Chase International’s Vice President, Sue Lowe, was interviewed for an article that appeared in yesterday’s RGJ about the current state of Lake Tahoe and Reno’s housing market. If you missed it, you can read the entire article here: Falling Tahoe home sales, prices push rebound out of reach
This morning Chase International [the broker where I hang my license] released the data that was quoted in much of the article. I thought I’d pass this along to our readers [simply click of the docs below]. The docs are multi-page .PDFs, so flip through them to find the area in which you’re interested.
Of particular interest are the price-branding charts. Take a look at Reno’s price branding. You’ll see that year-to-date: 90% of home sales in Reno/Sparks sold for under $500,000; 76% sold for under $350,000; and 44% sold for less that $250,000.
26 comments
Hmmm…
Not sure if it was intentional, but it is odd to look at a chart with 2008 values on the left.
Maybe this is a way of making the decreases seem less significant? Edward Tuft would be screaming if he saw this - really poor data visualization.
I, too, have always thought this was an odd way to present the data. Apparently this is the way they’ve always done it.
Not the way I would do it.
It doesn’t take a rocket scientist to figure it out. Thanks for the info Guy.
What I’d like to see is a comparison to the previous year’s sales. Anyone have the data in the same format for 2007?
billlddrummer,
I’ll see if I can dig up last year’s reports. In the meantime, you can look at my July 6th and July 15th posts, where I posted our broker’s Mid-Year market report and price branding charts.
I fully expect the Tahoe market to get hammered beyond most peoples wildest dreams. In light of the current economic situation, and taking into consideration the tremendous amount of wealth destruction occurring, the vacation home market will be DOA for years.
When one considers the sheer number of builder spec homes, high end flips, “investment” and vacation homes currently for sale in and around Tahoe, along with the shadow inventory waiting in the wings, it quickly becomes obvious that the numbers of wealthy people needed to absorb such levels of inventory don’t exist. It should be interesting what becomes of many of these white elephants.
“…interesting to see what becomes…
To Guy,
Thanks, I will.
And to BB,
I think you’re spot on. If only there were more rich people out there. I saw one listing for $100 million(!!). But that’s the exception. There are tons of mid-7 figure homes for sale all around the Lake basin. Unless they’re on the lakeshore, the market for them is dead. And even lakeshore properties are sitting longer than they did just a year ago.
Can you say losses?
Other than BB’s “feelings” about the Tahoe market, I don’t know what facts he relies upon in making the Lake Tahoe predictions that he does. Believe me, BB’s words were mine 3 years ago. Yet look what happened? In fact, look what’s actually happening right now in Incline Village.
The quote which follows comes from Don Kanare [today in an insert accompanying the North Lake Tahoe Bonanza newspaper], a local agent with Lakeshore Realty who last year represented more Incline Village purchasers than any other agent:
“While sales may be down 38% in 2008 versus 2007, the median price of a single family home has dropped only 7% [currently it’s $1.15M] and the median price of a condo has dropped only 9%. This is far less than just about anywhere else in the country…While there are pockets of weakness…the overall real estate environment has remained relatively healthy for price and value….The strongest part of our market…continues to be Lakeview homes and high-quality homes at low elevation. We continue to see prices holding firm in these sectors of the market as demand continues to exceed supply.”
I’m not saying I agree with Don’s long term outlook for Incline Village real estate given the present economy, but I can’t disagree with his facts YTD. The market here has been incredibly resilient and surprising to me, closed escrows have actually accelerated since September 1 compared to any other time of the year. And there are currently 11 SFRs in escrow priced at $1.2M or higher. Contrast this number with an average of only 7.7 SFR sales/month YTD, 44% of which sold at a median sales price of $750K. So I must respectfully disagree with billddrummer’s observation that “the [Incline Village] market for…mid-7 figure homes for sale…is dead.” The facts show that so far, it’s very much alive.
I attribute this anomaly to the fact that most purchasers of Incline Village real estate haven’t been affected by the purchase money mortgage squeeze that has plagued most other places. That doesn’t mean more banks loan in Incline Village. But it does mean that more purchasers aren’t relying upon borrowed funds to fund their purchases. Now maybe this will all change given what has happened on Wall Street [a gut feeling rather than fact]. But maybe not.
Smarten-
It’s FACT, not feeling, that there are many more high end homes than buyers, contrary to what Don wants everyone to believe. There has been no capitulation thus far in that segment of the marketplace, be it Tahoe, Montreux, Marin, West LA, or elsewhere. To believe, even for a brief moment, that it signals there will be no capitulation, is delusional, Smarten, delusional.
Buying into realtor Kanare’s logic, we’ve hit bottom, and any price declines are over, the market is taking off, and all’s well. If you believe that, I think you better get off your pompous @$$ and go buy a house, pronto.
What other FACTS do I rely upon, Smarten? Historic pricing and values, as they pertain to local wages, etc. Want to know where I think Tahoe pricing is going? Right back to where it was in the mid to late 90’s. The current economic depression will ensure that. If for some reason, I turn out to be wrong, Smarten, I’ll own up to it. I’m a man.
There you go again BB. You can’t make an argument when anyone challenges you without resorting to personal attacks [”I think you better get off your pompous @$$;” “I’m a man”]. You really need to grow up.
The point I was making, based upon fact [and not your constant feel bad mentality, nor history (which sometimes doesn’t repeat itself), nor local wages (as if they had ANY relevance insofar as Incline Village real estate prices are concerned)] was that SO FAR, the “Tahoe market [at least Incline Village (has not been)]…hammered [at least pricewise] beyond most peoples wildest dreams.” Is there more inventory than buyers? Of course. But that fact hasn’t yet translated into massive price reductions [nor price “capitulations” as you characterize it]. And at no time did I suggest “we’ve hit bottom…any price declines are over, the market is taking off, and all’s well.” Billdrummer made the statement “the market for…mid-7 figure homes for sale…is dead,” and so far, the facts I cited suggest otherwise.
I never said Incline Village real estate would be spared its day of reckoning [”maybe this will all change given what has happened on Wall Street”] but being right on the TIMING of one’s predictions is oftentimes more important than being right on one’s predictions per se. A perfect example is another one of your nemises, Derrick, and his oil/currency predictions. In retrospect, he was right on both calls. But given his poor timing, both were for all intents and purposes really wrong.
So if your Lake Tahoe price “capitulation” prediction takes years to play out [BTW, it has ALREADY taken at least three years and it still hasn’t played out], it will for all intents and purposes be wrong even though technically, it may ultimately turn out to be correct. So for how long, exactly, should we expect to wait, before you will “own up” because you’re “a man?” Want to give us a year? How about a month? And let’s not forget the day of that month, as well as the hour of the day [just so we’re comparing apples to apples].
Smaten-
Maybe I just enjoy getting you all worked up. You’re rather thin skinned, I’ve found. And for the record, the archived posts would indicate that the stucco oracle (who has been curiously absent lately) is more your nemesis than mine. You’ve given him far more attention than I ever have.
You posted:
“So if your Lake Tahoe price “capitulation” prediction takes years to play out [BTW, it has ALREADY taken at least three years and it still hasn’t played out], it will for all intents and purposes be wrong even though technically, it may ultimately turn out to be correct.”
Huh?? I mean, what?? Is there any logic to your posts anymore, Smarten? This statement is nothing more than pretentious gibberish. It’s not even worthy of a response. Forgive me, but it reminds me of a child yelling “because I said so!”
Smarten - Lake Tahoe is somewhere I’d be interested in looking at so, as a buyer, I’d like you to be wrong. LOL
However, here’s my question. Would you rather have good volume with a 25% drop in prices or a 10% drop in prices and very light volume? My take is that the latter situation, light volume and small price declines, means that prices are going down and we do not yet have a bottom in sight. This follows from the fact that, in order to have a bottom, you need buyers, and the lower volume doesn’t suggest we have them yet.
BB, I asked you before to provide specific references to where in the past on this board you had predicted the worldwide credit meltdown and how it would translate into credit worthy borrowers being unable to secure purchase money mortgages and instead, you responded you wouldn’t waste your time - instead I should search the archives for posts that don’t exist.
Some time ago I alerted this Board to the difficulties I and other credit worthy buyers have been having, since April of this year, in securing real world purchase money mortgage financing [actually, a precursor to what we’re seein in spades right now]. Your response was twofold. First, old news - you supposedly predicted all of this some time ago. Second, you questioned my candor - obviously there must be more to the story than what I was sharing.
In this blog you made the comment “the vacation home market [presumably in the Lake Tahoe basin] will be DOA for years.” Since it obviously hasn’t been “dead” [at least in Incline Village], YTD, I asked you to provide a date and time when this would take place? Instead you respond my question is “not worthy of a response” [BTW, one of your pet responses you seem to regularly employ].
There’s simply no purpose in attempting to conduct a reasoned conversation with you so do me and others who may feel similarly on this Board [assuming they haven’t already left]: DON’T waste your time BOTHER RESPONDING to any of my “pretentious gibberish.” I’ll try to make sure I DON’T ask you anything so you’re not placed in that difficult position.
Thanks in advance for your anticipated cooperation and hopeful positive reply [or actually, the LACK of a reply].
DonC -
What I think we’re seeing in Incline Village, is similar to what we’re seeing in the higher end of the Reno market. Notwithstanding the fact unit sales are down markedly, sellers remain delusional in their pricing [and apparently, they’re better able to wait the market out than in other real estate depressed areas]. In a normal market you would expect that as sales slow down, prices drop.
You would then expect that at some point in time, sellers would be forced to drop their sales prices [assuming they were “real” sellers]. In the past I’ve referred to this state of affairs as a “Mexican standoff” [i.e., at some point in time sellers are forced to capitulate and who is better suited to hold out?]. Yet this marks the third year in a row where Incline Village unit sales have either remained flat/dropped and by-and-large, sellers are continuing to refuse to meaningfully [I can’t tell you how many inconsequential (like $2,752 on a $900K listing) price reductions I’ve seen this year] drop their prices.
You ask me whether I “would…rather have good volume with a 25% drop in prices, or a 10% drop in prices and very light volume?” Since like you I am a potential buyer, I’m looking for the 25% drop in prices. When prices drop significantly, they tend to generate increased unit sales and at some relatively short point in time, we reach a bottom [something I think we’re seeing in the Reno/Sparks SFR segment of the market priced at less than $250K]. But here we’re experiencing what appears to be an artificially [at least pricewise] stable Incline Village SFR market; the same thing IMO we would be seeing in Montreux and St. James Village if any listings were actually selling.
Some of the more knowledgeable agents here in Incline Village state there are quite a few buyers, even in today’s economy, so the lack of buyers is not the problem [I must believe them because who else knows how many potential buyer-clients are actually out there?]. And the fact of the matter is that today’s buyers, at least in the Lake Tahoe region, are more knowledgeable and picky [also, because there are few if any high paying jobs or infrastructure to attract families to relocate]. So when a property comes along that is reasonably priced or special [like Lake front, dramatic architecture, development potential, etc.], it ends up selling reasonably quickly. But when it doesn’t [and there’s quite a bit of inventory that fits into this category], it sits - not because there aren’t any buyers but because there aren’t too many buyers at [yesterday’s] delusional pricing.
The median sales price doesn’t drop much because since there are so few unit sales, it doesn’t take too many in excess of $1M to artificially prop up the median. So does that mean the market is DOA? Pricewise, at least YTD, I would have to say no.
Smarten-
From now on, I AM going to refrain from responding to your long winded rants. But not because you, the narcissistic authoritarian, demanded it, but out of respect for the readers, and my own desire to avoid anything futile. It’s quite apparent that all you’re doing is trying to destroy the credibility of anyone who was ever right, because you’ve proven yourself so wrong. It’s quite sad, really.
I don’t feel the need or have the desire to prove anything to you, because there really is no getting through. You’re so obstinate as to be completely unreasonable.
I’m thinking the best bargains in Tahoe won’t be had until 2012-2013. At that time, most of the declines could be baked in, and the economy might have worked itself out. But it’s anyone’s guess. Real estate is sticky, and it’s proving that right now. The weak hands were flushed early, the stronger hands will be forced in due time.
Sue’s report, to which Guy refers, can be read on ChaseNation at: http://www.chasenation.com/profiles/blog/show?id=2000642%3ABlogPost%3A12166 .
More FACTS concerning “Incline Village [which] remains the priciest neighborhood in Lake Tahoe with a…median price of $1,135,000 (down only five percent). While homes sold for more than $1 million was down 43 percent, the number of those homes (53) was more than double of any other area on the lake and accounts for nearly half of the over-million sales in Lake Tahoe.”
Characterizing the real estate scene in Tahoe generally as a whole, makes about as much sense as repeating the exercise in Reno/Sparks. There are many micro climates around the Lake and as Sue points out, although “Lake-wide volume is down primarily because of the decrease in the sale of high-end homes,” Truckee [and Incline Village] seem to be the anomal[ies], offering some positive indicators.”
So like anything else, if you’re interested in Lake Tahoe real estate IMO it’s best to target your area[s] and then look at what’s going on. Just like I believe it may be a good time to be targeting and purchasing Reno/Sparks SFRs priced at under $250K, it may be a good time to be doing the same thing insofar as particular areas around the Lake are concerned. As Sue observes, “there are some absolutely amazing deals to be found right now…for…astute buyers with cash on hand.”
More FACTS concerning “Incline Village [which] remains the priciest neighborhood in Lake Tahoe with a…median price of $1,135,000 (down only five percent)
If we’ve learned anything from the last few years it’s that realtors will cook the numbers or they’ll unwittingly use cooked numbers.
Incline down only 5%? From peak? I don’t believe that for a second.
“While homes sold for more than $1 million was down 43 percent, the number of those homes (53) was more than double of any other area on the lake and accounts for nearly half of the over-million sales in Lake Tahoe.”
Oh, yeah, that’s a healthy market. A 43% drop in sales. Next…
smarten - I think we’re on the same page here. You have sellers not really pricing to sell so you have don’t have many sales. The only thing I find funny is that real estate agents can have lots of buyers but not that much being bought! LOL Yeah, so long as the sellers are pricing higher than what buyers are willing to pay there won’t be much volume.
The credit crunch is not improving. It’s going to be with us for a while in all sorts of areas, auto loans to house loans. Hard to keep prices up when so many will have a hard time getting a loan.
FWIW I don’t think you and BB are all that far apart. He thinks the market is DOA; you think there isn’t much of a market because sellers are delusional with respect to price.
Well, I hope the market keeps falling until 2012. I’ve wanted to buy property at the lake since I lived there in the mid-1980s.
Perhaps it will be cheap enough for me by then.
Interesting discussion. Smarten’s original observations about volume dropping as the median price holds reminded me that Reno’s sales volume dropped by some large number before its median price began finally dropping, perhaps as long as year later? (Would have to look it up.)
It seems to be a general trend. First volume drops, then finally, median price… but after many, many, stubborn months. Checking out the still whacko rent vs buy ratio for Incline Village on http://www.hotpads.com, I’d have to agree with Bantering Bear’s estimate of when Tahoe will reach bottom.
Keep watching the Bay Area. Now that the economic turndown has finally begun to affect them, it will affect the Lake. When the Bay Area recovers, so shall the Lake… just my theory.
Diane,
I agree, an interesting discussion.
Anyone have any clue how many listings there are that are outside the MLS? I’m talking about shadow foreclosures, FSBOs, expired but still for sale, lease/option (really desperate), and the like.
I realize they are difficult to count, but I think it would be interesting to find out.
We may very well have a larger inventory overhang than anyone anticipated. And with the ARM resets starting to hit the default rolls, it may get worse.
Smarten - Dont give up hope, Incline Village is crashing. Don Kanare is a cheerleader in the best tradition of Lawrence Yun. While sales volume is down 38% YOY, I would guess that sales volume is off at least 65% from the peak of 2005 (Guy?) Sales prices cannot be sustained indefinely when volume craters like that. Moreover, the backlog of unsold inventory is continuing to grow. (25 listings in Millcreek alone!)Realtytrac reports 115+ properties in all stages of foreclosure in IV. (I believe that this is more NOD’s and REO’s per capita than South Reno - 89511) A recession hitting the Bay Area will put further downward pressure in IV prices - in lean times the budget ax strikes the vacation home first.
I’m not saying that rent / buy ratio’s will become comparable to Reno anytime soon, but that the downside of IV has not nearly been played out as it has with Reno entry to mid level housing.
Thanks Paul -
Just for everyone to remember, 50% of sales below a median can be as close as 1% less than that median, or as far away as 99% less than that median. And conversely, 50% of sales above a median can be as close as 1% more than that median, or as far away as 99% more than that median. So just because the median is remaining fairly constant [as has been the case in Incline Village] DOESN’T mean the sales prices above/below are remaining constant. So the figure, in a vacuum, can be deceiving.
Prices HAVE been coming down in Incline Village for the last year. But you just can’t see the change in vacuum by looking at the median sales price. What has been happening is: properties that used to sell for $2.5M are selling for $2M; properties that used to sell for $2M are selling for $1.6M; properties that used to sell for $1.5M are selling for $1.1M; and, properties that used to sell for $1M are selling for $720K.
Another thing to remember: how do we measure a market bottom? Is it unit sales? Is it median sales price? Is it DOM? Or something else. Sales of SFRs/condos were down 2/3 in 2006 [compared to 2005]; they were exactly the same in 2007; and YTD, they’re down about 40%. So to answer Paul’s question, unit sales are down far more than 60% from their pre-bubble highs. But do they have lower to go [i.e., are they DOA]?
Another thing to remember is that Incline Village/Crystal Bay is a micro market of Washoe County. Compared to close to 4,500 MLS listings in Reno/Sparks, currently there are barely 500 Incline Village/Crystal Bay listings.
YTD there have been close to 3,000 MLS [and probably hundreds of other] sales in Reno/Sparks. In Incline Village/Crystal Bay there have been about 120. That’s about 12.5/month. With so few sales, you really don’t have a large enough pool to begin making the kinds of market calls which so many do on this blog for Reno/Sparks. Also, it doesn’t take more than a couple of sales above/below the median sales price to have a major effect on that median.
If you consider 12.5 sales/month to be DOA, then the Incline Village/Crystal Bay market has been DOA for a year. If you think sales/month are going lower or coming to a standstill, again remember that it won’t take more than a couple of sales above/below the median sales price to have a major effect on that median.
So for all these reasons, while the median has remained fairly constant one’s purchase dollars are going a lot farther than in 2005. And that’s one reason why there really are some good values compared to 2005. But of course if you’re a buyer who requires purchase money financing; and in Incline Village that means jumbo loans; and there aren’t any [or at least at reasonable pricing]; it just doesn’t matter.
Just some things to think about which may make Incline Village’s real estate market different [as in the median sales price tends to drop for 10-12 months after reaching a unit sales bottom] than Reno’s/Spark’s.