The Lake Tahoe Real Estate Market Softens in May but Remains on Good Footing
As we enter the summer selling season in Lake Tahoe and approach the conclusion of Q2, market conditions are softening after 2+ years of white-hot buyer activity. Uncertainty fueled by higher interest rates, weak stock market performance, inflation, and threats of a recession have shifted buyer sentiment. Over the last two months, the supply of inventory is up 111%, and approximately 25% of the current listings received price reductions. In a traditional market (pre-pandemic), it’s typical for inventory levels to jump in the spring/summer, so it seems that we are starting to return to more traditional market conditions.
Absorption rate analysis (see below) shows that we remain in a seller’s market, but stabilization is creeping into the equation. Many Lake Tahoe neighborhoods continue to suffer from a lack of inventory which helps push pricing higher, but the rate of appreciation is slowing as there are fewer buyers in a market with increasing inventory levels.
Lake Tahoe Real Estate Market Report May 2022 Highlights
- High Sale: Martis Camp Estate at $7.8M
- Average Home Price = $1.9M Up 9%
- Median Home Price = $1.57M Up 32%
- 36% of sales in May were priced over $2M Up 89%
- 11 non-lakefront sales priced over $1,000 per SqFt Up 27%
Homes That Are Priced Right Sell Fast, While Other Listings Need Price Reductions
Buyers remain active, but their purchasing power strengthens as inventory levels creep higher. At all-time high pricing, buyers have become more price-sensitive and are less willing to pay a premium over market value unless the home, setting, and neighborhood are exceptional. Although we are seeing a high level of price reductions, many of these homes were priced above the comps, and the reduced pricing is reflective of current market conditions. The average and median home prices are up year-over-year, but they are increasing at a decreasing rate (stabilizing).
Tahoe Buyers Have More Bargaining Power
Buyers that have been waiting in the wings for the insanity of the last few years to dissipate are being rewarded. There is less competition for homes and fewer multiple-offer bidding wars, which creates an opportunity for a more traditional sale. We continue to see multiple offers on some desirable properties, but these homes tend to have 2 or 3 offers versus a year ago when similar homes would receive 4 to 8+ offers. This summer will create a great opportunity for buyers looking to make a long-term investment without the stress of emotional bidding wars.
Year over Year Market Conditions and Value Trends
May 2022 Statistics
- 77 Single Family Home Sales Down 19%
- Marketing Time: 25 Days Up 56%
- List to Sold Ratio: 101% Down 1%
- Total Sales Volume: $147M Down 13%
- Average Price: $1.9M Up 9%
- Median Price: $1.57M Up 33%
- 0 REO & Short Sales Even
- 1 Sale Below $400K Up 100%
- 59 Sales over $1M Up 2%
- 10 Sales over $3M Even
- High Sale Price: $7.8M Down 29%
- Low Sale Price: $350K Down 27%
May 2021 Statistics
- 96 Single Family Home Sales
- Marketing Time: 16 Days
- List to Sold Ratio: 102%
- Total Sales Volume: $169M
- Average Price: $1.75M
- Median Price: $1.18M
- 0 REO & Short Sales
- 0 Sales Below $400K
- 58 Sales over $1M
- 10 Sales over $3M
- High Sale Price: $11M
- Low Sale Price: $477K
Lake Tahoe Real Estate May 2022 Market Report Sales Chart
Lake Tahoe Real Estate May 2022 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: 2.58 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)
- 412 Sales in the Last 6 Months
- 69 Sales per Month
- 2.3 Sales Per Day
- 178 Active Listings
- 178 Listings / 2.3 Sales Per Day = 2.58 Months of Inventory
- 1 to 3 Month Supply of Inventory = Seller’s Market
- 4- 6 Months of Inventory = Balanced Market
- 6+ Months of Inventory = Buyer’s Market
Currently, there are 113 pending homes in escrow with an average list price of $2M and a median list price of $1.7M, which shows that the market remains on solid footing. Inventory levels have jumped quite a bit over the last 45 days, which is common for this time of the year, but buyer activity has slowed down, so new listings are not being absorbed at the same rate as they were a year ago. This is providing buyers with a great opportunity to purchase good quality homes with less competition, which allows for some negotiation, something that has been missing from the market over the last few years.
When Will the Lake Tahoe Real Estate Market Stabilize?
To stabilize the market, we need 4-6 months of inventory or a minimum of 276 active listings. Currently, we have 2.58 months of inventory, which means that we need 98 new single-family listings to achieve stabilization. With only 98 homes needed to stabilize the market, we could possibly see a shift from a Sellers Market to a Stable Market by mid-summer.
It’s Still a Great Time to Sell, But Don’t Shoot for the Moon with Pricing
If you are a seller, this is still a great time to sell your home as buyers are still actively shopping for homes, especially updated turn-key properties that don’t require much work. We need to be thoughtful about pricing, as buyers are price sensitive and only make moves on the best opportunities. Homes are still selling quickly, but days on the market are increasing as the level of competition rises. This summer will be a great time to sell, but we need to watch the competition and present a great opportunity to buyers. Let’s discuss your goals and put a plan together to ensure the success of your sale.
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May 2021 Real Estate Market Report
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