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 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 2/10/2021. 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.
64 ACTIVE LISTINGS
That's right, only 64 active listings. Compare that with what the number was back in May when we had 202 Active listings. It's even more drastic of a change when you look a little further back 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 almost every month since September 2020 has had fewer and fewer active listings.
61 PENDING LISTINGS
So out of the 125 total listings, 61 already have accepted offers and are pending sale (aka "in escrow"). That may not seem like a high percentage, but when you view it as a percentage of the total number of listings available, it means 48% of the available listings are already in escrow. Just look at the chart below that shows how many listings went pending within each month, and see that 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 the peak in July 2020, but when you compare to the active listings chart, you can see that coincides with the drop of available listings. Fewer listings available means fewer listings that can go into escrow.
Many of these homes and condos are going into escrow with days of being listed for sale. Very few will 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. Most sellers have specific due dates when they will review all offers and make a decision. Usually this is a date about 5 to 7 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.
Basically... if you see something you like, then you need to act ASAP. Our Team can assist you and do a "Preview/Review" video and send it to you so you can virtually view the property. We can also give you valuable advice to have the best possible chance to have your offer stand out from the rest and get accepted by the seller.
49 CLOSED SALES
Again, the number of closed sales is dropping each month after the high in August 2020 due to the lack of inventory. We saw 155 closed sales in August 2020, 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 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.
Then, beginning at the end of July 2020, prices shot up dramatically. As of January 2021 the average sales price is at $575,000. That is the highest median price we have ever seen... HIGHEST EVER.
In fact, prices have been going up at such a rate that it is very difficult for listing agents to keep up. We may list a house at $700,000 based on the market and values we see on the day we write up the listing agreement. But by the time the property comes on the market, the demand may be high enough to cause offers to be much higher than the list price.
We had anticipated (in a previous version of this blog from September 2020) that the sales data would show a pretty significant rise in the median sales price as the months went on into fall and winter. 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 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. Right now since we are seeing so many multiple offer situations, we recommend being aggressive on the offer price. We also have a few special "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 during winter and into spring.
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 this isn't a normal year. We have seen the market continue to be busy through fall and into winter. Snow hasn't seemed to slow things down at all... our crystal ball was wrong on that point (sorry).
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 is still unknown. Again, we aren't physic. One thing is almost a given... if you wait until spring to see if there are more listings to choose from you will probably end up paying a much higher price.
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 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, 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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