The South Tahoe Realty Blog

The Tahoe real estate market does not follow the national market.

While discussing the state of the Tahoe real estate market last month, I was presented the argument that the number of home sales are down over the last several years. Surprisingly, this is a statistic I did not track, so I went to work in the MLS and started mining data. When finished, even I was shocked at the results.

When I compiled these figures we were only through half of 2010, so I totaled the number of home sales for the first half of each year as far back as the MLS had record. I was amazed to find that sales are up 45% over last year, and homes are selling at the same pace they were in 2003! These numbers also suggest the correction in the real estate market may be in the rearview. The middle point between the peak – 347 – and the trough – 148 – is 248, which nearly matches this year’s total of 239. Furthermore, over these eight periods, the average number of sales is 228, which also nearly matches this year’s total of 239. Home sales bounced up, fell down, and are now at the midpoint. This midpoint is accurate as 2010 Tahoe home sales were unaffected by homebuyer tax credits because our resort market hardly sells primary residences, which were the only sales providing tax credits. The Tahoe real estate market does not follow the national market.

In addition to my recent findings, median home sale price has remained level in South Lake Tahoe since January 2009* (see graph below). Year-over-year inventory continues to decrease. Based on supply vs. demand (previous sales versus our current supply of homes), our market still favors buyers but only slightly. Our market will reach a technical, numbers-based balance within months. It may have already attained an actual balance.

Our market does not follow the national market. Our buyers represent a unique subset of buyers who seek to purchase vacation homes. They have more financial power than almost any other group of buyers in the nation. They were not affected by the downturn in the economy like the average U.S. citizen. They could have purchased at any point during the real estate downturn, but they sat on the fence waiting for the bottom. Now that it appears to be here, they are purchasing Tahoe homes in droves – at the same pace of 2003. What’s the old saying? Those who purchase when no one else will are those who will become rich.

Drew Kondo received his Bachelor’s of Mathematics from UT-Austin in 2001 and now sells real estate on the Tahoe south and east shores. To contact him, call 530.545.1831 or email drew@southtahoehouses.com.

* When comparing my median sale price statistics to those of other sources, it must be understood that I present median sale price for individual months and only incorporate sales from that month. This provides the most accurate representation of what occurred in that month. Other organizations offering real estate data often squeeze sales from the previous twelve months into a single month. This flattens data and makes it easier to interpret, but it also fails to represent what actually occurred in any given month.

(This article by Drew Kondo was featured in the Tahoe Daily Tribune on June 12, 2010. For Part 1, click here.)

Preparing Your Home

The presentation or “staging” of your home is crucial in obtaining the highest possible sale price. Extra time and money spent making your home presentable and welcoming can yield several thousand dollars in the sale. Here are several staging tips:

1. Declutter – No buyer wants to see a mess. If a visible item doesn’t add to the aesthetic value of your home, it needs to go. This includes pictures and magnets on the refrigerator, boxes of food sitting out in the kitchen, the hairbrush on the bathroom sink, etc. Put it all away, box up what you can, and store it all in the garage, shed, or a closet.

2. Eliminate red flags – You never want a buyer questioning the structural integrity of your home. A crack in the drywall may be the result of a home settling. However, a buyer may perceive it as a foundation problem and never consider your home again. A 20-year-old water stain? A buyer may leave your home with worries of mold. I’ve even had buyers question a home’s plumbing because of restricted flow shower heads. Never leave buyers questioning anything because even the possibility of a problem may needlessly scare them away. Just fix it.

3. Gaining “sweat equity” – “Sweat equity” refers to home improvements that yield a profit when selling a home. You may not want to install a new kitchen, but replacing old fixtures and painting walls are cheap and easy upgrades that can improve your home’s resale value.

4. Staging items – Anything to make a buyer feel more at home will help, especially in a vacant home where everything has been removed. Not much is needed. Actually, less is usually more. However, consider purchasing a nice vase or flower arrangement for a living room mantle, a couple pretty cookbooks to stand up in the kitchen, fancy place settings for the dining room table, or a wine glass and bottle of wine to place next to each other.

5. Leave the lights on – If you occupy the home you are selling, follow two rules for property showings: First, don’t be present. Most buyers are more comfortable without sellers in the property. Second, before you leave, turn on the lights in every room. Homes always show better when they are well lit.

6. Consult your Realtor or a staging professional – Real estate agents have seen multitudes of homes. They know what works and what doesn’t. Ask your Realtor for help preparing your home, and follow his or her advice. If you want even more help, some individuals and companies specialize in staging homes for sale. They can be expensive, but if you’re selling a high-end property, hiring a home stager can be a profitable investment.

7. Additional resources – The tips I’ve provided are basics in home staging. More advanced tips can be found in home staging books, on the web, and, of course, HGTV.

The process of selling a home can be intimidating. However, if one takes good measures to prepare his or her home, chooses a good Realtor, and prices the home well, it can be a successful venture. When you’re ready, help is available from your local real estate professional.

If you have further questions, feel free to contact me at 530.545.1831 or drew@southtahoehouses.com.

(This article by Drew Kondo was featured in the Tahoe Daily Tribune on June 5, 2010)

The summer is finally, finally here, which means that many Tahoe homeowners will be listing their homes for sale. This can be a daunting task. For many it will be the biggest sale of their lives. Many questions arise: At what price will you list your home? Who will be your Realtor? And what changes will you make to your home before selling?

Pricing Your Home
Determining the market value of a home, especially in Tahoe, requires a great deal of skill. Value mainly hinges on size, condition, and location of a home. However, in Tahoe values can also fluctuate greatly based on view, neighborhood, lot size, floor plan, vacation rental potential, available remaining coverage, slope of a lot, and even a home’s orientation on a lot. Local appraisers, local Realtors, and extremely seasoned Tahoe real estate investors are best at pricing homes, but even their opinions differ sometimes.

If you’re considering selling a home, the good news is you can find help with the difficult job of pricing a home. Most Realtors will do this for free for the opportunity to talk to you about listing your home. A Realtor will oftentimes give you two prices – a suggested list price and a suggested final sale price. A good real estate agent will also provide information on how he or she arrived at these prices. This will be in the form of a comparative market analysis (CMA), which shows homes sold that are like yours. If you decide to ask more than one agent for a CMA, let the agents know about this. Realtors don’t mind competing against each other for listings, but like everyone else, they appreciate honesty and transparency. Contacting two or even three Realtors is fine; however, I would not recommend contacting any more than three.

Another option for determining the value of a home is hiring a local appraiser. Some consider this a little overkill. However, from time to time, real estate agents will even order appraisals when selling their own homes.

After you determine what your home is roughly worth, you must decide on a list price. Listing below market value may mean you’ll have to sell below market value, which hurts. However, the property may be bid upward if there are multiple offers. Listing a property too high above market value can also have negative affects on the sale of the home. It will likely be shown to a few qualified buyers who will write the property off as overpriced and will not consider it in the future even after several price reductions. Most real estate professionals recommend pricing at market value. A home will generate most interest in the first 30 days it is listed. If it is priced well, it will be shown frequently and will likely generate a reasonable offer or two.

Choosing a Realtor
Your choice of a Realtor is an import one. He or she will be coordinating a six-figure sale. Two of the biggest mistakes home sellers make when choosing a listing agent are selecting an agent based on who suggests the highest list price or who will take the lowest commission. These two criteria do not correlate with how a Realtor will perform.

First, getting a discount on your Realtor’s commission may leave some more money in your pocket. However, all real estate agents are not equal. Some agents have large advertising budgets and will spend time marketing your listing. Others will not provide the same service. This will affect the number of buyers who will see your home. Some agents communicate regularly with their sellers while others communicate less frequently. An agent’s experience level may be the deciding factor in the price negotiated on your home or whether or not your sale holds together. Having an agent who will provide quality service can easily be worth an extra half percent to a percent in commission costs.

Another mistake many sellers make when choosing an agent is choosing the one who quotes the highest price for their home. Yes, the idea of selling your home for oodles of money may sound great, but eventually false hope will lead to disappointment. As mentioned before, listing a property well above market value isn’t smart. An agent who leads a seller down this path provides a true disservice. Choose the agent who is honest with you, not the one who quotes you an unrealistic price in order to obtain your business…

Stay tuned for part two of this two-part article. If you have any questions, feel free to contact me at 530.545.1831 or drew@southtahoehouses.com.

Here is a word from Tahoe mortgage broker, Norm Hansen, on the future of interest rates:

Rates are still at an all-time low … but … we expect some changes in the 2nd quarter.

I have reported on the effective job the federal government has been doing in keeping rates low by buying mortgage backed securities … to the tune of $1.25 trillion.

That $1.25 trillion runs out at the end of March 2010 … which means if the other markets do not pick up the difference in purchasing, then rates will most likely increase. To what extent, we do not know. We do know the goverment is aware that these low rates have had a very positive impact on recovery and are sensitive to it. We await word if there will be further participation and/or impact from the goverment.

If you are rate sensitive to a refinance or a new purchase, a call to action may be prudent. As always, we like to take a positive approach … but this is something we do see on the horizon.

Norm Hansen
AmWest Mortgage
775.586.1130
nhansen@gbis.com

As the holder of a bachelor’s in mathematics, I mine for a lot of real estate statistics. The following numbers present a good reflection of what’s happening in the South Lake Tahoe real estate market. Since January 2009, median sale price has leveled. The bottom of the market is near.

The market as a whole has 9.1 months supply of inventory. A balanced market is traditionally defined by 5 to 7 months supply of inventory. Because we have a greater suppy than this, we are still in a buyer’s market. However, we are approaching balance. If the market is divided into price bands, some segments have reached balance and have even entered into a seller’s market. In the $0-$200,000 price band, only 2.0 month’s supply of inventory remain. In the $200,000-$300,000 price band, 4.5 month’s supply of inventory exists. These numbers suggest there is a seller’s market in these price bands, which is the case. Lower priced properties are seeing multiple offers and are often selling for more than their list price. If you are seeking a property in this price band, now is probably the time to buyer. The market bottom for these properties may already be in our rearview. A surplus of inventory in the higher price bands suggest that nicer homes will continue to lose value.

Here are a couple virtual tours that were created for my office. Click the links below to see details on these South Lake Tahoe properties.

3781 Lucinda Ct. - 4/4/2 - $1,595,000
1877 Delta Ave. - vacant land - $89,000

To see all my Tahoe real estate videos, click here. If you’re interested in these homes or any other Lake Tahoe property, please e-mail me at drew@southtahoehouses.com or call me at (530) 545-1831.

If video stops during playback, just press the pause button and wait a minute for the video to download.

Here and there I’ve been videoing property while previewing homes and holding open houses. I’ve posted these videos to my YouTube channel. Currently there are 17 videos on the channel. Click here to see the videos. It doesn’t take me long to do this, and I feel it provides a valuable resource to Tahoe home shoppers. I won’t leave any sold homes on the channel, and I’ll update it with a few new videos about once a month.

If you’d like to be updated any time I post new videos, I’d encourage you to subscribe to this blog’s e-mail updates on the right-hand side of the page. I’ll post updates on the blog any time new videos have been posted.

Also, if there are any properties you’d like to see video of, feel free to let me know. I can be reached at drew@southtahoehouses.com or at 530.545.1831. Some properties are harder to video than others because of occupants and stringent guidelines for access. However, I should be able to honor most requests.

It’s almost summer here in South Lake Tahoe, and while the temps aren’t too hot with this recent cold front, the real estate market is scorching. We haven’t seen buyer activity like this in years. I’ve seen several properties receive multiple, competing offers. They are oftentimes selling for more than list price. Things are getting crazy here and many of us real estate professionals are putting in long hours in order to keep up.

At the moment, there are 94 homes in escrow in South Lake Tahoe (We hit 100 last Friday.) We haven’t seen this many homes in escrow since July 2005, which was a month before the peak of the market. See the tables below for more statistics.

Our overall inventory is shrinking as well. Currently, there are 381 single-family residences for sale. Last year there were 414. The year before, 522. In May 2006, there were 424. With Tahoe homes reaching affordable prices and buyer confidence increasing, look for these trends to continue.

Speaking of prices, home prices have leveled off since the start of the year. I’ve checked the homes currently in escrow, and median sale price will continue to hold steady for at least the next couple months. Perhaps we are at the bottom of the market?? Statistics are increasingly pointing in that direction. A balanced market is traditionally defined by 5 to 7 months of inventory on the market. At 6.1 months of inventory, we have already reached that point in the under-$300,000 price band. We are quickly approaching that point in the $300,000-$400,000 price band. As inventory continues to decrease and sales increase, the statistics should catch up and begin to truly reflect how busy our market is.

A couple caveats …

Ninety-four homes in escrow today can’t be compared to 94 homes in escrow a few years ago. The reason for this is short sales. Short sales typically take longer to close than a normal escrow. Thus, with some homes sitting in escrow for long periods of time, this inflates the total. That said, however, only 15 short sale homes went into escrow over 45 days ago. Subtract these from our total and the 79 remaining homes in escrow still hasn’t been matched since September 2005, which was virtually the peak of the market.

In addition to this, the traditional definition of a balanced market, 5 to 7 months of inventory, may not apply in this market. Previous markets have not been affected by foreclosures like this. A new wave of foreclosures could drive prices down further. On the other hand, prices have leveled off for the last half year. And no one can argue that our shrinking inventory is a good sign of rebound.

All that said, now might be THE time to buy in South Lake Tahoe. And with another amazing Tahoe summer approaching, what better a time to come and start shopping!

Once again, all is quiet on the South Lake Tahoe foreclosure front. Not much has happened in the last two weeks.

I had the chance to drop by 489 Tahoe Keys Blvd. #69. I videoed while I was there. Click the link below to see it.

489 Tahoe Keys Blvd. #69 Video

If you’re interested in receiving the foreclosure lists by e-mail, please let me know at drew@southtahoehouses.com. If you are interested in property on this list or any property in South Lake Tahoe, e-mail me or call me at (530) 545-1831.

There is very little to report on South Lake Tahoe foreclosures at the moment. Our foreclosure list has dwindled to a mere 10 properties. Only 7 of these are single-family residences. A 90-day foreclosure moratorium was passed in late February. Thus, we should see a big wave of foreclosures hit the market later this month and in June when the moratorium is no longer in effect.

If you’re interested in receiving the foreclosure lists by e-mail, please let me know at drew@southtahoehouses.com. If you are interested in property on this list or any property in South Lake Tahoe, e-mail me or call me at (530) 545-1831.