Tahoe Buyers & Sellers Hibernate While it Snowed 14 Feet in January

The N. Lake Tahoe, CA real estate market showed significant cooling after a busy holiday season with the region receiving over 14 feet of snow in January. A lack of housing inventory coupled with buyers sitting on the sidelines due to high interest rates and fears of a recession led to one of the slowest one-month periods in over 10 years, with just 28 single-family home sales in N. Lake Tahoe, CA. Although this sounds bad, interest rates are improving; buyers are becoming more active, and exceptional skiing conditions have driven record numbers of people to Tahoe, all of which positively impacts the real estate market. 

Buyers Search for Value

Buyers are looking for high-quality properties at every price point; as those homes trickle onto the market, they get swooped up while average homes in lesser neighborhoods stagnate. There are 47 homes in escrow with an average price of $1.9M, showing that the market is just starting to wake up, and buyers are ready to make moves when suitable properties become available. As winter turns to spring and inventory levels increase, I expect to see a dramatic increase in home sales and tracked statistics.

Missing: Ultra-Luxury Home Sales

With only 28 sales in January, it’s hard to make assumptions as such a limited data set exists. In January, there were no lakefront or Martis Camps home sales. These 2 segments typically deliver the highest-priced luxury home sales, and a lack of sales from these 2 segments has a meaningful impact on market analysis. For example, last year, there was $23M lakefront sale in January, which helped bolster the average sale price and overall sales volume. Ultra-luxury home sales do not take place every month. When these sales close, they typically skew the data for any month that they take place. Based on pending sale activity, and sales that have closed in the first week of the month, there will be a sharp upward move in February, which helps ease my concerns.

Year over Year Market Conditions and Value Trends

Above Average Winter Draws Crowds

We are blessed with an incredible winter providing some of the best skiing and riding we have seen in years. People are visiting Tahoe in droves to enjoy outdoor winter adventures, translating to increased demand for Tahoe real estate. With the Tahoe snowpack at 250% of normal, Lake Tahoe will likely be full this summer, which always positively impacts real estate sales, especially for luxury waterfront homes.

Stability in the Tahoe Market

We are not anticipating a massive surge of Tahoe real estate inventory, so it is likely that Tahoe home prices will remain stable for the foreseeable future. If the Fed’s battle with inflation continues positively, mortgage interest rates should continue to fall, increasing buyer demand. Home appreciation could return to the Tahoe market in the 3^rd and 4^th quarters, interest rate dependent. Only time will tell, but we seem to be on the right track.

Lake Tahoe Real Estate January 2023 Market Report Sales Chart

Lake Tahoe Real Estate January 2023 Market Report Sales Volume Chart

*North Lake Tahoe, CA and Truckee Single-Family Home sales including lakefronts. Data is taken from the Tahoe-Sierra Board of Realtors, MLS Areas 1-9.

Absorption Rate: 1.64 Months of Inventory = Seller’s Market

The term absorption rate refers to a metric used in a specific real estate market to evaluate the rate at which available homes are sold during a given period of time. Here are the metrics and absorption rate for the North Lake Tahoe, CA and Truckee real estate market.

Absorption Rate (single-family homes)

• 509 Sales in the Last 6 Months
• 84.83 Sales per Month
• 2.83 Sales Per Day
• 139 Current Active Listings
• 139 Listings / 84.83 Sales Per Month = 1.64 Months of Inventory = Seller’s Market
  • 1 to 3 Month Supply of Inventory = Seller’s Market
  • 4- 6 Months of Inventory = Balanced Market
  • 6+ Months of Inventory = Buyer’s Market

With only 1.64 months of inventory (homes for sale), there are very few active listings in any given neighborhood, creating an advantage for sellers. The number of buyers in the market is also down significantly, which takes away some of the seller’s powers. When there is only 1 home for sale in a given neighborhood, the seller is in a good position to put a sale together with favorable terms.

In a more typical market, 1.64 months of inventory would produce bidding wars and above-average appreciation. This market is different due to the lack of buyers, so although this is technically a seller’s market, it feels more like a stabilized market.

The Absorption Rate Improved in Q4 2022

Pending sale activity shows transaction volume and pricing above January closings which helps provide some confidence in the market moving forward. Currently, there are 47 pending homes in escrow with an average list price of $1.92M and a median price of $1.2M. Out of the 47 pending sales, 9 homes were priced above $3M, with 3 listings priced above $6.9M. This is the level of momentum that we are looking to see, showing that the market is gaining strength after a slow January. I would be less optimistic if pending sales did not offer this kind of tenacity.

The Current Market Provides Opportunity for Buyers and Sellers Alike

The best-priced homes are moving quickly, while other listings tend to linger on the market, often requiring price reductions and deeper negotiations to complete a sale. Buyers remain excited about newer homes, updated homes, and properties located within desirable communities. These properties are selling quickly near peak pricing with very little, if any negotiation. Inversely, older/dated homes with differed maintenance issues are taking longer to sell as the market is timid when purchasing homes that need significant improvements, even if priced well within the market segment. If you are looking for a deal, focus on homes that have been sitting on the market for 45 days or longer.

Lake Tahoe Real Estate Market Report Archive

View All Tahoe Real Estate Market Reports
January 2022 Real Estate Market Report
January 2021 Real Estate Market Report 

Contact Dave Westall – Lake Tahoe Real Estate Agent

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