The South Tahoe Realty Blog

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.

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!

There’s been a bit of a buzz in the South Lake Tahoe real estate community. Have we hit the bottom of the market? Possibly. Check out the median sale prices over the last seven months. It looks like we hit bottom in June and have been heading up in the following months. Additionally, the median list price of homes in escrow right now is $437,000. I’d expect that number to drop to about $412,000 because our sale-price-to-list-price ratio on the year is 94.23%. These numbers fall in line with the theory that we have hit the bottom of the market.

What do I think? I’m skeptical. I wish I remembered enough from my college stats class to back this up, but I don’t think enough homes have sold over a long enough period of time to claim that the market’s downward trend has come to a halt. I’ll be happy when we sell off some more of this oversupply of homes.

Speaking of, South Lake Tahoe’s supply of homes did dwindle some at the turn of the month when seventy listings expired. Only thirteen of those listings are back on the market. With less competition amongst listings, now isn’t a bad time to list.

Other notable activity in September occurred in the foreclosure market. Of the 28 single-family residences that sold in September, 7 of them were foreclosures (25%). At the turn of the month, there were 12 foreclosures in escrow and 15 short sales in escrow. We’re seeing a lot of distressed sales. It’s no wonder that banks are folding on a daily basis.

Only 3 condos sold in the last month. However, some buyers were thinking about the upcoming ski season. An unusually high 6 condos went into escrow.

Four lots went into escrow last month and only two sold. It’s been very slow in the dirt market.

I’d love to hear your comments on any of this. I will update a few numbers as some agents haven’t been able to input their September sales in the MLS yet.

* For the sake of statistical integrity, my absorption rates are no longer considering sales for the last year. They are now calculated using sales for the last 90 days. For more information on why I decided on the change, e-mail me at drew@southtahoehouses.com.

As I’ve mentioned in previous articles, there’s been a theory proposed by a few South Lake Tahoe real estate agents, myself included, that home prices haven’t dropped as much as the statistics show. Perhaps there’s been more activity in the lower price bands. After all, it’s been much tougher to get a jumbo loan this last year. Additionally, the majority of foreclosure and other distressed sales have occurred in the lower price bands.

If there actually was more activity in the lower price bands, this could skew the all-important median sale price. I did a little data mining recently to see if in fact the theory was true.

What affects median sale price more than anything? Square footage. So I decided to break sales up into two categories – homes up to 2,000 square feet and homes above 2,000 square feet. If speculation was correct, we’d see an abnormally large amount of homes sold below 2,000 square feet in the last year. See the table below for the results I found. Percentages in parentheses represent the decline since the previous year.

As you can see, the results of my data mining actually show the opposite of what was speculated. If speculation was correct, there wouldn’t have been such a big drop in sales of homes up to 2,000 square feet. Moreover, the decline in median price would have been greater in higher priced homes. Instead the opposite occurred.

When it comes to South Lake Tahoe real estate, the median sale price continues to stand as one of the most accurate indicators of the state of the market.

Sorry this is coming late folks!  Achilles tendon surgery, amongst other even bigger things, has kept me tied up in the last couple of weeks.

Here are the latest statistics from the South Tahoe Association of Realtors.  This data is from April 30, 2008.  The median home price in South Lake Tahoe rose 0.7% from last month ($425,000 to $428,000).  The market, however, is still in a decline.  Median home price has dropped over the past year by 8% ($465,150 to $428,000).  The best explanation for the increase in median price from last month has been the increase in foreclosure listings in the higher price bands.  I blogged on this very topic on March 31st in the posting Foreclosures in South Lake Tahoe.  I expect a decline in median home price next month due to this foreclosure-driven, downcycling market.

Number of Listings by Price Range

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