Cruising around the internet, I came across an interesting article by Realtor Don Kanare in nearby Incline Village, Nevada. For those of you out-of-towners who may not know, Incline is just over the hill from Reno on the beautiful northern shore of Lake Tahoe. It’s a ritzy little vacation town known for being a tax haven for the rich and sometimes famous.
Don asserts that due to the high number of wealthy second home owners and the relatively low numbers of properties carrying any loans at all, Incline Village should be relatively immune to the whole subprime situation. He makes some valid points.
I asked my friends at Ticor Title to find out exactly how many individually owned housing units there are in Incline, Reno and Sparks, and how many of those have loans against them:
Location
Loans
Total
Reno
35,583
70,046
Sparks
17,130
30,608
Incline 2,201 6,882
So while Reno and Sparks run at about half, only one third of Incline properties carry any kind of mortgage at all. This certainly reduces Incline’s exposure to the problem. But once in a while, somebody gets into trouble. A friend of mine got a great deal last year on a foreclosure sale in Tyrolian Village.
More Incline Village market trivia:
2007 YTD Sold Avg Price Sales/List DOM
75 $1,334,639 93.02% 196
2006 YTD Sold Avg Price Sales/List DOM
92 $1,257,665 92.96% 137
2005 YTD Sold Avg Price Sales/List DOM
129 $917,100 95.82% 140
2004 YTD Sold Avg Price Sales/List DOM
153 $705,545 94.69% 142
2003 YTD Sold Avg Price Sales/List DOM
97 $629,508 93.05% 138
2 comments
Lake Tahoe is a whole different animal than Reno/Sparks. I wouldn’t be surprised to see less subprime exposure there. That said, the area will not be immune to price declines. It could be hit fairly hard actually, as vacation homes are the first to go when people are experiencing financial distress. While the area certainly boasts a healthy number of homes for the uber rich, there are many modest cabins and homes which belong to the working middle class. I see a lot of flips languishing up there, and time will tell who’s swimming naked.
Much of what Mr. Kanare says about Incline is true. The average SFR homeowner there is pretty upscale. Probably not any subprime borrowers. Maybe not quite as upscale as Glenbook, where house values are even higher, but pretty upscale.
The implication of Mr. Kanare’s comments is that if a community has no subprime borrowers who bought there, the market in that community is immune from any price declines. This is wrong. It is not just the presence of subprime borrowers that exert downward pressure on prices. Incline values fell during the last market downturn, and they will do so in this one. Even Mr. Kanare must acknowledge that houses are languishing (think we can get HONEST DOM figures for Incline?) and asking prices are dropping. Clearly, the prices in Incline are not ever going to approach the prices in Wingfield Springs. But the suggestion that prices CANNOT drop in Incline is absurd.
Sorry, Don, not even Incline is immune to market forces.
Tahoe always lags behind.
Let’s all check back in a year and see.