South Shore Lake Tahoe
The dog days of summer are upon us! We are ramping up for increased real estate activity on Tahoe’s South Shore which almost always grows progressively through the start of summer and until the end of October. The Tahoe Fall season has become a popular time for our tourist guests to visit us and I expect we’ll see this seasonal trend again this year.
Though things are far from typical…it certainly hasn’t been “business as usual” for us in the past few years. With the unprecedented run up of prices from 2001 to early 2006, followed by an unprecedented down turn in the market since, we have been hard at work keeping up with the changing dynamics in the market.
But what a difference a year makes (or 2-3)
At this time in 2007 we were recovering from a horrific firestorm that destroyed 250 homes and structures in South Tahoe. Much more damaging than the physical destruction, was emotional devastation and toll on the many families affected by the fire. As small communities are known for, we pulled together and rallied around the fire survivors, opened our doors and hearts and started the healing.
Today many of the families are returning to their “new and improved” custom homes or have simply moved on with other housing options. There are still the scars that remain but the “Angora Hills” area, once a lunarscape, is now a bustling sea of construction and positive energy focused on renewal.
Mind you this area’s redevelopment is somewhat of an anomaly given the current state of housing market and the economic downturn and it makes this active construction scene a bit surreal.
What do the numbers look like since the down turn in the realestate market?
For most of us with our ear to the ground in this industry, we knew that the market couldn’t sustain the continued upwards climb in pricing; there wasn’t an interest rate low enough to offset the high prices and certainly our incomes weren’t growing at the pace of inflation let alone housing prices.
Although the market came to an abrupt halt in October of 2005 the statistics (see attached) show the median home price of “homes sold” climbing until May of 2006 to an all time high of ~$486,000. Since then home prices have slowly and steadily declined at almost 1% per month to give us an overall decline in price since the peak in May 06 of 21% or $399,000 for the same home sold at the time of this writing.
Unintended Consequences and Help is on the way?
No one wants to see their home prices dropping and the terrible consequences it can have on equity (what’s left of it for so many).
However, it is a market place condition that must be observed. We have so little control as consumers and even the lawmakers with the billions of dollars they are pumping into the credit and financial markets seem to have had little immediate impact. But we are hopeful the government assistance with GSEs will shore up the shaky credit markets and provide options to the hundreds of thousands who are facing upside down pricing to mortgage scenarios.
Some Good News with a touch of reality!
The bright news is that due to the new levels of affordability (pricing), buyers are coming back in to the market place, this not just perceived but rather real. Here’s the new trend information that I have observed:
Since January of 2008 we have seen, on an average, the year over year pending sales numbers increasing and have continued to do so for over 7 months. Certainly in our office we are up over 20% in pending and closed sales from this time last year.
While the number of sales are picking up, comparing it to the early 2000’s, there is nothing to brag about. That said, it is a very good indicator that buyers, who have waited out the market, are returning. What is attracting the buyers back in to the market is the lure of a great bargain; short sales, foreclosures and “killer deals”, and there are plenty to be had, even in our resort market.
Having waited for the right time to buy these investors are interested in value first and foremost…so, pricing is key negotiating point in current transactions. Having a great negotiator on your side is critical. Ultimately, it takes a win – win to put a sale together and a knowledgeable team to close them (even more important these days).
Forecast for the next year-
If the economy can remain relatively stable along with interest rates I believe we’ll see the housing market emerge as one of the growing markets again.
Resort real estate is an interesting barometer of the economy. Tahoe real estate is generally viewed as a “luxury lifestyle” purchase but in recent years with an aging baby boomer population (a key target demographic), our market has become a safe “investment” option for those that have money to shelter and invest. The returns are great not only in the financial ROI sense, but in the quality of life department too. With the 1031 tax rules in place and the conversion rules of your investment property into your primary (which have recently undergone some changes, check with your accountant) many are converting heir vacation rentals into their retirement homes and/ or moving to Tahoe and telecommuting.
While I do see prices continuing to settle, certainly until the foreclosures and distressed sellers are out of the inventory, I believe we are near or at the bottom of the market in terms of bargain pricing. No doubt the next few months will tell the story, and we’ll keep you posted of course.
For more information email us at deb@realtordeb.com
Or call us toll free 1-866-542-2912
It is our pleasure to earn and retain your business!
We wish you and yours a fabulous fall season and hope your summer was all you wanted it to be, with plenty of Tahoe time!
Best Wishes
Deb Howard
Broker/Owner
NV/CA
3599 Lake Tahoe Blvd. Ste.A
South Lake Tahoe, CA 96150
deb@realtordeb.com