July generally put up some meager sales figures. The market as a whole had 22% fewer sales from July 2016. The only thing that saved it from being a really difficult month was Tahoe Donner which nearly doubled in closed sales from a year ago. If we pull that out and use the Tahoe basin, greater Truckee and Squaw Alpine numbers only, the drop is 37%. Take it a step further and the greater Truckee market took the biggest hit going from 64 sales last year to just 35 this year. I do believe a tight inventory was a primary factor. A slight tick up in interest rates and some over all appreciation likely played a role as well. Like it or not, affordability is affecting most markets and I don’t believe ours is any different. This is true for both the primary resident as well as the second home buyer. I have been part of a few recent conversation about the fact that as people are having to spend more money for their primary home in the bay area or even Sacramento, Granite Bay and Eldorado Hills it leaves less for that second home purchase.
Weird market? That was a topic of conversation just a couple weeks ago. The market signs that lead to the question were things like the million dollar plus market in Tahoe Donner just stopped. It was like someone turned off the spigot. I watched as Prosser Lakeview inventory jumped from literally a few listings here and there to 13 today. Oddly enough many of those listings are in the $400K-$500K range. A month or two ago you could hardly find a listing under $500K. Pending sales were lagging well below seasonal norms. Some, but not all of the weird market factors have subsided. The inventory throughout our area seems to be in a late season up swing, which I will gladly accept. It will hopefully allow for a strong finish.
I had a first this past week by being a moderator for the Good Morning Truckee real estate panel. We had the President of the Tahoe Sierra Board of Realtors, a loan officer and property manager all present. The general topic was trends in the different facets of the real estate industry. It was very informative for those in attendance and quickly turned towards the direction of affordable real estate and lack of affordable housing. I know I keep bringing the topic up but I do that only because I see and feel it everyday and feel for those people in the thick of it. Part of the presentation involved the numbers it would take to purchase the least expensive single family home at $407K in Truckee. Now recognize this is a 2 bedroom, 1 bath, 856 SQFT home with a 1 car garage. If you were fortunate enough to have 20% for down payment your mortgage, taxes and insurance payment would be just $2300 a month. That is a big number and pushes for debt to income ratios the need for the household to bring in nearly $65K a year minimum to keep housing below 50% of expenses. That is a number most folks would rather see at 35%. Even with our increased long term rental rates a home like that would rent for maybe $2K a month. Those rates continue to climb too as demand exceeds supply. We need more long term rental properties.
-Matt Hanson, Broker & Owner