Lake Tahoe Home Sales: Is it a Buyer's Market or a Seller's Market?

The median home prices of California homes sold reached a 4-year high in August according to the California Association of Realtors. In their August sales report released this week, CAR reports that home sales fell off slightly for the month but are maintaining a strong pace with 5 straight months of year over year sales gains. They also reported that inventory of homes for sale continues to be an issue with inventory at a 6 year low. You will notice similar trends in Lake Tahoe as I explain in more detail below.

Combine this information with interest rates edging up slightly in August (average of 3.60 percent from 3.55 percent in July) and you have what might be the switch over from a buyer's market to a seller's market. In my opinion the market over $400K is still a buyers market.

Homes Sales Pace Increasing

In California homes moved faster on the market in August than they have been. The average time a home was on the market was 41.1 days in August, 43.2 in July and 52.5 in August of last year.

South Lake Tahoe real estate isn't seeing home sales quite as quickly but the pace is still moving faster. In August the average home was on the market for 133 days. In May the average was 185 days, June 149 and in July 144 days.

Inventory Low in South Lake Tahoe
Just like the rest of the state, the inventory of homes for sale in South Lake Tahoe is dropping quickly. In August of 2012 there were 372 homes on the market. This may seem like a healthy number but when one looks back at July of last year when there were 689 homes on the market, this is a drastic reduction. There has been a 43.8 percent reduction in the number of South Lake Tahoe homes for sale. The monthly inventory of homes on the market is down to 5.7 from last year's 12.1 months. This means that if no more homes were listed it would take 5.7 months to sell what was on the market instead of the 12.1 months it would have taken last year.

Is it a Buyer's Market or Seller's Market?
Lake Tahoe has been a buyer's market for a few years now but it appears that this may be changing soon. The median price appears to have leveled off and it saw an increase in August, from $227,500 in July to $236,250. As we've discussed before, South Lake Tahoe's home prices are broken into 3 ranges: Homes priced under $299,887, then priced up to $434,999, $435,000 to $649,999 and then $650,000 and up. The lowest priced homes experienced a 14.3 percent drop in median sales price but the highest range saw a 17.2 percent increase in the median sales price.

We've also seen more homes selling for more than their asking price. If you look at our local sales report this week for Lake Tahoe, Nev., and Lake Tahoe, Calif., you'll see some homes going for 7-11 percent more than their asking price. The switch over to a seller's market will happen with the increased interest in owning homes in Lake Tahoe, an increased sale's pace, a lower inventory of homes for sale.

Increasing interest rates = increase in buyers?
With the real possibility of interest rates to increase by the end of the year we should see a larger percentage of homes selling in the next few months. Buyers aren't going to take a chance with an unknown interest rate and they'll want to buy now. As I've been saying, interest in owning a home in Lake Tahoe was already up, and news like this is going to cause the buyers to move even more quickly.

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