real estate market update - july 2021

The sales numbers

Hello, and happy summer!

I wanted to check in once again to let you know what is happening with the real estate market here is Truckee and North Tahoe.  In the last update, I compared three different single family home categories within the same neighborhood, Tahoe Donner.  I compared the year over year price changes from the months Oct-Dec in 2019, to the same months in 2020.  If you would like to read that update, just scroll down.  To sum up, the 3 bedroom 2 bath homes were up 24% year over year.  The 3 bedroom 2.5 baths were up 31% year over year.  And finally, the 4 bedroom 3 baths were up 19% year over year.  
Now lets compare those increases with what we have seen so far this year.  Keep in mind, for the last comparison we looked at price increase over 12 months, and now we are looking at that change just over the last 6 months.

For 3 bedroom 2 bath homes in Tahoe Donner in April through June 2021, here are the numbers:

Yes, you read that right.  The average 3 bedroom 2 bath home in TD sold in the last three months was $936k!  This was not a small sample size swayed by one big outlier either.  There were 23 of them and 7 of them were over a million.  Compare this with the average of $784,000 for the last 3 months of 2020, and you get an increase of 19% just for the first 6 months of this year.  

Now lets look at the 3 bedroom 2.5 bath home sold in TD in the last 3 months.  There were 7 sales in this category, with the average being $1,177,857.  Comparing that with Oct-Dec 2020, with an average of $986,432, and we see an increase of 19%, the same as the smaller homes.  

​Finally, lets look at the 4 bedroom 3 bath homes for the same time periods.  In April - June of this year, there were 13 sales, with an average price of $1.251M.  Compared with the same homes 6 months ago that averaged $1.083M, we see appreciation of 15.5%.
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Supply and Demand

OK, that is some pretty serious appreciation for 6 months, especially after what we saw the year before.  So lets have a look at some of the supply and demand dynamics that seems to have done this.  As we would expect to see in the late spring and early summer, we saw a lot more listings than we saw in the winter and early spring.  It is normal to see lots of listings during this time.  In fact, it is normal to see even more that we have been seeing.  So this year, even during the "listing season" less owners are selling than usual, so supply is down compared with average year.  Demand however, continues to be very very high.  It is not uncommon for buyers to offer 10-20% over asking to get a home under contract.  That is because they may be competing with up to 10 other interested parties, or more!  Many of these sales are in cash, but many buyers are getting loans.  And with the right offer, buyers needing a loan can get a house into contract that was getting several all cash offers.  Qualified buyers' loans are getting approved, so why wouldn't a seller wait an extra 2 weeks to close a deal if they are making more money on the sale.  All cash is great, but it is not a license to buy a house at a discount when there are other offers.  

So why does this strong demand continue?  Well, the answer has many parts.  First, living in the mountains is amazing.  Even in the recent heatwave, local residents are doing just fine, and mostly without air conditioning.  And because covid changed the way we work, many more people are going to be able to work from home long into the future.  And as far as   affordability, one only needs to look at what the stock market has done in the last 6 months.  The Vanguard Total Stock Market Index fund, which owns all US publicly traded stocks, is up 16% year to date.  The Nasdaq index is up 14.3%.  So if prospective buyers have had their money in the broad stock market, their buying power has not been significantly diminished, especially if they are getting a mortgage.  And even though mortgage rates are creeping up, It would not be unreasonable for Bay Area workers to expect their wages to increase over the next few years.  Inflation is up, and it will probably continue to be up.  That will also put up ward pressure on real estate.  
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Summary

Prices for the last 18 months have been straight up.  And it is likely that the new purchases are on strong financial footing.  A large portion of these purchases have been all cash, and loans are approved with a lot more care than they were in 2004-2007.  Will supply continue to be depressed?  Will demand continue to push things higher?  At this point, I am not seeing any signs of big changes in direction in the market.  
Feel free to call or email if you have any questions, or if I can help with anything.  Enjoy the summer!