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| Tahoe/Truckee: Q3 Results |
Like the Bay Area, third-quarter real estate activity in the Tahoe/Truckee region was dominated by a limited supply of inventory and resulting bidding wars among buyers. All single-family homes and condominiums that were priced in line with their appraised values got multiple offers, with homes priced from $300,000 to $600,000 especially popular.
Many properties in the region are second homes for Bay Area residents, and activity typically spikes whenever prospective buyers are able to spend a few extra days in the area. Accordingly, the week before and after the Fourth of July were extremely busy, followed by a brief slowdown.
September was busy after students returned to school and Bay Area buyers sought to close deals so that they could spend the upcoming holidays skiing in the area. Sales were strong in Tahoe Donner and the Truckee area, with significant lakefront sales as well.
Looking Forward: Unlike traditional residential markets, winter in the mountains can be an active sales time. If skiing conditions are good the winter months have historically seen strong activity and sales, particularly in larger homes suited for skiing families or groups.
Defining Tahoe/Truckee: Our real estate markets in Tahoe/Truckee include the communities of Alpine Meadows, Donner Lake, Donner Summit, Lahontan, Martis Valley, North Shore Lake Tahoe, Northstar, Squaw Valley, Tahoe City, Tahoe Donner, Truckee, and the West Shore of Lake Tahoe. |
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| Median Sales Price |
| The median sales price represents the midpoint in the range of all prices paid. It indicates that half the prices paid were higher than this number, and half were lower. It is not the same measure as “average” sales price. |
| Single Family Homes – Median Sales Price |
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| Condominiums – Median Sales Price |
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| Months’ Supply of Inventory |
| The months’ supply of inventory is a measure of how quickly the current supply of homes would be sold at the current sales rate, assuming no more homes came on the market. In general, an MSI below 4 is considered a seller’s market; between 4 and 6 is a balanced market; and above 6 is a buyer’s market. |
| Single Family Homes – Months’ Supply of Inventory |
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| Condominiums – Months’ Supply of Inventory |
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| Average Days on the Market |
| Average days on the market is a measure that indicates the pace of sales activity. It tracks, on average, the number of days a listing is active before it goes under contract, meaning an offer has been accepted by the seller but the transaction is not yet closed. |
| Single Family Homes – Average Days on the Market |
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| Condominiums – Average Days on the Market |
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| Percentage of Properties Under Contract |
| Percentage of properties under contract is a forward-looking indicator of sales activity. It tracks expected home sales before the paperwork is completed and the sale actually closes. |
| Single Family Homes – Percentage of Properties Under Contract |
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| Condominiums – Percentage of Properties Under Contract |
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| Sales Price as a Percentage of Original Price |
| Measuring the final sales price as a percentage of the original list price, without price adjustments, measures the success of a seller in receiving the hoped-for sales amount, but it also indicates the level of sales activity in a region. |
| Single Family Homes – Sales Price as a Percentage of Original Price |
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| Condominiums – Sales Price as a Percentage of Original Price |
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| A Closer Look at Tahoe/Truckee |
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| Bay Area: Is the Housing Slump Over? |
By now you’ve heard the optimistic news emanating from the media and real estate experts across the country: Housing markets are back on their way up.
Home values are rising, foreclosures are dropping, and housing starts are increasing. In addition, the Federal Reserve’s plan to purchase mortgage-backed securities to the tune of $40 billion a month should contribute to the climb by pushing down mortgage rates and boosting home prices.
Sounds like great news, and it is. But to those of us in the Bay Area, it’s a bit of old news. In January, we predicted we’d see the best year in housing since 2006. So far we have – and there are strong indicators that’ll continue, thanks to sustained job growth, low interest rates, and aggressive buyer demand.
If there’s a downside to all this, it’s that buyers who have been waiting on the sidelines hoping to pounce on a foreclosure or distressed property have likely missed their opportunity. The records being set for number of homes sold in the Bay Area are being accomplished with limited inventory, and this will contribute to price appreciation.
The combination of buyer demand and a continuing constrained supply of available homes is leading to a return of one of the hallmarks of the heyday of Bay Area real estate: the bidding war.
Multiple offers on well-priced properties are becoming the norm in many areas, and for every one buyer who lands the home, there are several frustrated suitors even more determined to find a new abode … thus fueling more multiple offers. We predict housing will be 3 to 6 percent more expensive by this time next year.
For more about the return of the bidding wars, read our exclusive feature story below. And best wishes for a happy, healthy, and productive year-end! |
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| Going, Going, Gone! The Return of Bidding Wars |
Throughout 2012 we’ve seen continued improvements in our housing markets, and our predictions of enjoying the best real estate year in the Bay Area since 2006 seem to be coming true.
Q3 has also brought the re-emergence of another characteristic of the heights of Bay Area real estate: bidding wars.
Multiple offers on desirable properties have become common, and the bidding wars that result can test the nerves of the most seasoned real-estate veteran.
Sellers in many Bay Area regions may receive 10 to 20 competing offers for a well-priced home; some homes are even luring 30 offers.
Our regions experiencing the most bidding-war activity in Q3 included the East Bay, Contra Costa County, Marin County, San Francisco, and Sonoma Valley. Sonoma County as a whole saw moderate numbers of multiple offers. Napa County and the Tahoe/Truckee area had the fewest bidding wars.
A robust economy, a skyrocketing housing market, and waves of tech dollars flowing from Silicon Valley spurred bidding wars during the real estate boom of the last decade. Today’s bidding wars owe more to the laws of supply and demand: too few homes on the market for too many eager buyers.
After years of stagnation, the pent-up demand for homes in the Bay Area today is palpable, fueled by historically low interest rates, economic growth, and an increasingly expensive rental market.
The problem: There’s precious little to buy.
Prospective sellers are waiting on the sidelines, unwilling or unable to enter the marketplace. More than a quarter of all Bay Area homeowners today remain underwater, owing more on their mortgages than their properties are worth. Others won’t sell because they don’t have enough equity yet to buy another home, or are holding out for higher price points.
This reluctance has driven down the supply of housing inventory across the Bay Area, which usually averages four to six months, to below two months in many regions. Cue the feeding frenzy, as hungry buyers compete against each other to land one of those homes.
Bidding wars can be great news for sellers who price their properties appropriately.
One of our real estate professionals recently helped a Bay Area client sell a home that attracted 27 bidders after just one week on the market.
“The seller was completely taken aback by the interest in the property,” our real estate professional said. “We had to be careful with the pricing, but the market was hurting for inventory.”
The home was offered at $417,000, slightly higher than comparable homes in the area. The eventual winning bid came in at $485,000 -- much of it in cash. The final selling price nearly matched what the owners paid in 2009.
Looking ahead, multiple offers will likely stay on the scene for a year or more, although gradual increases in home values will bring more homeowners above water and back in the market.
Meanwhile, although it can be frustrating for buyers to compete in a bidding war, it’s not necessarily a losing proposition. To improve your odds:
- Get pre-approved – not just prequalified -- for a loan, and offer the highest price you can.
- Make the highest down payment you can afford, and offer more cash if possible.
- If you are pre-approved and time permits, consider doing inspections in advance of your offer. The seller would likely respect your intent -- and you may then consider waiving any unnecessary contingencies to expedite the process.
- Don’t forget the personal touch: A “buyer’s letter” that lets the seller know how much you love and want the home can often spell the difference between two similar offers.
And listen to the real estate professional representing you. He or she has unique knowledge about the neighborhoods and homes you’re evaluating, as well as expert insights into market conditions, and can give you valuable advice to tip the scales in your favor. |
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| © Pacific Union International, Inc. 2012. CA DRE #1400292 |
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