Now that the stay-at-home orders have started to lift in both California and Nevada, how is that affecting the Lake Tahoe real estate market? The short answer is things are looking good! For the long answer lets dig into the details.
LITTLE BIT OF HISTORY
As mentioned in previous posts, when the stay-at-home orders were put in place in California and around the country, the real estate market went into a stand still. Strict travel restrictions were put in place in most areas around the Lake. Almost no buyers came into Lake Tahoe to visit or to look at properties. We also saw a lot of sellers take their listings off the market in late March and through April.
Basically, the real estate market paused for a few months. Few properties sold, but prices stayed flat. Everyone just sat and waited to see what would happen when things started to open back up.
THE SLOW RE-OPENING
By the time Memorial Day came, we had gone into Phase 1 of re-opening. While restrictions were still in place for travel to Tahoe from other areas, there was a slow trickle of more visitors to the area. But with lodging properties all closed they were limited to only day trips. A $1,000 fine was also in place in El Dorado County on the South Shore for any non-essential travel into the Tahoe area.
As we moved into early June we entered Phase 2. The casinos at Stateline reopened on June 4th and lodging opened up on the California side the next week. The $1,000 fine for non-essential travel was also lifted by El Dorado County and visitors were welcomed back.
When the July 4th holiday arrived we finally got back to a “normal” summer, with the town filling up that weekend. Almost everyday since then we have seen a large number of tourists coming to the Lake, with hotels and vacation rentals booking up very quickly and beach parking lots filling up by around 10am every day.
MARKET PICKED UP
As we predicted, as soon as visitors started coming back into Tahoe the market began to pick up. What we didn’t completely predict was how quickly it would pick up.
Let’s take a look at the largest marketplace in the Tahoe area, South Lake Tahoe.
In Tahoe we always see a drop in active listings over the winter through around April. But this year, due to obvious reasons, we didn’t see an increase of listings in spring like we normally would. There were 171 active listings in February, 174 in March, and 171 in April. May finally brought a small increase in listings up to 193.
But in June 2020 the number of active listings dropped back down to 162. This drop is explained in the Pending Sales data discussed below.
Pending sales went from 21 for the month of April, to 78 for the month of May. Then the rush came, and in June we had 154 pending sales. With only 316 listings, that means 1/2 of the listings were in escrow during that 1 month period.
As of July 13th the number of pending listings is even higher, with 190 pending and only 127 active. This means 60% of listings are currently in escrow.
With the increase of pending sales it was only a matter of time before we saw closed sales increase. That finally happened in June when we have had 71 closed sales. As of July 13th we already have 42 closed sales for the month!
That may not seem like much, but when you compare it to the 33 closed sales in April and only 24 in May it is a substantial increase.
AVERAGE SALES PRICE
During March thru May most of the sales were in the lower price range. In the field we noticed most of the buyers were calling about lower price range homes, mostly looking to pick them up at a good price.
But in June that changed as we saw more buyers looking for larger and more expensive homes. The average sales price in June was $515,000. This trend has continued into July, with a large portion of buyers looking at the higher price ranges, specifically homes in the County area of South Shore.
There are still buyers looking for homes in the lower price ranges, but with the extremely low inventory under $400,000 there isn’t much to choose from. As of July 13th there are only 10 active listings that are single family homes priced under $400,000. 28 listings under $400,000 are pending and already in escrow.
Here is a breakdown of the current inventory of single family, condos and townhomes in South Lake Tahoe:
*To see all current listings click on the price range listed above.
WHAT DOES IT ALL MEAN
So what does all of this data mean for buyers and sellers in Lake Tahoe?
Right now buyers will find low inventory and be prepared to compete against others looking at the same homes. Many properties are selling quickly, some even with multiple offers.
With the market heating up and properties selling quickly, most sellers won’t even entertain low offers at this time. So if you are looking to get a “deal” and offer far below asking price you should be prepared for a negative response from the seller.
During a hot market like we are currently seeing, it is recommended an offer be within 95% to 97% of the list price. There are exceptions to every rule, and Our Team can discuss the specifics of a particular listing and let you know what a good offer price would be to make sure you have the best negotiating power possible.
We have been contacted by multiple buyers over the past few weeks who stated they wanted to offer 10% to 20% below asking price on homes for sale. After we explain the home is listed close to market value and show them comparable sales that back up that price, some of them have held firm wanting to put in a lower price. It should come as no shock that the sellers would not even entertain those low offers, and within a day or two the home went pending with an offer very close to or at list price.
So please be prepared to purchase a home very close to what it is currently listed at (for the majority of listings). And as always, come prepared with a pre-approval letter from a lender to submit with your offer. We can help recommend some local Tahoe lenders if you don’t have one you are already working with.
You can probably guess what I’m going to say for sellers. Yes, it is a sellers market right now. Few listings and lots of buyers, perfect conditions to sell a home in Tahoe.
But we’ve already seen some sellers get greedy, and list their homes way to high. Again, prices haven’t gone up yet. And since most buyers need an appraisal done to give their lender a market value of the home, you have to be able to show comparable sales that back up whatever sales price you agree to. Plus those overpriced homes aren’t selling. They may get offers, but they will be low and well below asking price. Or it’s possible it just wont be attractive to buyers and the property won’t even be shown, so it will sit on the market while other homes sell.
Homes that are priced right are going quickly right now, sometimes getting multiple offers within just a couple days of being listed for sale. The main draw for most buyers seems to be homes that are remodeled, or at least are clean and well maintained. Many buyers are looking for a quiet clean yard and lots of natural light inside. Or if the location and setting is unique, it may sell very fast.
Here is an example of a home that sold within 1 day of being listed. It’s address is 3409 Panorama Drive in South Lake Tahoe, CA and it was listed at $599,000. It is located in the Christmas Valley area south of the city of South Lake Tahoe and has easy access to the forest hiking trails as well as the Upper Truckee River.
Basically… if you are going to list your home for sale you should put it at the current market value (backed up by comparable sales) or just a tiny bit above that figure. Make sure you home is clean and de-cluttered, lights all work, yard is raked and clear of debris, and any minor repairs that are obvious and visible are taken care of. This will give you the best chance for a quick sale at a fair price. Our team can give you a free market evaluation of your home and let you know what price range you should list at to be able to sell quickly for the most amount of money.