Third Quarter 2020 Lake Tahoe Market Report
We are closing the 3rd quarter of real estate sales activity in Lake Tahoe with the busiest months on record. The trend that began in May continued through June, July, August and into September 2020.
A look back over the summer, shows just how strong sales numbers have been, compared to 2019:
Sales 2020 Sales 2019
May 190 110
June 318 125
The 3rd quarter continued with record breaking sales:
July 298 150
August 315 170
We finished September with 300 sales, compared to 180 in September 2019. June saw sales numbers double with July just short of what would have doubled last year’s sales numbers. The prior monthly record for sales activity at Lake Tahoe was 182 sales in August 2017.
When we look at the year to date numbers, 1200 residences sold, compared to 826 during the same period last year. In the 3rd quarter alone, the dollar volume was nearly $1.2 billion.
Inventory Reduction
Last year, we approached September with 680 active listings. By September of 2020, we had only 296 properties available for sale. We generally see inventory begin to rise as we approach September, although the unprecedented demand has diminished available inventory. Sellers seem reluctant to capitalize on this trend and listings have become scarce. We are currently at only 44% of the inventory that was available last year.
Rising Prices
The average sales price for properties sold in Lake Tahoe is also growing rapidly. If we look at the first half of 2019, the average sales price was $674K compared to $669K for the same period in 2018. We tend to see a more conservative growth in equity.
By June 2020, the average sales price had risen to $987K, and in July, it was $1.2M. August numbers were similar.
Properties priced under $500K represented 22% of sales activity, while properties priced between $500K and $1 million represented 50% of all sales. The under $500K market is almost nonexistent. Luxury properties and homes over $1 million represented 28% of all sales. 236 properties sold in this price range in 2020, compared to only 152 during the same period of 2019.
Future Correction?
Equity trends are driven by supply and demand. In any hot market, you have to remember that what goes up also comes down. The lack of inventory and huge demand essentially creates escalating values through multiple offers. Since the values have risen quickly, affordability will come into play at some point in the future.
Sellers who held out in 1988 were kicking themselves in 1989 when prices began to correct. The same thing occurred when we could only see the top of the resort market trend of 2007, by looking back from 2008. Cyclical trends are predictable and a rampant run upward on values can face entirely different scenarios when demand is arrested by affordability.
Supply and demand begin to swap places when the average sales price exceeds affordability. Demand dries up and inventory begins to rise again. We began 2002 with a similar correction around Lake Tahoe and perhaps, we will be facing this later in 2021.
If you haven’t had a property value estimate on your current home, you will be surprised to discover its current value. If you are on the fence about selling, we may be moving into the top of the Lake Tahoe real estate market. However, we will probably see this current trend continue throughout 2020.
Whether you are thinking of buying or selling your home at Lake Tahoe, I am an expert negotiator and have successfully represented many buyers in multiple offer scenarios. I am currently working with sellers who are looking at ways to capitalize from this market to investigate move-up opportunities.
Contact me today for more information.