see we had seen an slowdown in sales in May with a total of 52 closed sales. With the July pending numbers down, we anticipate the August closed sales will drop as well.
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 July 2022 the average sales price is at $700,000. That is just slightly lower than the sales price in June and a 2.7% drop from the high in May of $719,900 which was the highest average sales price we have ever seen.
We will have to wait to see what August shows, but I anticipate it will also show a drop in price based on current market activity. This means it appears we have reached the peak in prices and are starting to see an adjustment, which was anticipated after the extreme market behavior over the past 2 years.
Experts in housing economics and statistical analysis have told us that they anticipate the housing market will settle late 2022 and most likely be more or less flat in 2023. But they did give a huge warning with that info… this market has been unusual and is driven by so many different factors it is difficult to come up with future estimates. Just remember these same experts also felt the slow down would happen last fall, and that didn’t happen.
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 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.
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, as 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.
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 quickly.
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