As we move into 2023, we are seeing a downward pressure on home pricing in many neighborhoods, and a stunning lack of inventory in a select few. We closed out the year with sales volume down almost across the board, but with median sales prices higher in 2022 than they had been the year before.
On the California side, sales volume declined by 22% in 2022, but the median sales price for a single family home rose 6% to $1,240,000. In Incline Village, sales fell off by half, while the median sales price rose to more than $2.3 million (a 17% increase over 2021).
Home pricing is always a balancing act between supply and demand, and as we move into 2023, expect to see prices adjusting in those neighborhoods with heavy inventory and steep price increases. We began to see this dynamic at play in the fourth quarter of 2022, as buyer demand fell in many areas.
Much of the drop was fueled by the Fed rate hikes, and Fed Chair Jerome Powell’s dire predictions for further tightening to come, which led to steep declines in the stock market. Amid that economic uncertainty, the final three months of 2022 showed prices falling off from their pandemic highs. The median price overall in Tahoe/Truckee (California side) adjusted downward to a little over $1.1 million in the fourth quarter, and it declined to just under $2 million in Incline.
In Tahoe Donner, with 60 homes changing hands in the last three months of the year, the median price dropped to $985,000 (down from a year-end high of $1.2 million). Sales held steady in Tahoe Donner throughout 2022, with volume declining just 4% over the year before, and price setting a new record with the sale of a seven-bedroom home atop Skislope for $3,850,000, the highest home sale ever in the subdivision.
A quarter of the 2022 sales under $1 million were in Tahoe Donner. And while there were some bargains to be found with cabins on Donner Summit, roughly one-third of the homes selling for under $1 million were at the lake, including some tiny one-bedroom cabins that closed for about the $500k mark. In Glenshire/Devonshire, more of a full-time neighborhood, the median sales price was $950,000, and roughly 10% of the sales closed for under $1 million.
A healthy inventory is considered to be six months of supply; less than that favors sellers, and more favors buyers. Here’s a quick look at supply as we approached the end of 2022:
Overall Tahoe Truckee market: 2.2 months of supply
The ski areas: just under 1 month
Martis Valley: 5 months
Tahoe Donner: 1 month
Incline Village: 5.3 months
East Shore Lake Tahoe: 6.7 months
Glenshire/Devonshire: just under 1 month
Prosser: 1.2 months
Home inventory levels remain low in some neighborhoods. But the spread between the median asking price and median sales price remains wide, with some sellers hoping for pandemic-era pricing.
With Covid shutdowns and work-from-home options, demand for Tahoe/Truckee homes skyrocketed. It was an unprecedented spike that caught some by surprise. Amid that fast-changing market, some sellers who could have asked more for their homes left money on the table in 2020 and 2021.
No one wants to underprice their home, and that’s led to the current climate of over-reaching we see in some neighborhoods today. The market favors buyers right now, but many are paralyzed with fear over what will happen with the economy and interest rates this year.
If you have the stomach for it, the next few months might just be the time to get into your Tahoe home.