LABOR DAY SALES ARE HERE!
LAKE TAHOE MARKET UPDATE – DAVID GEMME –
For those of you who follow us on a regular basis and read our news letters, I have been promising for months to give you a synopsis of where the lake Tahoe Market stands and how I think this year is shaping up. Simply put….Great deals, price reductions, and I can report we are now in a healthy market. While prices have continued to adjust, our market presenting wonderful opportunities, where both buyers and sellers are working to create unique value propositions in every price point. I spent the last week doing a little research into how our markets are performing, and with equity markets being slowed by increased interest rates and a crazy ass election coming around the corner, it should be no surprise that there is skepticism in purchasing and buyers are gaining more control in the negotiations. So Let’s Jump in, and due to the fact I like to present a very clean and simple approach to my newsletter, the remaining portion of this research will be redirected to our blog page by clicking this link.
LAKEFRONT & WATERFRONT INVENTORY
We have seen more fantastic waterfront properties in the market this year than in the past 3 years combined. As in every market, the good ones are going fast (under 60 DOM) for close to asking price. The properties that need work, appear to be sitting and seeing price adjustment to encourage Buyers to rise to the occasion and bring their offers. But truth be told, with an average building cost of $1250 to $1500 for a lakefront property, buyers seem to be less likely to jump on the bandwagon of remodeling and would prefer to wait for a better home. We are definitely seeing the $10M+ markets soften with the equity and interest rate problems I mentioned earlier, but wow, we have had some great sales in our market this year.
NOTABLE LAKEFRONT SALES FOR 2024 (click the links)
TOP 5 LAKEFRONT PICKS REMAINING THIS YEAR:
CALIFORNIA WATERFRONT – (click the links)
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4250 North Lake Blvd – $17.5M Truly spectacular home built by none other than Bruce Olsen. Simple Luxurious with every detailed toughly crafted. Deep water pier, 6000lb boatlift and a buoy.
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5520 West Lake Blvd. – $10.5M One of the best redevelopment properties I have seen in some time. Older existing house resides on a .8 acre lot with a ton of coverage available. Home also included a boat house and buoy.
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4940 North Lake Blvd – $7.75M Located walking distance to Garwood’s Restaurant, this gorgeous mid century cabin is the epitome of the older days of Tahoe when life required less and meant more. This one also has a boat lift and two buoys and offers a path to the
NEVADA WATERFRONT (click the links)
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187 Yellow Jacket Rd – $17.5M – One of the nicest settings on the entire lake located on the point of Glenbrook with bay views and crystal water. Home is a traditional Tahoe design, and sellers are building a brand new pier with a 12,000 lb boatlift and buoy.
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1050 Skyland Dr – $17.9M – Sellers are motivated to sell and are seeking a buyer who embraces the grandeur of this newer home. 6 bedrooms and a very well laid out floor plan offers wonderful views from just about every room. Sandy beach, long pier and boatlift make this property unique.
There are currently an additional 8 waterfront properties in Incline, 9 waterfront properties on the East Shore, and 9 waterfront properties on the North and West shores, totaling 25 opportunities for waterfront buyers. In simple terms 22% of the lakeshore inventory has been absorbed this year on track to be an additional 40-45% of the inventory being sold by the end of it.
Note to the buyers… Sellers want out before winter, and are more receptive to Buyer’s offers on properties that may need work, or have been sitting longer than 120 days.
Luxury Inventory around the Lake
2019 vs 2024
Due to the number of questions I have recently received, I decided to take a creative approach to understanding where the market is normalizing to and what we can expect to see if interest rates start to adjust positively in the near future. Most experts are saying that there is pent up demand that if we see even a 1/2 point drop in interest rates, we will see the market begin to take off again, with lower inventory selling and trade up buyers reallocating their assets into different products to fit their ever evolving lifestyle. As a reminder, the feds not only wanted to cool inflation but also wanted to cool the housing market.
I pulled the data below using single family homes at $1M+ sold price and segmented it into the Tahoe Sierra, Incline Village and East Shore MLS’s. An interesting fact that we have seen as opposed to past 3 years is that escrow cancelations are up. This is an odd statistic, but has relevance, as it sheds light on the ambiguity people are feeling right now. Mostly, we are hovering around 10% lakeside above 2019 pricing. However, that seems to stratify according to the entry level (Under $2.5M) the mid range ($2.5 to $7M) and the upper ($7-$15M) and ultra luxury (15+M) price points. Overall, this is a general approach, but should shed light what’s happening in each market below, and if you are curious to how your home would fit into this data please reach out to us and lets open a dialogue.
NEVADA – Throughout Nevada, we see buyers flocking to this state to reposition their primary assets in more tax friendly states. We are seeing buyers come in from all over the place, but primarily California. With over $5 Billion of state matched capital and companies moving their headquarters to northern Nevada, we anticipate these markets to continue to grow and improve over the next decade. Inventory is increasing throughout all of these areas, trending with about a 30% absorption rate after 30+ days on the market.
Incline Village and Crystal Bay – These markets have seen inventory steadily rising since May, yet as the number point to below, over 50% of the inventory is still selling within 3 months of being listed. There is consistent movement in the market, and sales are segmented, banding around great views, quality of construction, walkable locations and proximity to amenities. Building starts are down about 30% from 2023 and we are seeing buyer be more scrupulous in their desire to create their own dreams, and the cost that comes with it. So what does incline village look like from 2019 to today?
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2019 – 151 Sales/ Avg 166 DOM/ avg sold price 2.43M/ $24.5M highest sale.
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2024 – 80 Sales/ Avg 114 DOM/ avg sold price $3.25M/ $47.5M highest sale
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Note: As of 8/21/24, there are 17 pending properties with an average 97 DOM and price of $2.9M. There are currently 94 active properties on the market.
Summary: It would appear that 50% of the inventory is selling year to date and with the currently trajectory there should be around 60-70% of the 2024 market inventory sold by the end of the year.
Glenbrook & East Shore – The Glenbrook and east shore market usually attracts a more eclectic buyer as the location is not as convenient to the bay area. Much of the inventory, especially near Zephyr cove is older and eclectic for the savvy younger buyer of today. As we look at neighborhoods like the gated neighborhood of Glenbrook, these properties are holding strong as the community adds a ton of value and people love being there with all of the amenities. One outlier which I did not include in this report is the neighborhood of Clear Creek, which is an anomaly all to itself with a Martis Camp feel and beach club. They have hit new records in that neighborhood recently with a $12.5M sale and several sales in the mid $4M-$7M range for brand new contemporary homes.
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2019 – 61 Sales/ Avg 246 DOM/ avg sold price 2.24M/ $5.96M highest sale.
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2024 – 48 Sales/ Avg 130 DOM/ avg sold price $1.86M/ $6.99M highest sale
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Note: As of 8/21, there are 12 pending properties with an average 83 DOM and price of $2.6M. 1062 Skyland should close north of $10M being the highest sale of 2024. There are currently 40 active properties on the market.
Summary it would appear that 62% of the inventory is selling year to date and with the currently trajectory there should be well within 70-75% of the 2024 market inventory sold by the end of the year.
CALIFORNIA – Tahoe Sierra MLS
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2019 – 314 Sales/ Avg 57 DOM/ avg sold price $2.4M/ $37M highest sale.
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2024 – 317 Sales/ Avg 60 DOM/ avg sold price $2.37M/ $16.95M highest sale
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Note: As of 8/21 There are 72 pending properties with an average of 81 DOM and price of $2.6M. There are also three properties pending much higher than the highest sale represented above. There are currently 270 Properties on the market.
Summary: it would appear that 59% of the inventory is selling year to date and with the currently trajectory there should be well within 70-75% of the 2024 market inventory sold by the end of the year.
Over all conclusion: Our market is still very healthy. I believe we will have a good sell off in the fall prior to winter arriving. There are price points which are moving slower in all these areas. The mid and lower end of the market is still very tight with good inventory selling within 90 days. The Upper and Ultra luxury market have buyers that can wait and are not in a hurry to purchase. So they will wait for the right home. Buyers are choosing quality, views and location over homes that need remodeling and are more remote. In all markets, homes can be purchased well under replacement cost and can present wonderful opportunities and values.
For our Seller’s – Its important to recognize the market trends, and expect that your home will not sell as quick as before. If the goal is to get out this year, price your home ahead of the market and present the best value to Buyers. Buyer are responding very positively to this type of pricing. Great homes that are good values sell quickly in any market. Don’t go for top dollar, position and focus on your net return, thereby having the cash to continue your ambitions and move on from the equity you have built in this investment.
For our Buyers – This is considered a “slower than normal market” and Seller’s are willing to negotiate. Inventory is your friend this year, and with interest rates expected to come down, we will begin to see an increase in activity especially in the low to middle level homes. Don’t wait as there is very good inventory to select from. Don’t be afraid to put your offer in front of Sellers, as the worst case answer is always “no”. You will have a strength in the negotiations especially if properties have been sitting for over 120 days.
As a final thought, I wanted to add that the high end Luxury Tahoe market has been fueled for decades by various companies IPO’s (Initial Public Offerings) You may or may not know this, but according to and article in IPO Statistics, 2024 marks the lowest number of IPO’s since 2009, with only 122 companies going public this year. Parallel that to the highest number of IPO’s in 2021 (1035), and it is no wonder why the the compounding affect of COVID and IPO’s created record numbers of luxury sales across Lake Tahoe and all of our surrounding states. For those of you who have built your businesses one day at a time, and understand the pauses that markets take in between these spikes in IPO traffic in real estate markets, this is a wonderful time to increase your odds of non competitive offer scenarios and truly get the home you have been desiring for years.
This has been a ton of information to digest. It is my hope that you have enjoyed this Gemme Group market update. We believe that the Tahoe market is remaining strong and has adjusted to a level playing field for both buyer and sellers. This is the first time I can say that in almost 4 years and I believe that it will continue to hold its value, if not start to increase in value coming into the tail end of 2025 as interest rates drop. We truly appreciate the you as our valued friends, clients and patrons. If ever you would like to discuss anything surrounding real estate in this area, listing your home or want buyer representation we are always here to help.
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