Based on the statistics, what is the current status of the Tahoe-Truckee Real Estate Market? The number of sales for the entire region has dropped dramatically from 1,216 to 722 in the past two years. In Truckee there were 854 home sales in 2004 and only 461 in 2006. North Tahoe saw similar decreases with 362 sales in 2004 and 261 this past year. We see locals moving to Reno or other places ‘off the hill’ because they can’t afford to buy a house here. Price reductions are the order of the day and some sellers are offering bonuses to real estate offices to sell their properties. Realtors all over the region are trying to figure out what else to do to attract buyers.

Based on what we are seeing in the demand side of the market, the average and median prices should be going down. Well, last year they went up. The median price for the whole Tahoe-Truckee region went up slightly from $687,000 to $700,000. The average home price went from $870,949 to $918,365. At North Tahoe, the average home sale price went above one million dollars for the first time, increasing by over $150,000 from last year – with one-third fewer sales! The median price on the North Shore went up from $680,500 to $765,000. Newton (what goes up must come down) and economists (supply and demand) would be scratching their heads. It doesn’t appear to make sense.

Or does it. Let’s look at a few possible explanations for what is going on. Overall, the market is slower as the number of sales illustrate. With many locals (especially first-time buyers) and income property purchasers priced out of the market, most homes are being purchased by second homeowners. While in the past many second homeowners were looking for a little rustic cabin in the woods, a higher percentage now want more luxurious, newer homes and are willing to pay the price. Thus, while the total number of buyers is down, those who are buying are selecting more top-end properties. And they are finding a good selection of high-end homes on the market, with more to come as Truckee grows. Along with custom homes, the second-home buyers want amenities, and turn-key homes that work with their very busy lifestyles. They are finding homes that meet the criteria in the new Truckee area developments such as Old Greenwood, Northstar and Lahontan. With lots of selection in the high end of the market, they are being priced competitively and are selling.

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Less expensive properties (I bet ten years ago nobody considered $500,000 to a be a ’less expensive property’) and moderately priced properties, on the other hand, are having more trouble selling. The reason is simple: Many local teachers, small business people and trades people who used to buy these properties cannot afford a $500,000 fixer-upper. These homes are caught between a rock and a hard place. They are too expensive for a lot of locals and not fancy enough for a lot of second home owners. The low and moderate price ranges are where you are more likely to see price reductions and longer periods on the market. It is also becoming more common for sellers to take their properties off the market and rent them, while they wait for the market to pick up again. In fact, many sellers in the Tahoe-Truckee region do not have to sell, so if they don’t get their price they just take it off the market. As more properties come off the market, the listing inventory goes down, which helps keep supply and demand in balance.

Tahoe and Truckee are not alone. The most recent figures from the National Association of Realtors (NAR) found increased sales activity for October and November 2006, but there will still 10.7 percent fewer sales in November 2006 than November 2005. The national median sales price in November 2006 was $218,000 (wouldn’t that be nice), which is 3.1 percent lower than a year ago. Here at home, the California Association of Realtors found homes sales down 22.2 percent in November compared to a year ago, but the median price is up 1.4 percent. Both associations see modest gains in real estate sales activity in 2007. David Lereah, NAR’s chief economist, says, ‘existing-home sales should be rising gradually during 2007 – it looks like we may have reached the low point for the current cycle in September.’

What does the future hold in our region? Based on our current market it is unlikely that we will see substantial price increases in the next year or so. On the other hand, it is also unlikely that we will see a major decrease in real estate values. To me the market is starting to look like it has the majority of my 20 years in the real estate business. Homes have to be priced right to sell, but if they are priced right – they will sell. Perhaps supply and demand does still exist. It just doesn’t happen overnight.

Sides:
Hindsight tells us that 1998 would have been a good year to buy. The statistics reflect the activity for home sales reported to the Tahoe Sierra Multiple Listing Service for January 1 to December 31 for each time period. The figures refer to home sales only and may not reflect the total number of sales. The median priced sale is the sales price where half of the sales are more expensive and half of the sale are less expensive. For example, if there were eleven sales, with five for more than $500,000, five for less than $500,000, and one for $500,000, the median would be $500,000. Statisticians have found the median price more accurately reflects the status of the market, as a few $10,000,000 sales can really skew the average sales price.

Combined North Tahoe (California Side)-Truckee Region
2006
Total Sales: 722
Average Priced Sale: $918,365
Median Priced Sale: $700,000
Average Days on the Market: 95
Total Sales Dollar Volume: $663,059,584

2005
Total Sales: 969
Average Priced Sale: $870,949
Median Priced Sale: $687,000
Average Days on the Market: 92
Total Sales Dollar Volume: $843,949,933

2004
Total Sales: 1216
Average Priced Sale: $670,359
Median Priced Sale: $550,750
Average Days on the Market: 107
Total Sales Dollar Volume: $815,156,007

Truckee Region (including Squaw Valley and Alpine Meadows)
2006
Total Sales: 461
Average Priced Sale: $812,220
Median Priced Sale: $665,000
Average Days on the Market: 92
Total Sales Dollar Volume: $374,433,605

2005
Total Sales: 607
Average Priced Sale: $826,073
Median Priced Sale: $690,000
Average Days on the Market: 81
Total Sales Dollar Volume: $501,426,399

2004
Total Sales: 854
Average Priced Sale: $623,875
Median Priced Sale: $540,000
Average Days on the Market: 102
Total Sales Dollar Volume: $532,789,644

North Tahoe Region
2006
Total Sales: 261
Average Priced Sale: $1,105,847
Median Priced Sale: $765,000
Average Days on the Market: 102
Total Sales Dollar Volume: $288,625,979

2005
Total Sales: 362
Average Priced Sale: $946,198
Median Priced Sale: $680,500
Average Days on the Market: 111
Total Sales Dollar Volume: $342,523,534

2004
Total Sales: 362
Average Priced Sale: $780,018
Median Priced Sale: $590,000
Average Days on the Market: 119
Total Sales Dollar Volume: $282,366,363

And for a real shocker, take a look at a few years earlier…
North Tahoe Region:
2000
Total Sales: 378
Average Sale: $616,006
Median Sale: $400,000

1999
Total Sales: 416
Average Sale: $379,441
Median Sale: $262,500

1998
Total Sales: 368
Average Sale: $313,083
Median Sale: $221,000

~ Tim Hauserman has been a realtor with Coldwell Banker in Tahoe City since 1986. He writes frequently about a variety of topics. His second book, ‘Monsters in the Woods: Backpacking with Children’ will be published by University of Nevada Press in April.

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