2011 Lake Tahoe Real Estate Market Review

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Alpine Meadows Estelle Bowl March 2011

It’s amazing that the end of the year is already upon us, where does thetime go.  With only a few weeks left in 2011 I figured I would take a lookat the overall Lake Tahoe Real Estate market as of 12/16/2011 and compare it to2010 and see where we ended up this year. Please keep in mind that it is only the 16^th of December sothese numbers will change a bit over the next few weeks.  I will go back and update this post after theNew Year to reflect the best data available.

The Lake Tahoe Real Estate markets were super active in 2011 with buyerstaking advantage of motivated sellers, distressed sales, and historically lowinterest rates.  The Lake Tahoe single family residence (SFR) sales volumewas up 3% in 2011 from 797 SFR sales in 2010 to 823 sales in 2011.  Thisis a very modest jump in volume but shows that buyers are very active, even inthe current economy.  Most buyers are reporting that they feel that LakeTahoe Real Estate is a great long term investment and they feel morecomfortable investing in Tahoe Real Estate than the stock market at thistime.  Many buyers who purchased in 2011 have been shopping for a Lake Tahoevacation home for 6+ months and have been waiting for the righthome in the right neighborhood to come on the market.  Bottom line,buyers are being patient, but when an opportunity presents itself home buyers aretaking advantage of the Tahoe Real Estate markets.

For my Year over Year analysis I looked at single family homes in the Tahoe-SierraMLS in areas 1-9 which encompass Rubicon Bay to Kings Beach, the ski resortneighborhoods of Alpine Meadows and Squaw Valley and all of Truckee including DonnerSummit.  I did not include condos in thisanalysis as I wanted to focus on Single Family Residences (SFR).

Year over Year statistics 2011 vs2010:

 
Number of Sales: up 3%from797 sales to 823 sales
The number of sales shows confidence in the Lake Tahoe Real Estate markets withbuyers taking advantage of low pricing and historic financing opportunities. Toput this in perspective, at the height of the Tahoe real estate bubble in 2006there were only 734 single family residential sales.  Since 2009 the number of SFR sales hasoutpaced pre-bubble rates.

Average Price: down 14.6%from$712.3K to $608.3K
With distressed sales making up 30% of total sales in 2011 it is not surprisingto see the average home price fall. Banks are not in the business of property management and want to selltheir inventory quickly, which translates into pricing distressed propertiesfar below market value thus pulling down average home prices with eachdistressed sale.  2010 also saw a highernumber of luxury home sales than 2011 which has affected the average salesprice.

Median Price: down 7.5%from $475K to $439K
I think the median price is more reflective of the actual health of the LakeTahoe Real Estate Market as the median does not allow for outlying sales (highor low) to have a major effect on the results.  With distressed sales making up30% of total sales in 2011 it is not surprising to see the median home price fall.

Days on Market: down 1.7%from 116 days to 114 days
Marketing times have been around 3.5 months for the last few years.  The fact that marketing times have stabilizedright around the 10 year average shows that although pricing is off a bit weare moving towards a point of stabilization. If we were to see a dramatic dip in marketing times that would indicatea stronger real estate market.

Number of Sales over $1M: down 21%from 105 sales to 83 sales
Although the overall number of sales is up 3% the number of luxury homes over$1M is down 21%.  The reduction in luxurysales in 2011 is the main reason why the average sales price drop 14.6% Luxurybuyers made up 10% of the market this year and although an active segment ofthe market, we just didn’t see the dollar volume this year.  With the San Francisco/SiliconValley techsector doing very well we are expecting very strong luxury sales in 2012.

Number of Lakefront Sales: down 10%from 22 to 20
Over the last 2 years we have seen very strong demand in the Tahoe Lakefront market with sales volume equal or higher than pre-meltdown numbers.  The increase in sales volume shows thatluxury buyers are taking advantage of depressed pricing and the currenteconomic conditions which has created some amazing opportunities for luxury buyers.  Lakefront pricing is down 30%from the peak of the market (median price) and Tahoe lakefront buyers can nowafford more house per dollar and luxury buyers are using the current economy toturn their dreams of lakefront ownership into reality.

Number of Distressed Sales (REOand Short Sales): up 7%from 229 to 247
This year distressed sales made up 30% of all sales in Truckee/N. Lake Tahoewhich directly reflects why the average and median sales prices are down thisyear.  As I noted earlier, Banks are notin the business of property management and want to sell their inventory quickly,which translates into pricing distressed properties far below market value thuspulling down home prices with each distressed sale.  Hopefully 2012 will have lower numbers ofdistressed sales, but in reality I would expect to see a similar number as thisyear.

• Sellers Market: 1 to 4 months supply of homes
• Neutral Market: 5 to 6 months supply of homes
• Buyers Market: More than 6 months supply of homes

• Total sales volume ofSingle Family Homes in the Tahoe-Sierra MLS is $1,042,058,122 ($1.04B)
• Total sales volume ofall Real Estate sold in the Tahoe-Sierra MLS is $1,325,393,845 ($1.3B)
• Highest Sale Price: $6,450,000 5 Bedroom/4.5 Bath Lakefront located in Tahoe City
• Lowest Sale Price: $42,500 This 1 Bed/1 Bath Truckee Riverfront Cabin is located in a Flood Zone and was an REO with major septic and well issues.
  

Best Regards, Dave