March 2023 Lake Tahoe Real Estate Market Report
It is true that sales activity for Lake Tahoe Real Estate in 2023 has cooled because of higher interest rates. However, many people are expecting a market correction like we saw in 2008, especially when hearing about the handful of bank failings.
Over the last 2 weeks, 30 properties sold in the North Lake Tahoe and Truckee area. While we may see an influx of listings during the summer, which may stall the market, sales are still commanding high sale to list prices.
Any slowing is more of a stalled market – not a correcting market. A market correction is driven by supply and demand. After the 2008 housing market crash, too many homes came onto the market at the same time, driving prices lower.
The stall in our current market is from a lack of buyers meeting a lack of inventory. While buyer demand has dropped, listings too, are relatively low. However, this may change this summer.
Listings vs Sales Lake Tahoe
For all of the Tahoe Sierra Board of Realtors, there were only 273 listings, with 38 sales in February. This shows a 14% absorption rate, which would signal a transition from a seller to a buyer’s market. However, 30 properties sold so far in March, and we did not see the same amount of listings come on the market. Inventory is still relatively low.
Buyers have started making lower offers, assuming that sellers will bite. However, we are also seeing sellers holding firm. Both buyers and sellers are waiting to see what the market is doing. Even while sales have been slower over the last 6 months, the median price of sold homes have held steady.
The FED is expected to announce a rate increase of 0.25 basis points in March. The increase could be as high as 0.50 basis points based on what FED chairman told Congress a few weeks ago. Many expect it to be lower because of the bank failings. As expected, the stock market rallied on news that these banks have been purchased. Calming the bank sector can also lead the FED to follow through on their aggressive rate hike policy.
Rates reached their peak at 7.25% at the end of last year and slowly came down into the mid 6% range in January and February. They rose again on Powell’s aggressive stance when speaking to Congress. In the last few days, they have come down again.
"Expect mortgage rates to yo-yo up and down in the first half of the year, at least until there is a consensus about when the Fed will conclude raising interest rates," says Greg McBride, CFA and chief financial analyst at Bankrate.
We expect more listings to hit the market in the summer of 2023, so we may begin to see more price corrections. Currently, the median price is holding steady in most neighborhoods in the Tahoe basin.
Truckee Real Estate Market
In February 2023, Truckee home prices were down 11.2% compared to last year, selling for a median price of $1.1M. On average, homes in Truckee sell after 74 days on the market compared to 28 days last year. There were 30 homes sold in February this year, but only slightly down from 39 last year.
Sale to list price is at 96.35 down 8.4% since last year. Only 15.8% of homes available for sale have had price reductions. This is only 8.1% higher than this time last year.
In the last 30 days, the median price of homes sold was at $742,000 in Truckee. There are currently 72 active listings, with 14 sold in last 30 days and only 10 new listings.
North Lake Tahoe Real Estate Market
In North Lake Tahoe, the median price for the 4 sold properties over the last 30 days was at $1,027,000. Homes are still selling at 98% of list price. Of the current inventory, we had only 3 new listings against 4 sales.
This is certainly a different market than what we have seen in the past. Sellers can still get pandemic pricing from the amount of Bay Area buyers looking to relocate for a better quality of life. Some buyers are growing more comfortable with higher borrowing costs, knowing they might refinance later.
Most economists agree that 2023 interest rates will not be falling as low as they were during the pandemic. Sellers may realize that the top of the market is slowly passing them by, bringing an influx of listings onto the market this summer.
This would bring about a correction if too many listings hit the market at the same time. If interest rates do begin to fall, we will also see an influx of pent-up demand.
If you are considering listing your property for sale, this may be the best time to get the highest price. For buyers, Lake Tahoe will always have only a limited amount of inventory.
The Lake Tahoe real estate market is driven in large part by the 7.7 million people in the Bay Area. Many are choosing a full-time mountain lifestyle over city living. As more people begin to work remotely, the demand can only increase.
Contact me today about the specific market conditions in the neighborhoods of Lake Tahoe and Truckee.