The Tahoe real estate market softened in 2022, but it is not a down market. Homes are still appreciating, buyers are still buying but with more options and more negotiating power.
What Does this Mean?
This means that we have moved back into a more normal real estate market, similar to 2019. In 2022, total dollar volume of single-family homes sold in the Lake Tahoe basin was 38% less than in 2021. Units sold were 30% less but in all four areas median price increased, two areas slightly and two significantly. Condominium sales have similar statistics.
What Happened?
The craziness of the COVID period, 2020 and 2021, ended. Those two years were unlike any other time in my 41 years in real estate in this market. It was not normal. Home values went up dramatically, which was good for sellers. Properties sold very quickly, usually with multiple offers (not a few offers but many). Sellers didn’t have to negotiate. With what appeared to be very low inventory buyers had a crazy sense of urgency which resulted in offers way above asking price and no contingencies. Often buyers bought properties sight-unseen.
As we moved into 2022, the craziness died down and the urgency went away. Properties started selling at a slower pace, giving buyers more choices and time to consider those choices. It took most sellers time to recognize that the market was changing, the selling boom was ending and as we moved further into the year, listing price reductions increased and sellers had to start negotiating again, BUT, values were NOT dropping. We transitioned back into a pre-COVID market (similar to 2019); median price on closed escrows went up slightly in the South Tahoe, West and North Shore and significantly in Incline Village and the East Shore.
What is 2023 Going to Be Like?
Moving into the post-pandemic times, I am cautiously optimistic. Obviously, there are variables in our country that can affect our market, but in my opinion, it will be a lot like 2022 with property values increasing slightly in the North, West and South Tahoe areas and more so in the East Shore and Incline Village. Activity will be slow through the remainder of winter but will increase in the spring when more listings come on the market. Demand for Tahoe properties is still very high. I think the increase in listings that will happen in the spring will still not entirely meet the level of buyer demand, but we will not see the urgency of 2020 and 2021.
It will again be a normal real estate market.
What About Interest Rates?
I know that the interest rate increases have made potential buyers feel a bit nervous, however, if you look at the history of interest rates you will see that interest rates today are still historically low, just 30 years ago they were up above 15%. Yes, they are double the rate of six or eight months ago, but they are still low and will likely go down again and lenders will welcome clients that want to refinance. In our market, I don’t think that will have much impact on our sales because a large percentage of our transactions are all cash sales and most of our sales are for vacation properties, our buyers are families with discretionary income.
Bottom Line: It is a Good Time for Sellers and Buyers
For sellers, it is a good time because the demand is there. If a property is properly prepared for sale and priced realistically it will sell! If you have owned your Tahoe property for more than two years you probably have a substantial increase in equity. Don’t set your expectations to 2020 levels and do expect to have to negotiate.
For Buyers, it is a good time because prices will most likely be higher next year. Properties will generally not sell as rapidly as in the COVID years which means there will be more inventory, more choices to consider, a less competitive market, and sellers will probably negotiate and accept offers with contingencies. Remember, the reason to purchase property in the Tahoe area is to use it- you are buying into a lifestyle.
The Tahoe real estate market softened in 2022, but it is not a down market. Homes are still appreciating, buyers are still buying but with more options and more negotiating power.
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Please call me if you would like to discuss your Lake Tahoe Real Estate needs.
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