Random Real Estate Ramblings
It has been a very interesting start to 2019 for real estate sales in Incline Village and Crystal Bay. Inventory levels have remained extraordinarily low while sales activity has continued along at a steady pace. While overall unit sales are approximately 25% below the same time last year this number is deceiving. We had a monstrous winter in 2018 – 19 vs. an extreme drought the year before. The numerous road closures and deep snowpack put a lid on showing activity, especially for houses.
In general, both showing and sales activity remains strong this spring across all price ranges. The single-family homes in escrow range from $600,000 all the way up to $7.5 million. With only 11 houses with asking prices under $1 million many buyers are getting priced out of the market. Condo prices continue to trend up. There are only 2 condos currently listed for sale on the Incline Village MLS with asking prices under $400,000.
One anomaly is the extreme difference between the median sale price for the past 6 months and the median asking price of houses currently for sale. Over the past 6 months the median sale price for single-family homes was $1.25 million. But the median asking price of houses currently on the market is over $3 million. This means there is an extreme shortage of lower to moderately priced inventory in our market. If you own a property with a fair market value of $1.5 million or less that sector is still a seller’s market.
The interest rate outlook for 2019 has changed as the Fed has signaled that they have no need to raise rates in the foreseeable future. This is a reversal of course from the dead of winter when it looked like we would see one or two rate hikes this year. As a result, interest rates have trended downward slightly. Buyers with a good credit rating can get a 30 year fixed-rate loan with an interest rate around 4.125% and 30 year Jumbo loans are down to 3.875%. (This information was gathered from the wellsfargo.com website on May 12, 2019).
Low interest rates benefit both owner-occupied buyers and investors. Prices for real estate across the country have risen significantly in the past 7 years. Even though monthly rents have also gone up they have not kept pace proportionately with price increases. Consequently, the cash on cash rate of return for investment properties has declined for many areas. Being able to use leverage instead of having to pay all cash for an investment property can significantly increase the rate of return.
The vast majority of real estate purchases at Lake Tahoe are discretionary. Many people purchase property here simply for the enjoyment and not for investment or income purposes. One of the great things about owning property at Tahoe is that you can keep it for yourself, do vacation rentals or lease it full time. The beauty of doing vacation rentals is that you can generate income to offset some of the expenses while still having plenty of time to enjoy the place.
We are seeing vacation rental restrictions in some communities such as South Lake Tahoe. Also, many condo and freestanding condo developments have restrictions on the minimum length of stay for renters. It behooves anyone purchasing property at Lake Tahoe to perform their due diligence if they are considering doing any type of rental so as not to run afoul of any regulations.
Weekly Real Estate Update Statistics gathered from the Incline Village MLS on 5/12/19
Houses Condos PUDs
For Sale 81 35 6 Under $1 million 11 28 5 Median Price For Sale $3,020,000 $579,000 $558,000 YTD Sales 2019 39 48 19 YTD Sales 2018 56 59 19 New Listings 11 In Escrow 9 Closed Escrow 8 Range in Escrow $389,000 – $2,600,000
These statistics are based on information from the Incline Village Board of REALTORS® or its Multiple Listing Service as of May 12, 2019