South Shore Lake Tahoe
The dog days of summer are upon us as we ramp up for the real estate activity in the Tahoe 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.
Although there’s certainly been no “usual” anything the past few years, what with the unprecedented run up of prices from 2001 to early 2006 only to be followed by an unprecedented down turn in the market (in well over the past 20 years).
But what a difference a year makes (or 2-3)
At this time in 2007 we were recovering from a horrific fire storm that had not only destroyed 250 homes but more damaging was the destruction to the lives of as many families. As small communities are want to do 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 lunar scape is now a bustling sea of construction and positive energy focused on renewal.
Mind you this a site that must be seen for it is an anomaly, particularly given the current state of housing and the economy downturn on so many fronts, all of which has hit realestate hard and makes this 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 approx. However since then the 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 $399,000.00 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; 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!
That said, the bright news is that due to the new levels of affordability (pricing), buyers are coming back in to the market place, this not perceived but rather real. Here’s the new trends 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 that are picking up, comparatively to the past early 2000 years, is nothing to brag about per se, it is a very good indicator that buyers, who have waited out the market, are returning.
These people need and want a roof over their heads and in our market a resort home’s roof over their heads. They have waited for the right time to buy and are doing so with one very clear caveat; the value must be strong, pricing is subject to negotiations. Having a great negotiator on your side (either side is critical) but ultimately it takes a win – win to put a sale together and a knowledgeable team to close them (even more important these days).
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.
Consequently the sale prices have declined to reflect the notes made above.
Currently Sales are up (slightly) Prices are down-
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 realestate is an interesting barometer of the economy, we are viewed generally as a “luxury lifestyle” purchase but of recent years, with the aging population and demographics, 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 “roi” approach but in the enjoyment 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.
Supply (down) and demand (up) and no doubt the next few months will tell the story, and we’ll keep you posted of course.
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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