How bad is it? Tahoe Donner is down by 40%, greater Truckee by 25%, Tahoe Basin by 16% and Squaw/Alpine by 22%. This may not sound like emergency levels but remember where we stood this time last year. We still had huge piles of snow everywhere and houses were only just starting to peek out from behind snow banks. The return or maybe first appearance of winter may have put a slight delay on things but it still feels like we are going in to an even tighter year of inventory then we have had the last few years. What is the cause you might ask? I believe we are seeing some effect of the folks that purchased or refinanced when rates were at record lows. Reluctant to give up those properties with those great rates and low property tax assessments. Secondly is the concern with the steady increase in values as well as interest rates means getting back in the market may be a lot harder or maybe not even possible. I see this as a more primary resident issue. Thirdly, the advent of VRBO and AirBNB is allowing people to absorb the carry cost of the second home a lot easier. That same effect is also helping on the demand side as people see a way to help cover the carry cost of a second home.
What does this mean going forward? So far not too much. Sales for the month of March were still solid with 75 single family home sales and 26 condominiums. This is inline with 2016 but a solid increase in single family home sales compared to 2017. I thought we would see an increase over last year with snowmageddon vs this years sunny warm start. The real question is what happens if inventory lags 20%-30% compared to years past? Do we see sales volume drop by similar amounts? I believe the answer is yes though maybe more like 10-15%. More importantly is what happens to values as we once again see demand outpace supply. We have been on a steady path of 5%-7% annual appreciation. Do we move in to double digit annual appreciation? Very possibly though I would actually prefer the slow steady sustainable pace.
-Matt Hanson, Broker
2017 Realtor of the Year
Tahoe Sierra Board of Realtors