Greetings from Truckee on a stormy fall morning,
I thought this would be a good time to reflect on this year with respect to the real estate market in Truckee and North Lake Tahoe. At the end of 2019, the market was still slowly and consistently pushing upwards. It had been doing exactly that for about 9 years, as we saw real estate prices finally get above the highs we saw in 2007. When Covid hit in march, everything went on hold for a short time. Realtors had to stand down for a week before real estate was considered essential. Within a week were were back at it, and we had the beginnings of a plan for how to list and sell properties during a pandemic. Nobody knew at that time how buyers and sellers would react. That was our usual time of year to start seeing lots of spring listings, but they were slow to come. By June it was clear that less owners were selling, and there was a huge jump in buyer demand. Many Bay Area folks were now working from home, and many were told it would be permanent. Many of them also wanted to get away from the city, so demand for properties up here went through the roof. I like to watch Google Trends to get an idea of what the masses are thinking. This is a screen shot of the trends of the search "Truckee Real Estate" this year. As you can see, it really peaked in Late July.
But as early as June, we started seeing the big demand changes. Instances of 5-10 offers on a property were becoming normal. Seeing properties going $100,000 over asking were seen for the first time in my 14 year career. Prices were being driven up hard. It was an easy time to be a seller, and it was challenging to be a buyer. That continues through the summer and up to today. We are now in the time of year where we usually get less new listings, and buyer demand peaks. New buyers want to get in before the ski season, and we are seeing that still, along with the existing covid based demand. Let's have a quick look at the sales numbers so far this year. These are from the end of October, and reflect the number of sales, and sale prices for single family homes, condos, and vacant lots. These are all from Tahoe Donner, which is a very good bellwether for the broader market in our area.
Numbers courtesy of David Hipkins - Dickson Realty
There are some interesting things to see in this chart. First, the number of single family home sales is up around 50% year over year. The average sale prices are up just over 10% since this time last year, again, just in single family homes. Remember though that these are average numbers taken since October 2019. The market is up significantly in the last few months. If you took todays market as a snapshot, I would say that we are up more like 20% since this time last year in terms of home prices. And unlike many times we have seen in the last few years, the high end homes have done just as well as the entry level and middle market homes in Tahoe Donner.
Condo sales, however, are completely flat in bath the number of sales and prices. I think that is a function of families wanting their own space, again a covid effect.
Now look at vacant lot sales, they have more than doubled. There is a lot of construction happening in the area right now, and many spec builders are looking for their next project. The average price, however, is down. This tells me that builders and not looking for premium lots for their next house.
What can we expect for the rest of this year, and into 2020? I get asked this a lot. The answer is that I don't know for sure. We could see a drop in demand due to prices increasing, or we could see this upward march in the market continue. There are 4 factors that I am watching to see what might happen.
Covid Itself - the pandemic is spiking hard right now. The spike seems to be everywhere, and Truckee/North Tahoe has not been spared. I believe that as long as covid community spread remains high throughout Northern CA, so will demand for property up here.
Low interest rates - as long as rates remain this low, the ability for buyers to afford a home here will remain elevated. From what the Fed Chairman Jerome Powell says, rates will continue to be kept low for at least 3 years.
Work from home - in my opinion, one of the biggest drivers in our market this year, and probably for years to come. The last 2 deals I just completed both involved buyers who could now work from home and would rather live here than where they were living before. Many tech workers form the Bay Area have been told they can now work remotely, on a permanent basis. My wife, who is a social worker at the VA, has also been told she will now be working from home permanently, even post covid. I believe this will influence our market more than anything else in the long term.
Inflationary pressures - the Fed is printing money at rates we have never seen in this country. Even though it has been scaled back throughout this year, it is still happening and will continue for the foreseeable future. A likely result of this, over the medium and long term, could be inflation. This is especially true if the economy recovers quickly next year. If inflation starts running up fast, hard assets, like gold or real estate, would be likely places for investors to put their money.
Considering these 4 influences on our market, my best guess will be that the market will continue upwards, but probably not quite as hard as it did this year.
The long and short of it is that buyers can still get good homes right now, but they have to be aggressive. There will also not have as many options, as there are fewer new listings. There are no great deals to be had right now, at least not on good homes without design problems. As for sellers, it is easy street right now. Multiple offers are driving up sale prices well above listing prices in many situations, and most offers are all cash. Deals with loans are still happening though!
Let me know if you have any questions, or if I can help you with your real estate needs. Thanks, stay healthy, and lets get through the rest of this year in one piece!