Despite Challenging Market Conditions, the Tahoe Market Holds Steady

In 2023, the North Lake Tahoe, CA and Truckee real estate markets fought to maintain pricing stability while recording the lowest number of single-family home sales since 2009. The median single-family home price was only 3.6% below the all-time record highs of 2022 showing that despite the challenges of 2023, the market remains on solid footing amidst an onslaught of economic challenges. 

This past year will be remembered for its high mortgage interest rates, economic uncertainty, and limited housing inventory. These challenges have drastically reduced the number of active participants in the market, and surprisingly, buyers were making moves, resulting in solid sales, and regional pricing stability. Over the course of the year, homes that were priced effectively sold within 30 days or less, while overpriced homes sat on the market for 90 days+, often requiring price reductions. 2023 will be defied as a year of limited inventory that was plagued by fear, uncertainty and doubt (FUD). With limited inventory, we saw a decline in the volume of home sales and you would need to go back 14 years (2009) to see fewer single-family home sales than 2023.

The 4th Quarter of 2023 Showcased Resilience

The 4^th quarter of 2023 was inspiring with 13% more sales than Q4 2022, marketing times were reduced by 29%, total sales volume increased 8%, and the median home price closed up 4%. We saw momentum gaining within the market this past fall, and the 4^th quarter delivered solid results considering how lackluster the year had been. In the 4^th quarter, buyers were purchasing high quality inventory and making moves in order to enjoy their new properties this winter. Positive news from the Federal Reserve showing that inflation is cooling and it appears that a recession will be averted, provided buyers with the positive news they needed to feel confident with their purchase decisions. We are hoping that the performance of the 4th Quarter will spill over into Q1 2024.

 Highlights from the 2023 Market Report

• The Median home price rose 4% in the 4^th quarter
• High Sale: Dollar Point Lakefront at $16,500,000
• 29 Martis Camp Sales, Average price: $7,851,293
• 483 Sales over $1M
• 36% of all sales in 2023 were priced over $1M
• Sale Volume down 17% year over year, lowest level since 2009

Unmotivated Sellers Backstop the Tahoe Market

In 2023, the Tahoe real estate market was backstopped by the fact that sellers are sitting on a mountain of equity, they continue to enjoy their homes, and for those that have mortgages, the loans are at very low interest rates. Most Tahoe sellers would prefer to wait for improved market conditions to sell their beloved homes, as time is on their side. The lack of housing inventory coupled with a reduction in the number of buyers, created a slow-paced market, but one that has underlying strength and tenacity.

Year over Year Market Conditions and Value Trends

Effectively Priced Homes Sell 3x Faster

The best-priced homes are moving quickly, while other listings tend to linger on the market, often requiring multiple price reductions and deeper negotiations to get a sale done. Homes that are priced correctly are selling in about 30 days which is 3x faster than homes that are not priced right, which average 90 days on market. Buyers remain excited about newer homes, updated homes, and properties located within desirable communities. 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.

Lake Tahoe Real Estate Year End 2023 Market Report Sales Chart

Lake Tahoe Real Estate Year End 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: 1.71 Months of Inventory = Seller’s Market (kind of)

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 statistics used to determine the absorption rate for the North Lake Tahoe, CA and Truckee real estate market.

Absorption Rate (single-family homes)

• 585 Sales in the Last 6 Months
• 97.5 Sales per Month
• 3.25 Sales Per Day
• 167Current Active Listings
• 167 Listings / 97.5 Sales Per Month = 1.71 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 1.71 months of inventory (single-family 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 power. 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, 1.71 months of inventory would produce bidding wars and above-average appreciation. This market is different due to the lack of buyers and high interest rates, so although this is technically a seller’s market, it feels more like a stabilized market (supply and demand in balance).

Pending Home Sales Provide Market Insight 

Pending sale activity shows transaction volume equal to November closings with the median price showing strength. The average price of pending sales is off a little which is not surprising as we are now into the holiday season, where unit volume tends to taper and pricing is tied to the limited available inventory. Currently, there are 52 pending single-family homes in escrow with an average list price of $1.52M and a median price of $1.29M. Out of the 52 pending sales, 5 homes are priced above $3M, with 1 listing priced above $5M. These pending sales will help keep the market stabilized in January, a typically slower month for closings.

Will the Tahoe Real Estate Market Fall Apart in 2024? 

It appears that the Lake Tahoe real estate market will likely have a good year in 2024 as buyer activity will likely increase as mortgage interest rates fall. We are not expecting a large increase of homes for sale (inventory), so it would seem that if demand increase and inventory remains low, we will see price increases throughout the years. 

• If mortgage interest rates come down, buyer demand will increase
  • rates are expected to come down throughout the year
  • the sweet spot for strong buyer activity is between 5.75% and 6.25%
• If inflation continues to fall the market will have a positive response
  • keep an eye on the Federal Reserve inflation data
• Avoiding a recession will help boost buyer confidence
• A higher number of buyers in the market will put upwards pressure on pricing
  • bidding wars might return
• Limited housing inventory is expected 
  • Sellers have lots of equity and will only sell when timing is right
• Demand for quality homes in good neighborhoods will likely increase

Lake Tahoe Real Estate Market Report Archive

View All Tahoe Real Estate Market Reports
Year End 2022 Real Estate Market Report
Year End 2021 Real Estate Market Report 

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