The South Tahoe Realty Blog

My real estate agency, Chase International, has recently unveiled a new website at ChaseNation.com.  ChaseNation is a social networking site like Facebook or MySpace.  However, ChaseNation is geared toward Reno-Tahoe real estate.  In fact, it is the first ever agency specific social networking site.  I invite you to check it out at:

www.ChaseNation.com

When showing property, I’m often asked the question, “What will my monthly payment be on this house?”

The answer many people give is simply the amount owed on the home each month, which is often called PI – principle and interest. On a $400,000 home, this would be about $1,920 (assuming 20% down and a 6% interest rate).

However, PI does not completely account for the cost of homeownership. There are other reoccurring costs. Those with a little real estate savvy often use the term PITI. It stands for Principle, Interest, Taxes, and Insurance. In addition to PI, it accounts for the cost of property taxes and homeowner’s insurance. This presents a much better picture of what owning a home will cost.

On our $400,000 home in Tahoe (mentioned above), we can expect to pay about $400 a month in property taxes. Insurance will cost around $100. I also like to account for the cost of water, sewer, and trash, which will be about $120. Add this to our $1,920 mortgage, and we’re paying $2,540 per month. Thus, PITI and water/sewer/trash accounted for an additional $620 of expenses above and beyond payments on the house.

Before getting to the nitty-gritty, I want to mention that every homebuyer should account for tax write-offs. The interest you pay on your property can be written off at tax time. This tax break can be VERY significant.

So in answer to the question, “What will my monthly payment be on this house?” I’ve created the following table to provide an answer to almost anyone shopping in Tahoe.

* Interest on 20% down loan = 6%. Interest on 10% down loan is calculated at an additional 0.5% for PMI. Property taxes = 1.2%. Insurance = 0.3%. Water/sewer/trash = $120.

Right Next to Heavenly Sqft: 3200 Beds: 5 Baths: 3 Price: $895,000 >Click for more info	Between Unbuildable Lots! Sqft: 1680 Beds: 3 Baths: 2 Price: $369,000 >Click for more info
Foreclosure Steal! Sqft: 1432 Beds: 3 Baths: 2 Price: $225,000 >Click for more info	Brand New Construction Sqft: 2032 Beds: 3 Baths: 2 Price: $489,000 >Click for more info
Tahoe Keys Waterfront Sqft: 2070 Beds: 3 Baths: 2 Price: $829,000 >Click for more info	Tahoe Island Park w/Upgrades Sqft: 1353 Beds: 3 Baths: 1.75 Price: $388,900 >Click for more info

For further information on these and other South Lake Tahoe Best Buys, call Drew Kondo at (530) 545-1831.

Here are some of the latest statistics from the South Tahoe Association of Realtors.  This data is from March 31, 2008.

South Lake Tahoe’s median home price has fallen 5.5% in the last two months.  Ouch!

Number of Listings by Price Range

Since learning that one of the highest priced homes in America is only four miles from my home, I’ve been fascinated by the Lake Tahoe estate called Tranquility. It is owned by co-founder of Tommy Hilfiger, Joel Horowitz, and is listed at $75,000,000.

You can learn some basic information on Tranquility at www.tranquilitylaketahoe.com. I’ll also include some property detail at the bottom of this message. However, I want to focus this write-up on a few things I find pretty fascinating about the property.

First, even Realtors cannot step foot onto the property without a buyer who can provide verification of funds (i.e. a bank statment showing $75,000,000). The driveway can be seen from Highway 50, but you won’t get past the private guardhouse, which is just off the road. The only time Tranquility was open to the public was 2007 when the Horowitz’s generously opened their home for an Angora Fire benefit. 250 tickets to see the home’s interior were sold at $500 a piece. $250 tickets were sold to those attending the benefit on the property grounds without the tour of the home.

The closest encounter with Tranquility that is currently available is through a satellite image from Google Earth.

I’ll share a few additional interesting facts about the property. The conservatory, which features a 100-foot pool, has a roof that retracts when the room reaches a certain temperature. It also has an underground tunnel that provides access to and from the main residence. Underground tunnels have a lot of utility during Tahoe February’s when the snow pack is six-feet deep.

For the sports junkie, the gymnasium features a basketball court with regulation NBA backboards and scoreboards. Outside, there are two par 3 golf holes and horse stables. There is also a room with a golf simulator in the home.

Finally, do notice any similarity between these two pictures?

Tranquility’s staircase is actually a replica from the S.S. Titanic. …I’ll have to plan that for my next remodel!

For more information on Tranquility see my post, Tahoe’s $100 Million Tranquility Estate - Part 2.

Tranquility Details:

8 Buildings:
* Main Residence (20,000+ sqft.)
* Guest Residence (5,000+ sqft.)
* Staff and Guest Residence (5,000+ sqft.)
* Gymnasium (4,000 sqft.)
* Art Studio (1,400 sqft.)
* Conservatory (pool)
* Stables
* Boat House Pavilion

210 Acres
16-Car Garage
19-Seat Theater
100-Foot Indoor Pool
2 Par 3 Golf Holes
3,200-Bottle Wine Cellar
Cigar Lounge styled after the one in New York’s St. Regis Hotel

Edit: Changes were made to reflect a price reduction.

It seems like the popularity of Zillow.com is rapidly growing. I’ve heard a few times lately, “Oh, I’ll just check my home’s worth on Zillow!”

These people are referring to Zillow’s Zestimate. The Zestimate provides an estimated market value of a home.  This is done by entering data on the subject home and comparable homes into an algorithm. Unfortunately, the resulting estimate is oftentimes very inaccurate. See the table below, provided from Zillow’s Zestimate Accuracy page. Find the line for El Dorado County, which includes South Lake Tahoe. Homes here sell within 20% of their Zestimate only 75% of the time! This means if you were selling a home worth $500,000, there would be a 25% chance your Zestimate would be under $400,000 or over $625,000. As a buyer or seller, giving the Zestimate substantial credibility in these cases would obviously be disastrous.

Many factors can really skew the Zestimate. The facts about your home can be incorrect. Zillow could pull bad comparable properties. Oftentimes, Zillow won’t adjust for location, conditions specific to your market, and especially remodeling. I’ve even heard of sellers entering data for overpriced comparable listings in order to boost their Zestimate.

Zillow readily admits that the Zestimate is inferior to a Comparative Market Analysis or an appraisal. Moreover, they’re making significant strides in improving the Zestimate. In a January 10, 2008, press release, Zillow announced that they increased their database from 70 million to 80 million homes. They also upgraded their algorithm. These improvements resulted in a 12% boost in accuracy.

Apply this boost in accuracy to our $500,000 South Lake Tahoe home, however, and there will be a 25% chance the Zestimate will be under $412,000 or over $610,000 now. So while still a fun tool, the Zestimate remains just that – a fun tool. If you want to know your home’s value, get a Comparative Market Analysis from a real estate agent.