As December 2022 ended, the Truckee–Tahoe real estate market continued to sleepwalk into the new year.

Minimal transactions, minimal inventory, and minimal changes to home values were all present to welcome 2023. Current economic trends and the traditional seasonal downturn in market activity combined in Truckee-Tahoe, allowing for an atmosphere of inactivity and confusion.

But as we dig into the data, there is a silver lining for strategic Truckee-Tahoe home Buyers and Sellers.

First Half vs. Second Half

In the year’s first half, homes continued to sell over asking, a continuation of a fading pandemic market.

But the second half was a different story, with homes selling slightly below asking, beginning around the time interest rates began to accelerate.

2022 MoM Price Comparison

Inventory Supply

The months’ supply of inventory continued to shrink. On the last day of 2022, inventory was at 2.25 months’ supply*, down 28.3% from its peak of 3.14 in August.

Transactions have significantly reduced, with only 49 transactions for December 2022, a 44.3% drop from the 88 transactions in November 2022.

*Inventory must be at a ~6 months supply in order to be considered a ‘balanced’ market; neither a Buyers or Sellers market.

2022 MoM Sales Totals

Historical Sales

Looking back at 2022 the data clearly indicates that the chaotic pandemic market is over and has cooled drastically. Closing 2022 at 1,102 total transactions marks the lowest annual sales transaction total since 2011.

Historical Annual Sales Totals

A Pricing Game

Despite total transactions for the year posting a poor showing, there was a 15.4% increase in median list price from 2021, coupled with a 10% increase in median sold price.

Historical Median Price Comparison

What You Hear vs. What Is Happening

There’s a lot to unpack in 2022, much of which contradicts what is seen in the news versus what is actually happening. Despite seeing price reductions, homes selling below asking, expired listings, and days-on-market increasing – prices have remained stubbornly high.

But why would that happen with all those indicators painting a picture of a market in decline? The answer is two-fold: the absolute dearth of inventory available and Sellers continuing to push the limits of the market.

Buyers need to understand that this market is nothing close to a 2008 market, where home prices went off a cliff. This time, homeowners have a ton of equity baked into their homes and are locked into favorable pandemic rates (~3%). So, homeowners are nowhere near any distressed positions, and Sellers only sell because they’re willing to.

2023 Projections

We ended 2022 in a stand-off between Buyers and Sellers, a stare-down between the two parties waiting to see who flinches first. Once these parties adjust their expectations, the market will further normalize into the more recognizable rhythm of years past. Barring any sort of catastrophic shock to our economy, I don’t foresee any quick or substantial decrease in Tahoe home prices.

At best, I see a ~15% correction over ~3 years. Put another way, I foresee the future price reductions to be far less impressive than anticipated and taking much longer to come to pass. Prospective Buyers will have to weigh if that wait is worth it rather than purchasing sooner for personal enjoyment and/or monetization.

Truckee – Tahoe real estate remains a solid long-term investment; its natural beauty and outdoor lifestyle provide immense value now and forever.