The snow is melting, the birds are chirping, and the real estate market is still on fire. The first quarter of 2022 showed that buyer demand is running strong, and that owners are holding onto their homes, for now. For anyone following this blog, you will know that a part of this just our yearly pattern. Inventory generally bottoms in February or March, and inventory starts picking up in April, or at least new listings do. Currently in Tahoe Donner, my preferred bellwether for the Truckee Tahoe Market, the number of active listings is 15 single family homes, out of just over 6000 completed homes in that neighborhood. And out of those 15 homes, the median asking price is $1,449,000 and only 3 of them are under one million.
Here is a breakdown of how the sale prices of Q1 2022 compared with Q1 2021, again, using Tahoe Donner as our subject area:
Let’s start with the 3 bed, 2 bath homes with 2 car garages:
There were 5 sales in this category in Q1 this year, compared with 12 the year before. The decrease is clearly explained by low inventory. But the average prices are up by 30% year over year. There is one notable listing that I want to share that is really incredible. It is 14169 Glacier View Rd. It is a 3 bed 2 bath 2 car garage home built in 1980, at 1474 square feet with a steep uphill driveway. It does not appear to have ever been remodeled. It was listed for $849,000, and sold in 4 days for $1,175,000 to a buyer who got a loan. This is 38% above asking price!!! It should be noted that the buyers were represented by an out of area agent, and may not have been made aware of the hazards of steep driveways and future salability of homes with that issue. Here is the link to that sale if you would like to have a look- https://tsierra.paragonrels.com/CollabLink/?id=7e66b8e3-5b71-464a-8eed-3275e081b2fa&forMlsId=TSIERRA
Next, lets look at the 3 bed 2.5 bath homes with 2 car garages:
There were 7 of these sold, compared with the same number in Q1 of 2021, but the average sale price was up by 14% year over year.
Lastly, lets look at the 4 bed 3 bath homes with 2 car garages:
There were 5 sales in this category this quarter, compared with the same number in 2021. This year the average sale price was up by 28%.
The biggest change underlying the market in the last 12 months has got to be interest rates. They have been quietly creeping up, but up they are, and considerably!
Per Freddie Mac, rates as of March 31st are averaging 4.67% for a 30 year fixed loan, compared with 3.18% for the same week last year. For buyers that are getting loans, which is still the majority of sales in our area, this translates to significantly less buying power. And yet sale prices continue to skyrocket. At some point, there has got to be some affect of this trend in mortgage rates. And if there is a negative force on prices this year, I think it will be from this. But we aren’t seeing it reflected in demand just yet.
This winter, extreme buyer demand has continued to push prices sharply upward. We are now starting to see the beginning of our spring listing season. It will be interesting to see if owners that have been thinking of selling, start to consider these new lending rates and what effect they will have on future buyer demand. If sellers are reading the tea leaves, we may see a heavier than usual listing season. In my opinion, this would be good for our market. The effects of covid, work from home, and inflation have lit a fire under the market for the last 2 years. And while work from home, and most certainly inflation will continue to fuel the market, there will finally be a check on them in the form of mortgage rates. We will have to wait and see how strong of a balancing force that will be. I’ll be back with another update after Q2, but in the mean time feel free to reach out with any questions you may have. Enjoy the spring, the weather here in the mountains has really been incredible!
Allison James Estates and Homes
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