As we move into Fall, I keep hearing one question from my clients: Is the real estate market cooling down yet?

On the heels of last year’s pandemic shutdowns, the value of Tahoe/Truckee real estate skyrocketed. The volume of sales tripled in some markets, and the median sales price rose for the first time ever to more than $1 million in most of our markets.

What goes up must come down. That’s what my clients keep telling me.

But that’s not what the data shows … at least not so far.

We are not seeing the sort of panic buying we did amid the Covid shutdowns last year. Anecdotally, there are definitely fewer buyers in town than we saw earlier this summer. Schools are back to live learning in many of our Bay Area feeder markets, parents are taking kids to college (unheard of last year), and fire smoke kept many would-be buyers at bay throughout August.

Still a Seller's Market?

But if the market itself were truly “cooling,” we could expect to see attractive price reductions and more homes wallowing on the market. And that’s not the case.

All of our major markets are seeing 2 months or less of inventory. That measures the pace of sales over the past year with the current number of homes for sale. Six months of inventory (or home supply) is regarded as a balanced market that favors neither sellers nor buyers.  Less than six months is thought to be a seller’s market, and more than six months favors buyers. 

Tahoe/Truckee (including the Lake and the ski areas) has just 1.2 months of inventory; in Incline Village & Crystal Bay it’s 2 months, and on the East Shore of Lake Tahoe stretching down to South Lake Tahoe, it’s about a month and a half.

Technically, it’s still a sellers market. But, perhaps not at any price.

When the Covid shutdowns were lifted last summer, money flowed into Tahoe like water. And it was not uncommon to have little more than two or three homes to show buyers in major markets like the Westshore, Lahontan, or Tahoe Donner. (Plug that into the “months of supply” equation above, and you have a market where sellers can literally set their price.)  That’s changing as we head into Fall.

In real estate, as in any market, scarcity drives demand (if you don't believe me, just look the Covid-scare panic buys wallowing on the shelves of your pantry). With limited inventory, sellers could almost "set their price." Some brokers leveraged this with the "Buy it Now" price, where a home might be listed at $900,000 with a "Buy it Now" tag of $1.2M. 

Sellers got a little spoiled, and came to expect that the sky was, indeed, the limit. That's not true in today's market.

Pricing is Key as We Move into Fall

Consider Incline Village, for example. The median sales price for the 335 homes that have sold there over the past 12 months has been $1,785,000, but the median asking price of the homes on the market in early September was a little over $3.5 million.

The Incline Village home above, priced below $3M, was a beautiful remodel

The same is true for Tahoe/Truckee on the California side. The median sales price over the past 12 months leading up to early September was a hair over $1 million, but the median asking price at the end of August was $1,650,000.  The gap is telling.

Homes that are priced right and show well are still selling quickly, sometimes over asking. But amid the smoke that clouded the skies during much of August, the past month saw the scales tip. In Tahoe Donner, for example, 77 percent of the homes sold since Aug 1 have closed at or below the asking price.

Market Reaching for Equilibrium

The market is not “cooling;” it seems to be stabilizing. And it remains to be seen where the point of equalization will be reached.

While it would seem demand is waning as we move into Fall, we have seen more homes change hands at closer to their asking price in 2021 than we did the year before. And some high end markets are still seeing very limited inventory.

On the Nevada side of the Lake, the pace of sales this year has been very strong.  Fueled by demand from well-heeled buyers seeking an escape from California taxes, the East Shore saw 22 lakefront homes change hands over the past 12 months.

But by the end of September, we had only four for sale – a pair of Glenbrook estates for $43.5 & $48 million, a family compound near Thunderbird Lodge listed for $25 million, and a contemporary Zephyr Cove lakefront for almost $10 million.

 The Zephyr Cove Lakefront, pictured above, is offered at $9,995,000

Prices, like always, will continue to respond to the interplay of supply and demand. But this Fall could be the time to pick up a deal in those markets where we have more than a few eager sellers.

Please call me if you would like information on a specific property of a micro-market report for your area. ~ Jackie 775-391-9443

Posted by Jackie Ginley on


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