The South Tahoe Realty Blog

Always trying to improve the real estate statistics I present to you, I’ve decided to mine for a new stat – median sale price for the last 90 days. I will present this statistic along with the median sale price for the last month. See the table below for the actual numbers.

What are the benefits of looking at the median sale price for the last 90 days? First, it helps minimize some of the incredible variance that occurs in a small market like South Lake Tahoe. A few high priced sales can throw off the median sale price for a single month here in South Lake. This isn’t so true when looking at sales over a 90-day span. Second, the 90-day statistic centers on a date 45 days in the past. The commonly accepted monthly median sale price centers on a date 15 days in the past. Thus, we get three times more homes, which minimizes variance, and only lose a month when it comes to keeping our stats current. If you are yet to be convinced, look at the table below. For any given month, the median price for the last 90 days, more often than not, produces a better reflection of market conditions than the median price for the month.

For those of you who’ve been following my statistical reports, you’ll notice that I’m no longer calculating median sale price over the last year (a.k.a. 12-month moving median). The statistic just doesn’t make sense to me. It’s good for looking at real estate history; and this is only true if the reader knows the data centers on a date 6 months in the past. Presenting it as current information on a month-to-month basis, however, just doesn’t make any sense.

As for now, we’re still seeing a lot of homes in escrow. We’ve had 60-70 homes in escrow at any given time in the last 2-3 months (the numbers I took from STAoR for the months previous to this one are low somehow.) And we’re finally seeing an increase in homes sold, but it still should be higher. Look at the numbers in 2005 when the market was at its peak. About 65% of escrows closed at that time. Right now we’re seeing about half close. I know a knowledgeable real estate professional who suggested that perhaps we have a bunch of really long escrows sitting out there. This would keep many of our escrows from closing. This isn’t the case, however. When I looked through South Lake Tahoe’s escrows a week ago, only 14 out of the 70 had been in escrow for more than 60 days. I think it’s just that a larger percentage of homes are falling out of escrow than we’ve seen in the past. With a tight lending industry, most buyers probably aren’t qualifying for loans. So if you’re a seller here in South Lake Tahoe, don’t be too upset about your home falling out of escrow. It’s happening to everybody.

I’ll do my best to bring you more statistics in the next week. I was only able to go back to the beginning of 2007 with the 90-day median sale price. I’d also like to give you some foreclosure, condo, and lot numbers. It’s just a very, very busy time for real estate here in South Lake Tahoe.

I know a lot of you searching the internet are curious about South Lake Tahoe foreclosures.  I’ve decided to make things easy for you, and I’m just going to publish a foreclosure list every couple weeks.  The latest list can be accessed at the foreclosure section of my blog.

Right now there are 8 foreclosures in South Lake Tahoe - 7 homes and one multi-plex.  There are no condos in foreclosure.

The two latest foreclosures, 873 Stanford & 1612 Choctaw, are pretty good deals.  873 Stanford is especially well priced.  For further information on these properties, call me at (530) 545-1831 or e-mail drew@southtahoehouses.com.

Seventy homes are in escrow here in South Lake Tahoe. It hasn’t been since September 2005 that we’ve seen that many homes pending. Over the last few years, a lot of people have been waiting for the right time to buy. It seems that many think that time is now. I’m really beginning to agree with them. Here are a few good reasons why it may be time to buy:

1. Interest Rates Will Go Up

Interest rates are low these days. They have no where to go but up and with inflation skyrocketing, the Federal Open Market Committee has a lot of incentive to raise rates. When this happens mortgage rates will increase, which means homebuyers’ dollars won’t go as far. Assume you can afford a $400,000 home with today’s rates. If interest rates increase by a single point, you’ll then be able to afford a $368,000 home. That single point will sap you of 8% of your buying power!

2. The Market Can’t Down Cycle Forever, Especially in Tahoe

The South Lake Tahoe housing market has seen a 25% correction since August 2005. Can prices really drop much further? I have no crystal ball, but we will eventually hit the bottom. With a limited supply of homes in the Lake Tahoe basin and an ever-increasing demand, we should hit bottom before many other areas.

3. It Is Better to Buy in a Buyer’s Market!

Those who are waiting for the market to hit rock bottom before buying are doing themselves a disservice. Buying a home isn’t only about getting the best deal possible. It’s about finding a home you can truly enjoy living in. With the number of homes on today’s market, you should be able to find what you want when it comes to location, condition, and quality. Finding that special home on tomorrow’s market could be much more difficult.

4. It’s a Home, Not a Stock

You’re buying something you will live in. Unlike a stock, bond, or commodity, your home will have utility. You’ll grow attached to it. And if you hold onto your home for a while, it’s pretty much guaranteed to increase in value.

I thought some of you might find this information interesting. The Tahoe Daily Tribune released information on South Tahoe area schools. Everything looks good to me except that Zephyr Cove’s middle school, Kingsbury Middle School, closed on June 9, 2008. Sixth graders will now go to Zephyr Cove Elementary. Seventh and eighth graders will go to Whittell High School, which is also in Zephyr Cove.

Parents Have Choice of South Shore Schools
Tahoe Daily Tribune, June 13, 2008

The Lake Tahoe Unified School District consists of four elementary schools, a middle school, a high school and a continuation school.

There are approximately 5,000 students in South Lake Tahoe and 200 teachers making the student to teacher ratio about 16 to 1. There are slightly more male students (53 percent) than female students. Fifty-five percent of students are white, 36 percent are hispanic, 6 percent are asian, 1 percent are black and 1 percent are native american.

District and school registration information can be found at www.ltusd.org or can be obtained by calling (530) 541-2850.

On the Nevada side of South Lake Tahoe, the Douglas County School District has an elementary school, middle school and high school all located near Zephyr Cove. For more information on Nevada schools visit dcsd.k12.nv.us or call (775) 782-5134.

There are also three private schools in South Lake Tahoe: St. Theresa, Tahoe Montessori House and The Walden School.

Watch in high quality

As predicted, the median sale price for single-family residences in South Lake Tahoe dropped dramatically in June, down to $365,000. The market is certainly suffering. However, I’m becoming skeptical of the statistical barometers we continue to rely upon. Perhaps the steep decline in median sale price doesn’t quite reflect what’s happened to home values here in South Lake Tahoe. Perhaps the decline in median sale price is due in large part to increased activity in the lower price bands. Given how tight the lending market has been with jumbo loans, this is a valid hypothesis. I’ll dig through some data in the next few days to see if I can find numbers to support.

The foreclosure market was active in June with 6 foreclosure escrows of the 37 homes that went into escrow for the month. There were also 3 short sale properties that went into escrow. As of today, there are 9 foreclosure single-family residences on the market.

Lot sales and condo sales were few and far between in June. Five condos sold and 4 went into escrow. Six lots sold and 5 went into escrow in June.

Activity has increased in the 1 to 2 million dollar price band. This price band has averaged 1.75 sales per month over the last year. However, 4 sold in June, and right now there are 5 homes in escrow that were listed between 1 and 2 million dollars.

I love real estate statistics. I got a math degree from the University of Texas, so I could make a career of real estate stats. In this blog, I’ll keep things relatively simple.

In efforts to improve the statistics I present you, I am beginning to mine for and calculate absorption rates and months supplies of inventory for you. These stats are important because they reflect how a market is doing. They also help savvy buyers and sellers establish and meet their goals.

Absorption rate – the rate at which real estate is sold, or absorbed, in a specific area

I calculate absorption rates in terms of homes sold per month. Thus, for South Lake Tahoe the absorption rate is the number of homes sold in the last year, 341, divided by the months in a year, twelve. 28.4 homes are sold per month in South Lake Tahoe. This is the absorption rate. (Feel free to skip the rest of this paragraph.) Some people like to express absorption rates in relation to the amount of inventory. Our inventory in South Lake Tahoe is 476 homes. Thus, 28.4 homes is 5.97% of the inventory; so the absorption rate is 5.97% of the inventory per month.

Months supply of inventory (MSI) – an estimation of how long it will take for all the market’s homes to be sold, or absorbed, based on how many homes are currently on the market and the rate homes have sold in the past (absorption rate).

This is pretty simple. If 28.4 homes are sold per month in South Lake Tahoe, how long will it take to sell 476 homes? Divide homes by homes sold per month (476/28.4 = ???). It will take 16.76 months to sell all the houses. This is the months supply of inventory (MSI). You may now be asking, “Who cares? New homes are listed all the time. You’ll never sell the entire inventory in South Lake Tahoe.”

This is true. MSI is simply used to compare the size of an inventory to the rate of sale. This is very important. MSI is a great indicator of how balanced a market is.

MSI less than 5 months = seller’s market
MSI equals 5-7 months = balanced market
MSI greater than 7 months = buyer’s market

These guidelines are not fool-proof. Notice in the table below there is a 6.7 month supply of inventory in the sub-$300,000 price band in South Lake Tahoe. Any seller in this price band will tell you it’s not a balanced market. The buyers continue to call the shots. The MSI stat was skewed in this price band by desperate sellers, especially banks, who bent over backward in the last year for buyers. Thus, the absorption rate was increased, which decreased the MSI.

So how can these stats help you? I’ll preface the answer by saying that no mathematical model can be used to determine what will happen in real estate. There are way too many factors involved. That having been said …

For sellers, these stats will tell you how much competition you have. Let’s consider a seller with a $1,500,000 listing in South Lake Tahoe. With almost 33 months of inventory, he better think about some serious price reductions if he wants to sell soon. The seller with a sub-$500,000 listing (6.7-13.3 months of inventory) should also think about a price cut. However, there is a greater chance he’ll get lucky and find a buyer who loves his home and qualifies for a loan.

For buyers, MSI will tell you how negotiable sellers may be in different markets. If there are 3.5 months of inventory in Bangladesh and 10.2 months of inventory in Baghdad, the sellers in Baghdad will probably be more negotiable.

If you have questions about these statistics feel free to comment, e-mail me (dkondo@chaseinternational.com), or call me (530-545-1831).

South Lake Tahoe real estate statistics as of 7/1/2008

Imagine the Lake Tahoe basin with 800,000 homes in it. A freeway, connecting different mountain peaks, overlooks the basin where the Tahoe Rim Trail currently lies. Lake Tahoe is another San Francisco. This is what many area planners hoped for in the 1960’s, shortly after the Olympic Games at Squaw Valley. Fortunately the government stepped in, and the U.S. Congress ratified an agreement in 1969 creating the Tahoe Regional Planning Agency (TRPA).

These days the TRPA is most often a target of criticism. The agency has had a tremendous affect on property owners and seekers in the Tahoe basin. Best Management Practices (BMP) regulations require homeowners to spend thousands to avoid water runoff from their properties. Proposed home additions are often blocked by the TRPA; and $5,000 fines are levied to those who remove trees without a permit.

In the weeks to come, several of my posts will cover different aspects of the TRPA and how it affects life in Lake Tahoe.

I just upgraded my website’s blogging software.  It was a big scary process that appears to have gone well.  In part, this is a test message to see if things are working.  However, I will ask that if you see anything weird from your end, please notify me.  Send all feedback to dkondo@chaseinternational.com.

The following article about South Lake Tahoe weather was published in the Tahoe Daily Tribune earlier this month. It provides valuable information on the kind of weather to expect when visiting South Lake Tahoe. Basically, come expecting anything!

For homeowners starting projects, be aware that it will likely snow sometime in October. Last September, we saw some snow coupled with 19 degree temperatures!

Weathering the Storms on Tahoe’s South Shore
Tahoe Daily Tribune, June 6, 2008

Snow has been recorded during every month of the year in South Lake Tahoe, but cold temperatures and precipitation during the summer are not the norm.

Generally summers on the south shore are mild with temperatures averaging 80 degrees. Due to the city’s elevation, the temperature is lower than the national average throughout the year. Precipitation is usually less than an inch during June, July and August.

The sun shines an average of 274 days a year making conditions perfect for outdoor recreation in both the summer and the winter.

At Lake level an average of 125 inches of snow falls per year. Heavenly Mountain snowfall averages 300 to 500 inches per year at alpine skiing elevations. Despite having to shovel their driveways, South Lake Tahoe residents enjoy the winter just as much as the summer.