Tahoe Talk

Luxury Real Estate Market Outlook

While the historically busy Lake Tahoe summer selling season is over, there is no reason for buyers and sellers to pull back from participating in the market. Late fall is an excellent time to put together a deal on the perfect winter getaway! While national real estate markets are seeing a significant slow down, it’s important to remember that deceleration does not always mean depreciation, especially in Lake Tahoe and other highly soughtafter resort towns. More than ever, the move toward lifestyle investment has become a top priority for homeowners. While nationwide, transactions and dollar volume dropped, most property values in the Lake Tahoe Basin have held steady. Many indicators would suggest we are still in a “Seller’s Market,” with historically low inventory and pent-up buyer demand. On the other side of the coin, interest rates have jumped to 20 year highs to combat inflation, which has spooked many buyers. This is when working with an experienced real estate broker is crucial to both finding your dream home, and determining how to finance it.

Will History Repeat Itself?

After an historic record-breaking run in 2021-2022, the real estate market has approached an inevitable slow down. Doomsday headlines dredge up fears that history will repeat itself, leading to a post-pandemic version of the 2008 recession. So far, that is not the case, and there are no strong indicators that it will be. In speaking with our clients and our colleagues in the industry, sentiments are not the same now as they were in 2008. Buyers are taking some power back, and sellers are having to concede on pricing, but successful deals continue to come together.

Four key differences in today’s market:

Inventory. Current supply is well below where it was in 2008 so inventory will remain in demand. New housing starts were nearly double in 2008 and construction was booming. While new construction has been on fire in 2021 and 2022, it has not been able to catch up to the current demand and so the market is not saturated like it was in 2008. According to research, there is a nearly 6 million home deficit, which will take a huge effort and several years to break even.

Lending Standards. Mortgage standards and requirements are significantly more rigorous today and this has created a strong, credit-worthy homeowner versus the extremely risky and careless lending practices leading up to 2008.

Qualified Buyers. In 2008, there were many buyers who overextended themselves and their lenders were happy to oblige. Today, over 50% of homeowners have more than $250,000 in equity in their home and over 30% own their home outright.

Long Term Investment. Stock market volatility should drive investors into safer investments. Real estate is a great place to put money when the stock market is jumping around. Home equity grew to over $10 trillion since 2021, so there is a lot of excess value and cash available to continue to invest in real estate and other less volatile investments.

As always, we are here to help you in whatever way we can. Whatever your real estate goals, we have some amazing resources available to discuss your options and opportunities. Our team has more than 50 years of local real estate experience, and we have weathered many market shifts. If you are thinking about investing in your lifestyle or looking to sell your Tahoe home while the values are still at a premium, contact Team Blair Tahoe today.