The real estate market is evolving rapidly with the extreme COVID activity in the rearview mirror and, statistically trending to a more “normal” level of activity.
If you compare the Truckee-Tahoe real estate market year-over-year, it gives the appearance that things are quite slow. However, if you eliminate the “COVID bump” and compare only 2019 and earlier, the market might just be correcting back to “normal”.
Relatively low inventory is still a big force in the market. However, there are significant questions about how strong demand will be through the 2nd half of the year. There are major variables like inflation, a possible recession, interest rates, the Russia-Ukraine War, short-term rental regulations (read more about STRs here), and mother nature that is going to have an impact on demand.
We expect “normal” (by pre-COVID standards) activity, measured by the number of transactions, through the 3rd quarter. Beyond that is more uncertain. For the last month, multiple offers on properties have become less common, and bidding wars have almost disappeared. Price reductions are commonplace, and we anticipate many sellers withdrawing or canceling their listings as we head into fall and winter. My hunch is the slowing demand will be matched by limited supply, making for a quiet winter.
Sellers are still in the driver’s seat, but buyers have some real leverage for the first time in 2 years. Buyers, you now have the following things working in your favor:
- The ability to negotiate sales price
- The ability to inspect a property and have normal contingencies
- The ability to negotiate repairs
- Yes, interest rates are climbing, but if they continue to climb, you will be glad you are locked in now. If/when they do reverse course, you can refinance to take advantage.
Total Transactions
Monthly sales numbers, measured in the number of transactions, have fallen well behind historical averages. In July, there were 103 residential sales which are just 71% of the July average for the last 10 years (145 sales). Even if you remove the two COVID year outliers, July 2022 is still at 85% of the average for the previous 10 years (121).
Homes that sold continued to sell quickly through July, with the median days-on-market being 12. That said, this number is increasing for closed residential sales in August, which is averaging about 30 days.
Median and Average Sales Prices
Sales prices have fallen off from record highs, but are still at a very healthy premium from where they stood in 2019. For July the average residential sales price was $1.735M and the median was at $1.155M – both figures are up from June.
Active Listings
We are into the summer season, when we typically see the highest inventory level for the year. Since the 4th of July weekend, the inventory of residences for sale has been buoying between 345 and 360. Last year, at this time, there were about 180 residences actively for sale. However, in August 2019, the inventory was closer to 650. Looking at long-term numbers, inventory is still at the lowest levels we have seen historically before COVID – around 60% of the average for the five years before COVID and 40% of the 10-year average for this time of year.
The 187 new listings in July mark the lowest July total in 10 years. For 15 consecutive months, the number of new listings for that month has been below the 5 and 10 year averages.
Current Pending Sales
The number of pending sales is 140 (up from 136 last month). About 125 residences went into contract in July (up from 96 in June).
Current inventory represents a little over 2.9 months of supply relative to July activity. Historically any number below 5 months of supply is still considered a seller’s market. But, this is a much more balanced market than what we saw the last 2 years, when months of inventory consistently hovered around 1.
For the first half of the year, there were 41 residential sales under $500k, representing 6% of total sales. In the same period in 2021, 10% of sales were in this range.
Mid-Range Market Sales $500,000 to $999,999
Year to date, 269 residences sold between $500,000 and $999,999, representing 33% of total sales. In 2021, 42% of sales were in this price range for the same period.
High-End Home Sales $1,000,000 to $1,999,999
For the period, 264 residences have sold between $1M – $2M, representing 39% of total sales. For the same period in 2021, homes sold in this price range represented 32% of total sales.
Luxury Home Sales Over $2 Million
148 residences have sold over $2M, representing 22% of sales. This includes 32 sales over $5M, of which 11 are over $10M, and one over $20M. In 2021, 155 homes sold over $2 million for the same period, representing 16% of sales.
