I wanted to bring you some relief and insight into how this crisis may affect home values and the state of the market in the Tahoe Truckee region.
What I have been hearing a lot right now is:
What is the market doing?
Are homes values going to drop?
What will happen to the Real estate market moving forward?
The economic toll of the shutdowns and unemployment we are seeing is difficult to predict. However, experts are reminding us that the economic impact will rebound with a cycle of downturn followed by economic expansion. To keep it in perspective; a recent study from John Burns Consulting reminds us that past pandemics have created economic rebounds with minimal impact on housing prices, and that historically over time, real estate has out-performed the stock market.
Will this affect my home value?
Remember this is not 2008. Today’s market conditions are not related to the housing market, overpriced homes, and easy-to-access mortgages of the 2008 housing crash. Right before the housing crash of 2008, people were cashing out the equity of their homes at historic rates. This led to a steep increase in foreclosures and short sales, which in turn lowered the value of other homes in the area.
That won’t happen today because house prices have risen nicely over the last few years, leading to over 50% of homes in the country having greater than 50% equity with owners who have not been tapping that equity like they did in 2008.
Demand is high for the Tahoe area. With a new generation of younger buyers who are getting used to working from home amid the corona virus pandemic, the prospect of living out of the city and in Tahoe while maintaining a career is appealing.
Many prospective buyers I am talking to right now are looking for a simpler life, a close community. They want the outdoors and don’t want to be stuck in places where there’s a health problem. They want the Tahoe-Truckee lifestyle.
I do not expect to see any significant drop in home values in our market this year. Of the listings that have closed escrow, the sold price has averaged only 4% below asking price. With the listings that are currently in escrow we are seeing hardly any price reductions in the under $1,000,000 price ranges and 4% – 6% reductions in the over $1,000,000 range.
I expect that when we see their actual closing prices they will be about 4% below asking price. Active listing are also only having very slight price reductions. As long as we are low on inventory and demand stays high our values will stay high.
Prospective buyers have remained hesitant to buy before they can physically tour a home, but as people are allowed to take a physical tour, the market is going to boom. Lawrence Yun, Chief Economist at NAR, noted the beginnings of a turn in the market:
“After a pause, home sellers are gearing up to list their properties with the reopening of the economy…Plenty of buyers also appear ready to take advantage of record-low mortgage rates and the stability that comes with these locked-in monthly payments into future years.”
Due to the easing of restrictions on the “stay at home” order and new guidelines from the California Association of Realtors we are now able to show properties. We are entering what is usually the busiest season of real estate, which typically lasts through the end of the summer. I am confident that the busy season will last through the fall, and possibly extend through the winter.
Momentum is building, so there is no need to fear putting your home on the market now. Just this week, Zillow reported an uptick in listings across the country, which means good news for the health of the market:
“The number of new for-sale listings overall has shown improvement, up 5.9% last week from the previous week. New listings of the most-expensive homes…are now seeing the biggest resurgence, up 8%. The uptick is likely a sign sellers are feeling more confident because of improving buyer demand, as newly pending sales have also jumped up during the same period.”
The Tahoe market is on Fire!
Since April 23rd we have had 218 new listings, with 77 in escrow, 62 of which went into escrow over the last week and holiday weekend. Our total number of Active listings is just slightly higher than back in April because so many listings are being purchased.
Here are the statistics on recent market activity for the sales of Single-Family Homes and Condominiums in North Tahoe and Truckee, excluding Donner Summit, Sierra County & Surrounding Areas, as of midday on May 27, 2020.
Total Active Listings
- 397 with a median price of $945,000
- 150 in escrow with a median price of $730,000
- 56 sold since 4/23 with a median price of $699,000
- 26% of active listings are priced under $600,000
- 31% of listing in escrow are priced under $600,000
- 30% of recent sold listings had a sold price under $600,000
- 44% of the listings in escrow are priced between $600,000 and $1,000,000
- 46% of the recent sold listings are priced between $600,000 and $1,000,000
As you can see, about 75% of the recent market activity has been in the under $1,000,000 price range.
What can you do with this information?
Rest assured that home values in this market will stay high. This is a good time for those interested in selling their property because demand is high This also is a great time for buyers to purchase a second home or for an existing homeowner to move up in the market because and interest rates right are at record lows and there are good properties on the market that are priced to sell.
I want to help you to understand what is going on in the Tahoe Truckee real estate market right now. That is why I am personally inviting you to a no obligation call with me to discuss the real estate opportunities in the Tahoe Truckee market and answer your questions one on one. I am here to serve. Give me a Call: 530.913.6020