Tahoe Real Estate Posts Lowest Number of Sales Since 2008

With mortgage interest rates hovering around 7%, an aggressive Fed battling inflation, and a barrage of negative news flooding our screens, it’s no wonder the North Lake Tahoe, CA real estate Market has seen a significant volume slowdown since 2021. In the last 16 years, we have only had 1 other year where only 68 homes traded hands in October and that year was 2008 as we entered the “Great Recession.”

October Dollar Volume Equal to 2021 with 26% Fewer Sales

On a more positive note, October 2022 posted almost the exact same dollar volume as October 2021, with $129M in sales for the month. This is amazing, as we achieved this feat with 26% fewer sales. This was made possible as 70% of the sales that took place in October 2022 were priced over $1M, which is astounding. We also saw a $12M Martis Camp estate trade hands in October 2022, whereas the highest sale a year earlier was only $6.1M. It’s remarkable to achieve this level of dollar volume while having a significant decrease in the number of homes sold year over year.

Although the number of sales in October is off significantly, pricing remains on an upward trajectory in October 2022, and currently, sales volume is outpacing the number of new listings. With recent sales outpacing listing volume, the Tahoe market is showing its resilience. In the sales chart below, I added a moving average trendline to the median home price, which shows consistent appreciation in the market since 2012.

Since 2019 (pre-pandemic), the median home price is up 71%, and although we are off from the record market stats of 2021, the market remains on solid footing. My analysis shows that the Tahoe real estate market is not crashing. Instead, the velocity of the market has slowed significantly, but demand is outpacing supply which has kept upward pressure on pricing.

Tahoe Sellers Are Waiting on the Sideline 

A majority of Lake Tahoe homeowners have significant equity and enjoy the utility that their homes provide. If an owner has a loan, it is typically a smaller loan at a favorable interest rate. For these reasons, sellers are not motivated to sell and are happy to enjoy their vacation homes until market conditions improve. Getting owners to part with their properties has become increasingly challenging over the last few years, which has helped with market stabilization.

Year over Year Market Conditions and Value Trends

Lake Tahoe Real Estate October 2022 Market Report Sales Chart

Lake Tahoe Real Estate October 2022 Sales Volume Chart

*North Lake Tahoe, CA and Truckee Single-Family Home sales including lakefronts. Data is taken from the Tahoe-Sierra Board of Realtors, MLS Areas 1-9.

Absorption Rate: 2.1 Months of Inventory = Seller’s Market

The term absorption rate refers to a metric used in a specific real estate market to evaluate the rate at which available homes are sold during a given period of time. Here are the metrics and absorption rate for the North Lake Tahoe, CA and Truckee real estate market.

Absorption Rate (single-family homes)

• 606 Sales in the Last 6 Months
• 101 Sales per Month
• 3.36 Sales Per Day
• 210 Current Active Listings
• 210 Listings / 100 Sales Per Month = 2.1 Months of Inventory = Seller’s Market
  • 1 to 3 Month Supply of Inventory = Seller’s Market
  • 4- 6 Months of Inventory = Balanced Market
  • 6+ Months of Inventory = Buyer’s Market

Currently, there are 68 pending homes in escrow with an average list price of $1.8M and a median price of $1.1, which shows minor softening from September to October. This could be related to the sever lack of inventory, seasonal market shifts, or it could be the start of a trend. We will have to see what happens in November for confirmation and further analysis.

The Absorption Rate Improved in October 2022

With only 2.1 months of inventory (homes for sale), the advantage has shifted from market stabilization to a slight lean to the seller’s advantage. Although the number of active buyers in the market is down year over year, housing inventory is highly constrained, so home pricing remains relatively stable. In a more typical market, we would be in a strong sellers market with 2.1 months of inventory, but in the current market that is plagued by fear, uncertainty and doubt, having less than 3 months of inventory has characteristics resembling a more stabilized market.

The Current Market Provides Opportunity for Buyers and Sellers Alike

The first month of Q4  saw fewer sales taking place than last year due to lower buyer demand, yet inventory levels remain historically low, which has led to stabilized market conditions with a slight lean towards the sellers. Buyers remain excited about newer homes, updated homes, and properties located within desirable communities. Inversely, older/dated homes with differed maintenance issues are taking longer to sell as the market is timid when purchasing homes that need significant improvements, even if priced well within the market segment. The best-priced homes are moving quickly, while other listings tend to linger on the market, often requiring price reductions and deeper negotiations to get a sale done.

The dramatic market conditions of the “COVID Years” have subsided and although the Tahoe real estate market has slowed, it remains on sound footing, creating opportunities for buyers and sellers alike. We have entered a new chapter where fewer buyers exist in the market, housing inventory is constrained, and home prices have stabilized. At this point, it is apparent that we are not going to see above-average inventory increases, which will keep pricing stable as we navigate the 4^th quarter of 2022.

Lake Tahoe Real Estate Market Report Archive

View All Tahoe Real Estate Market Reports
October 2021 Real Estate Market Report
October 2020 Real Estate Market Report 

Contact Dave Westall – Lake Tahoe Real Estate Agent

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