Year-End 2022 Market Report Lake Tahoe
Over the last week, the stock market has rallied with higher expectations for cooling inflation numbers. In December, the FED only raised the prime rate 50 points and many are hoping 2022’s rate hikes will cool in 2023.
The Consumer Price Index came in today, and showed inflation slowed to 6.5% in December for the sixth straight month. This will be good news across mortgage markets.
The Lake Tahoe real estate market is also getting inspiration from a snowpack that is 200% above normal. Great snow years have always coincided with more demand for the unique lifestyle and limited inventory at Lake Tahoe.
Consumers are still on the sidelines, awaiting better interest rates, but the demand is steady and inventory levels have returned to normal.
Lake Tahoe is the ‘backyard’ inventory for a huge Bay Area feeder market. While forecasters are predicting a decline in Bay Area home prices for 2023, Lake Tahoe is buffered by a limited supply. Home prices are expected to remain steady.
2022 Year-End Market Report
Data from the local multiple listing service reveals that 2022 had 1,299 transactions. Inventory is still below the 6-month supply that would change the market to a buyer’s market. The median price of $1,075,000 is up 7%, so even while we had fewer transactions, higher prices resulted in higher sales volume. More than 54% of homes sold in Lake Tahoe and Truckee were over $1 million.
For January to December 2022, the number of homes sold across the Tahoe Truckee MLS had a decrease of 19%, compared to 2021. Median prices are still on a growth trend with a 7% increase in 2022. Almost a quarter of the sold inventory was over $2 million.
On the North and West shores of Lake Tahoe, sales decreased 27% compared to 2021. The median price still increased 2% year over year. For the lakefront market, home sales were much lower and decreased 56% year over year. The median price for lakefront homes on the north and west shore of Lake Tahoe decreased 32% when comparing 2022 to 2021.
The Truckee real estate market had a decrease in sales of 17% year over year. The median price of homes sold in Truckee in 2022 still increased 4%, compared to 2021. Luxury homes priced over $2 million represented 22% of all sales.
Lot sales overall are not as strong as supply chain factors continue to challenge the homebuilding process. Lot prices that are priced well still offer a great opportunity for investors.
Absorption Rate Trending Lower
We are beginning 2023 looking back at December’s median price growth of 12% compared to when we started in January of 2022. Absorption rates (inventory compared to units sold) is still on a downward trend. It is currently at a 2 month supply, which is still indicative of a seller’s market. However, until buyers become comfortable with 5-6% interest rates as the new normal, sales activity remains checked.
It is interesting to note that the benchmark rate for the FED is around 4.5%. Even if inflation eases and rate hikes stop, we might still expect interest rates for a 30 year fixed rate mortgage to remain in the high 5% to 6% range.
Driven by the unique opportunity of owning a mountain retreat, buyers are choosing to move forward in a less competitive atmosphere.
Contact me today for more information about the real estate and mortgage market at Lake Tahoe. I love working with investors, and today's market offers many opportunities.