Market News

It is an interesting time in the Lake Tahoe and Truckee real estate market. With interest rates continuing to fall and home values holding steady, both buyers and sellers will benefit.

Over the last 30 days, the median price of sold homes in Truckee was at $762,200. The median price for new listings is currently at $1.2 million. The sale to list price is at 92%, lower than the 97% of the Spring and Summer of 2022. This means that most transactions have required sellers to adjust their prices down to close the sale.

However, list prices may have been set from comps tracking to the earlier part of the year. Homes that are well priced are still selling rather quickly. The demand for a limited supply of mountain homes in Lake Tahoe and Truckee still remains strong.

Homes take an average of 103 days to sell in Truckee, which is much higher than the 30 days of 2021 and beginning of 2022. Sellers will need to be more aggressive in pricing their home and ensuring it is in pristine showing condition. The days of waiving inspections and multiple offers are over.

Inventory

There are currently 94 active listings, with only 16 new homes listed for sale in the last 30 days. 15 homes sold during this same period. The current rate of absorption, which measures supply vs. demand and how quickly homes sell, is at 3 months or 17%.

Since a seller’s market is generally defined by an absorption rate of 20% or higher, it is clear that we are transitioning into a buyer’s market. However, an absorption rate of 15% and below is the indicator of a buyer’s market. We might call the market balanced.

Over the holidays, we generally see a reduction in available listings. This could change as we move into Spring 2023.

Interest Rates

Over the last month, the average 30-year rate for a home mortgage fell from 7.16% to 6.4%. Lenders are gaining confidence that the FED rate hikes will slow in 2023. On November 17th, rates fell the largest amount in 41 years, from 7% to 6.5%.

The FED is expected to raise the prime rate next week 50 basis points. This is a decrease in the 75 point hikes of the past few months. The FED rate is currently between 3.75 and 4%.

Lenders generally offer rates that are 3% higher than the FED rate. However, the market for buying and selling mortgages has been in a slump and mortgage companies are becoming more competitive. This presents would-be buyers a great opportunity and mortgage applications rose in November.

During the first week of December, mortgage rates dropped to 6.41%. According to Bloomberg, rates have dropped for the fourth consecutive week. This is the longest stretch since 2019.

Home Values

Because inventory is still relatively low, home values in Truckee have remained stable. Although the amount of closed transactions fell during October and November compared to last year, the median price was actually higher year over year.

The current market presents an unusual opportunity for both buyers and sellers. While interest rates are down from their 7% highs, buyers can save by locking in a rate at 6.5%.

Additionally, since home values are holding steady and inventory is down, sellers too, have an opportunity. They can sell their home at a higher price while demand remains for the limited supply of mountain homes in Truckee.

Both CAR and NAR are forecasting a downward trend in home values for 2023. The California median home price is forecast to drop 8.8% to $758,600 in 2023, following a projected 5.7% increase to $831,460 in 2022. Of course, values in Truckee and Lake Tahoe match more to the Bay Area and are higher than other parts of California.

Contact me today for more information about the local market conditions in each area of Lake Tahoe and Truckee.