Labor Day Sale – Gemme Group Newsletter

Happy Labor Day weekend my dear clients, colleagues and friends,

It is my hope that you have truly enjoyed the beautiful summer and enjoyed the splendor of Lake Tahoe. As summer winds down and our children return back to school, and life seems to be getting back to normality, I am left with an overwhelming feeling of how bless we are to have spent time with those we love, sharing laughs and experiences together.

Recently in my own life, I have launched my son Luke into college, and I am left for the first time in 25 year with the question of “What Now?” In truth, the empty nesting stories I have heard through the years, can not embody the actual emotions one goes through when you are saying good bye to your last child and watch them launch into adulthood. I believe through this experience, I understand better why people buy their Lake Tahoe dream home to create a place to continue the memories and foster the reason for their families to unite every summer and winter, continue to build upon their lasting family memories. So here’s to our kids success and the families and friends who are changing the world one generation at a time!

For those of you who follow us on a regular basis and actually 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 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.

As you may be aware 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 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 as we are definitely seeing the $10M+ markets soften with the equity and interest rate problems I mentioned earlier.

 

There are currently an additional 8 properties in Incline, 7 properties on the East Shore, and 10 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 about 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.

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. Across all of our markets we are seeing an increase in the amount escrows that cancel. This is an odd statistic, but has relevance. 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.

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.

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?

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 I did not include in this reports 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.

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

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 is 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. 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 trend, 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. Great homes that are good values sell quickly in any market. Don’t go for top dollar, position and focus on your net return.

For our Buyer’s – This is considered a “slower than normal market” and Seller’s are willing to negotiate. Don’t wait as there is very good inventory to select from, you will have a strength in the negotiations especially if properties have been sitting for over 100 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.

 

“We welcome the opportunity of helping you or someone you love”

Kind Regards,

David Gemme