From the local rental market we go to the other end of the housing spectrum. The lead story in today’s RGJ’s Business section concerned the Tahoe housing market: Average Tahoe home price drops below $1 million
This story contains commentary and stats by our very own broker and vice President of Chase International, Sue Lowe. Be sure to check it out. (Click on the link above to access the article in its entirety.)
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Diane Cohn
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Caughlin Ranch House
Reno, NV
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Reno, NV
The Rock House
Reno, NV
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We’ve talked about Incline Village [”IV”]/Crystal Bay [”CB”] on this site before - especially with respect to Lexi’s and Mark’s reports [remember, the IV market is immune to everything else that’s going on around it?]. But you have to be very cautious interpelating the numbers.
For instance,
1. Average prices in Tahoe are not indicative of the market. Remember, IV had a $32M sale in the first quarter of this year. Also a new $47M listing came on the market last week [so Diane, you were asking who purchases a $8M IV home? I ask you, who purchases a $47M one?]. What do you think a couple of these do for the average?
2. Unit sales are so small around Lake Tahoe that it doesn’t take much of a drop in numbers to result in large percentages. For the first quarter of this year unit sales in IV/CB dropped from about 75 [that’s 25/month] to 33 [that’s 11/month]. No doubt this represents a big percentage drop but really, we’re only talking about 13 sales/month. This drop can easily be erased in a single month.
3. The median sales price dropped so much because just like Reno/Sparks, the mid to high end of the market dried up while the low end took off.
But the moral of the story is Lake Tahoe is not immune to the same kind of market forces that are going on around it.
It is almost one year, to the very day, that a realtor in Incline named Don Kanare wrote a spin piece about how Incline’s market was immune from any price declines because there were no subprime loans there. Diane linked to it on her post of 4/24/07. BB and I made a comment that there was nothing to suggest that Incline Village is immune to the financial laws of the universe, and that Incline would deterioraste just like everywhere else. I ended my comment by saying let’s all check back in a year and see how Don’s prediction is holding up.
Now we know.
Yeah, and on March 24, 2000 - John Chambers CEO of Cisco Systems said it didn’t look like Cisco would be hurt very much by the current downturn in tech stocks. This is 3 weeks after he sold 158 million in company stock.
And we all know how that played out.
Wow. Average down 38%. Median down 25%. And even with those staggering price drops, sales volume is also down, 25%-73%.
Lots of crow being eaten today by the “But the upscale Tahoe market is *different*!” crowd.
Now for the $64K question … if $900K gets you into Incline, what happens to the sales volume of all those $900K+ Pergraniteel McMansions for sale in Reno?
You don’t need $900K to get into Incline. I found 20 properties under 600K, and a several 2 and 3 bedroom places in the 300K to 400K range.
Here is some interesting info, not about Tahoe, but about Caughlin Ranch.
Jeannie Cassinelli, a realtor with Dickson Realty, puts out a quarterly report on sales and listings for Caughlin Ranch. According to Ms. Cassinelli, Q1 sales for Caughlin Ranch, Juniper Ridge and Juniper Hills are down 86% from 2004. Here are the figures for Q1 sales:
2004……42 sales
2005……32 sales
2006……30 sales
2007……28 sales
2008…….6 sales
Ms. Cassinelli calls these 2008 numbers “paltry sales figures”.
So it appears that while the overall market saw some increased sales activity in Q1, clearly Caughlin Ranch did not.
Also interesting is that of the 6 sales that did happen in Caughlin in Q1, the most expensive was 15 Rimfire Cr., 5033 sq. ft. sold for $950,000. That is $189 a sq/ft.
The other 5 sales were for $250,000 in Alum Creek, $325,000 and $392,000 in Mayberry Meadows, $775,000 in Juniper Trails, and $410,000 in Village Green.
Nothing sold for over $1 million in Caughlin Ranch, the so-called Danville of Reno.
Following up a bit on the Caughlin numbers, the median sales price in Caughlin Ranch for Q1 of 2008 was $401,000. Now obviously the sample is quite small, and it’s only for one quarter, but when was the last time we heard the median sales figure for Caughlin Ranch at $400,000??
I’m thinking……never.
Mike Van H, what exactly do you mean by “getting into Incline [”IV”]?” If you mean a foot in the door, I agree. But if you mean something most of us would be interested in purchasing, NOT…
Our good friend Lexi [of Mark and Lexi fame] has posted a blog on ChaseNation [ http://www.chasenation.com/profiles/blog/show?id=2000642%3ABlogPost%3A5585 ] wherein she highlights 20 “best buy” condos priced at under $600K, and 20 “best buy” SFRs priced between $700K-$1.5M. Remember [according to Lexi], these are ONLY the “best buys!” I invite you to take a look at the lot and then compare them to what you get Reno.
Now take a look at the 20 properties you reference in IV that are priced under $600K. I haven’t seen the makeup of your list but I’ll bet you dollars to donuts possibly one or more likely NONE are SFRs [remember the least expensive SFR on Lexi’s list of “best buys” is priced at $700K]. So what can you purchase in Reno for $600K compared to that $600K 2BD condo [w/o a Lake view] you reference in IV?
The import of Mike Z’s post was that if SFR prices in IV come down, additional pressure is placed upon the pricing of comparable Reno properties. Although we’re not there yet, it should be an interesting summer.
Actually all of them were Single Family Residences…I excluded condos and townhomes from the search. Most were 2 and 3 bedrooms, around the 1,100 to 1,500 sq.f. range. In fact one was even a Chase featured listing on the golf course, 1,500 s.f. Singe Family Home for under 500K. So it would kind of pompous maybe to say none of these properties would interest anyone? I used to live in Incline Village, I graduated high school from there, so I know a thing or two about where these homes are at.
What was the median price (or even price per square foot) for Incline Village in 1999? I’d love to see the data for the past 10-15 years. I think IV’s bubble began in the late 90’s due to the dotbomb nonsense.
Not everyone has such impeccable taste as Smarten, Mike. Many of us prefer much smaller, more efficient, and charming Tahoe retreats. You know, the rustic cabins you and I remember from our youths - some of which were even on 1 sometimes 2 acre parcels. That’s right Smarten, acres. I’d imagine most have been leveled and replaced by those dreadful, ostentatious eyesores on postage stamp lots.
No BB. There’s a new $47M listing on 8 plus acres. See, you still can find IV homes with some elbow room.
Mike Van H, I’d be interested in seeing your list of 20 IV SFRs listed for sale at under $600K! Just out of curiosity, I ran an IV MLS search for ALL SFRs under $600K. My search came back with THREE; a 2BD/1BA 1,000 square footer [according to the agent “ugly on the outside,” but a “great development opportunity”] on Geraldine for $460K; a 3BD/2BA 1,224 square footer on Dorcey [nose bleed upper Tyner] for $499K; and, a 4BD/2BA 1,728 square footer on Jeffrey for $598K.
To augment these three, I’ve gone through this week’s real estate insert in Friday’s North Lake Tahoe Bonanza newspaper looking for SFRs not on the MLS. I found two possible additional SFRs priced at under $600K; a 4BD/2BA 1,768 square footer on Tirol, and a “chalet” [is this a SFR?] on Valais [both located above Diamond Peak Ski Area] at $599K/each.
That’s it!
Additionally, two sets of Chase IV agents [Bruce & Sandra Soli and our friend Lexi] post regular weekly IV “best buys” [the Solis’ can be found at http://tahoehomesblog.files.wordpress.com/2008/04/040808-best-buy-list.pdf , and Lexi’s can be found at http://buytahoehomes.com/Incline_best_buys.html ] and NONE of these properties is considered enough of a “buy” to make it on to their lists! In fact, there are NO <$600K SFRs included on their lists!
I never said that “none of these properties would interest anyone.” What I did say was “most of us would [not] be interested in purchasing” any of these [do you think Transplant would be interested?], and I stand behind the statement!
There are virtually no SFRs available for purchase in IV for $600K or less and even if there were, compared to comparable southwest Reno SFRs currently for sale, there’s no comparison.
RI,
Where would I find Jeannie Cassinelli’s quarterly report on sales and listings for Caughlin Ranch?
Thanks!!
Hi 3,
It’s a report she mails out to all homeowners in Caughlin Ranch. Since I live there, I get it in the mail. I would assume that if you want a copy, she would mail you one if you call her office and ask. Jeannie lives there as well and knows the Caughlin market very well.
Last year the local paper in Incline (Tahoe Bonanza) published a banner, bold faced headline declaring that “Incline Real Estate Bucks the Trend” and that median home prices were up 15 % year over year. They didn’t mention that the median figure had been skewed dramatically by the sale of several 15+ million dollar properties. We will see if they report the latest numbers, or mention the 75+ homes in various stages of foreclosure in Incline (according to realty trac). Not only is Incline vulnerable to a housing economics like everywhere else, they may be worse off for two reasons: 1) The difficulties in the Jumbo mortgage market and 2) Vacation homes are a cash draining liability that are the first things to be sold off if their owners find themselves in financial difficulties.
“Luxury homes lose lustre”
By Laura Cohn, FT.com site
Published: Mar 11, 2008
This London Financial Times article mentions that North Lake Tahoe, NV and Jackson WY, two formerly high-flying real estate markets have suffered the largest percentage drops in sales volume nationally.
Great find, Paul. Interesting that the Incline Village real estate crash has made the international news. Looks like the high end isn’t so “special” after all, right Allen?
Here’s a piece from Reuters covering a property auction which offers a glimpse of the smackdown that’s coming for the high end market:
“Guido Teichner, a would-be buyer who said he attended the auction looking to make a killing, put in a $500,000 bid on a two-story, 4,000 square foot (370 square meter) penthouse condo in downtown Fort Lauderdale that had previously been listed at $3 million…The bid…was accepted at auction but still awaited seller approval because it was below the minimum bid. ‘Fifty cents on the dollar is not good enough in this market,’ he said. ‘I don’t think we’ve hit bottom yet so you’ve got to get a real steal to allow for a little remaining downside.’”
http://www.reuters.com/article/domesticNews/idUSN0128282020080421?sp=true