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Lake Tahoe and Truckee Luxury Real Estate Trends for 2017

by Nicholls Real Estate Group

Click here to see our detailed Luxury Trends, Truckee and Lake Tahoe real estate market report.  Included are year over year statistics for neighborhoods such as Martis Camp, Tahoe Donner, Gray's Crossing, Old Greenwood, Northstar, Squaw Valley, Lahontan and both the North and West Shores of Lake Tahoe.

 
Everyone is trying to make sense of the changes to the Federal Tax Laws.  There are a lot of changes overall, but here are the specific changes that impact the residential real estate market:
 
1.  Mortgage Interest Deduction (MID) - Homeowner's can deduct interest on mortgage debt up to $750,000 (you used to be able to deduct interest on mortgage debt up to $1 million).
 
2.  The State and Local Tax  (SALT) Deduction is now capped at $10,000.  This includes property taxes.  Previously you could deduct an unlimited amount.
 
3.  Interest on home equity lines of credit is no longer deductible.  It used to be deductible up to $100,000 of mortgage debt.
 
4.  The Standard Deduction was increased dramatically.
 
There was discussion of changes to other real estate items, but ultimately, the following items DID NOT change:
 
1.  Homeowners who sell their home for a gain will still be able to exclude $500,000 from capital gains (if filing jointly, $250k for single filers), so long as they are selling their primary home and have lived in it for 2 of the past 5 years.  (There was talk of this changing to 5 out of 9 years, but ultimately no change was made).
 
2.  1031 Exchanges remain intact.  Investment property owners will continue to be able to defer capital gain taxes using IRC 1031.  (1031 exchanges of other non real property, which used to be allowed, have now been eliminated).
 
It can clearly be stated that there are not any new aspects of the tax code that aid the real estate market.  The best thing that happened is the capital gains exclusion and the 1031 Exchange laws stayed in place.  I am not an accountant, nor an economist, so I'm going to leave the heavy lifting to people who are.  There are quite a few projections out there with respect to the primary home market.  This recent article from Curbed, which includes statistical projections from Moody's Analytics in which they compare the projections using the old tax laws, and then the new tax laws, is probably the most interesting I have read.
 
Did you notice there's no mention of the second home market in articles like this?  Expert opinions and projections are difficult to come by on this topic.  Again, there are not any positives baked into the tax code for a personal use second residence.  The fact that a second home is a discretionary purchase has not changed.  So, the impact on the second home market will vary from region to region and person to person.  Those who are impacted positively by the other aspects of the tax changes will have more money for discretionary purchases.  Those impacted negatively, won't.  That said, with such positives in the new tax code for the treatment of business income, it could create positives for investors and developers.  
 
The tax breaks for businesses will become a significant counter point.  Will the changes, overall, make the wealthy more likely to invest in their business than invest in real estate?  Probably.  However, the wealthy are also very cognizant of keeping a balanced portfolio.  So, those who have always had a propensity to invest in real estate are likely to continue to do so.  Might they find a way to buy a "corporate retreat" rather than a "second home"?  There will certainly be ways that the new tax laws get manipulated.  
 
To be frank, the changes, overall, make real estate slightly less desirable than it was in comparison to other asset classes.  However, the changes are not dramatic enough to change someone's overall feelings about investing.  If you always liked investing in real estate, you will continue to, and, you will find ways to take advantage of the new tax laws.  If you never liked investing in real estate, this won't get you started.  For those who were on the fence, a few will likely fall toward investing in other asset classes.  Since many people, in each of these categories, are likely to have more money in their pocket, it's impossible to make an exact prediction of how the second home market will be impacted.

Lake Tahoe and Truckee Real Estate 2016 v 2017 and 2018 Thoughts

by Nicholls Real Estate Group

 

At the end of 2016 we predicted that 2017 looked to be a very strong year, in terms of appreciation and selling homes.  We were not disappointed.  We continue to be plagued with low inventory and we don’t project that to change in the near future. Let’s look at single-family home sales for all of 2016 vs 2017:

 

 

Units Sold

 

 

Volume of Sales

 

 

 

2016

2017

% change

2016

2017

% change

Tahoe Donner

263

278

5.7%

$176,414,204

$202,930,440

15.03%

Truckee

613

641

4.57%

$622,060,092

$660,984,851

6.26%

North/West Lake

328

346

5.49%

$312,561,139

$350,295,761

12.07%

All MLS

1,104

1,160

5.07%

$1,085,103,931

$1,167,829,876

7.62%

 

As you can see, a lot of positive gains in all areas.  We feel confident that the relatively meager gains around the number of units sold was due to lack of properties to buy rather than lack of growth of demand (also contributing to the appreciation).  While not broken out above, the truly remarkable trend in 2017 was the tightening of the $1mm-$2mm market, in which the number of sales grew by 23.81% (for the entire MLS area) and the standing inventory dropped 24.05% (from 1/1/17 to 1/1/18).

 

Prices also continue to ramp up, when you compare Average/Median price changes for 2016 versus 2017:

 

 

Average Price

 

 

Median Price

 

 

 

2016

2017

% change

2016

2017

% change

Tahoe Donner

$670,779

$729,965

8.82%

$605,000

$675,750

11.69%

Truckee

$1,019,770

$1,031,177

1.12%

$619,900

$670,000

8.08%

North/West Lake

$952,930

$1,012,415

6.42%

$590,000

$650,000

10.17%

All MLS

$985,480

$1,009,471

2.43%

$619,706

$672,000

8.44%

 

This looks like the strongest appreciation we have seen since the downturn, and we are the closest we have been to peak values in most market segments.  

The other side of the market is the available inventory, which will favor continued strength in the market. 

 

 

1/1/17

1/1/18

% change

Pending as of 1/22/18

Tahoe Donner

27

33

22.22%

20

Truckee

107

95

-11.21%

46

North/West Lake

88

78

-11.36%

25

All MLS

269

226

-15.99%

82

 

In general, we appear to be poised for another strong year of sales and appreciation.  The inventory is lower than last year (although Tahoe Donner shows over 20% more, when comparing the first to the first, it only represents a difference of 6 listings and as of the 22nd, we have already turned that around and we are at 4 listings, or 13%, below last year) and the buyer activity and confidence appear very strong.  In general, we gauge how hot the market is now by how many months of standing inventory there are (years’ worth of sales/12= absorption per month, inventory/absorption per month=Months of inventory).  Around 6-8 months of inventory is neutral, above that is a buyer’s market, below is a seller’s market and when you get below 3 months of inventory, you start to see significant appreciation numbers.  The MLS, at the beginning of the year, was at 2.34 months of inventory, the hottest market right now appears to be Tahoe Donner at 1.42 months of inventory at the beginning of the year.  Things to watch out for this year:

 

  • Interest rates:  will probably continue to rise, which should keep the demand strong.  If it is not a rapid change (more than 1% in less than 6 weeks), it should continue to maintain or increase the strength of the market.  This is mostly because it incentivizes people to buy now rather than wait until later.  Current expectation is that we will go up something close to .75%-1% over the year.
  • Geo-political climate: there are so many variables here that there are a lot of ways this could go.  The good news is that while it has been somewhat unpredictable for about 1 year, it does not appear to have negatively impacted the market yet, so... fingers crossed!
  • Weather: clearly our winter has been anemic so far and we rely on people coming up to the area (and enjoying themselves) to drive demand, not to mention water supply, perception, etc...
  • Spring Pricing Behavior: it typically happens, in a low inventory/high demand market, that listing agents and sellers over anticipate the motivation of buyers (or underestimate the elasticity of pricing in housing);  i.e., a buyer who lost out on a $600,000 house in Q1, will likely pay a little more for the same or similar house in the spring (1% or $606,000), but not likely significantly more (5%+ or $630,000+).  Too many overpriced listings tend to cool the market, as there are already many homes coming on, so perceived scarcity by the average buyer goes way down. 

 

While this is a broad overview, all real estate is hyper-local.  If you have specific questions about a section of the market or what to expect from this coming year, please don’t hesitate to reach out! 

Lake Tahoe and Truckee Real Estate Activity for December 2017

by Nicholls Real Estate Group
We saw a nice surge in market activity this fall, in all neighborhoods and all price ranges around Truckee and Lake Tahoe.  Following are neighborhood by neighborhood photos and details of real estate sales in December:

 

Tahoe Donner:  28 properties sold in December, including 10 more sales over $1 million.  The second half of the year really changed the momentum of the luxury market.  Tahoe Donner ended up with 29 sales over $1 million in the second half of 2017, and there has already been 5 more sales and 4 more pending sales in January.  Here are photos and details of the sales, in all price ranges, for December:  Tahoe Donner Real Estate Activity
  
 
Old Greenwood/Gray's Crossing:  A Gray's Crossing townhome for $899k was the only sale in December.
 
Northstar:  Four homes and 8 condos sold: Northstar Real Estate Activity.  Included in this is a ski in/out home in M25 at Mountainside at Northstar which sold for $6.35 million.
 
Donner Summit and Serene Lakes:  Seven homes sold in December, including a $1.35 million lake front:  Donner Summit and Serene Lakes Real Estate Activity.
 
Lahontan:  Three homes sold, both over $1.8 million.
 
Schaffer's Mill:  There were no home sales in December.
 
Glenshire/Sierra Meadows/Prosser/Donner Lake:  Twenty properties sold.
 
Squaw Valley/Alpine MeadowsEight homes and 7 condos sold.  There's now a stunning penthouse available in The Village at Squaw Valley for $4.8 million, as well as a beautiful remodel of Plump Jack which will include some luxury residential offerings (contact us for details!).
 
North Lake Tahoe:  Forty one properties sold, including a beautiful Carnelian Bay lake front for $5.4 million, a Brockway Springs lake front for $4.5 million, a Fleur Du Lac Residence for $3.2 million, and a record sale in Tahoe Tavern at $2.6 million.
 
 
If you are considering buying a home, use the tabs above to search by neighborhood or other parameters.  If you are considering selling (now or in the near future), start by requesting a market analysis from us at:  truckeehomeprices.com.  
 
 
All Statistics provided by the Tahoe Sierra MLS, with the exception of the Martis Camp subdivision which are provided by the Martis Camp sales team.  All statistics assumed to be accurate, but not guaranteed.
 

Tahoe Donner Real Estate

by Nicholls Real Estate Group

Getting back to normal . . . 

Many of you have noticed that I haven't posted in awhile.  I apologize!  The winter weather was so crazy through January (snowiest month on record) and February (snowiest February on record), that there wasn't much activity to report.  Plus, I was tired from working (and playing!) in the snow.  In a "normal" year January and February are quite active for real estate sales, while March and April are slower.  This year was the opposite.  January and February were slow, but March and April were busier than normal.  We seem to be getting back to normal now, as inventory is starting to build, but demand is strong.  There is definitely a sense, regionally, that it will be a very busy summer.

Here's a look at some of the big picture real estate activity over the last couple months:

Home Sales:

Current Pending Sales (28 homes).

Current Homes For Sale (46 homes).

 

Condo Sales:

Current Pending Condo Sales (5 units).

Current Condos For Sale (14 units).

Tahoe Donner Real Estate Update January 9 - 15

by Nicholls Real Estate Group

It feels like it has been awhile since we had a "normal" business week in Tahoe Donner real estate.  Last week, Mother Nature did a number on us, with one of those big storm cycles we see once every 5 years or so.  This one was particularly impressive, both in the amount of snow fall, and the amount of havoc it created in the Truckee/Tahoe region.  Ski areas reported up to 15 feet of snow over a 10 day period, including one 24 hour period which brought 3-4 feet.  We saw 3 to 4 days of all the major roads being closed, 4 days of the major ski resorts being closed, and more power outages than you can count.  In fact, some areas were without power as much as 6 days.  Norm, who has lived in Tahoe about 50 years, ranked it as the third "wildest" winter storm he has seen.

Even with all that going on, we did find a little bit of time for real estate activity.  Four new listings managed to make it onto the market, and 4 homes had price reductions (both low numbers for a week preceding a significant holiday weekend).  Two homes managed to go in contract. 

From a business perspective, the good news is that the storm (and "havoc") mostly cleared out for the holiday weekend, so there were a lot of showings over the weekend.  This, combined with the now phenomenal ski conditions, should bode well for next weeks new escrows.  That said, there's a couple more storms in the forecast for the end of this week!

Here are photos and details of last weeks Tahoe Donner real estate activity:

4 homes were listed for sale.

4 homes had price reductions.

2 homes went into contract.

2 homes sold.

 

Tahoe Donner Real Estate Sales January 2 - 8

by Nicholls Real Estate Group

The overwhelming story of the first week of 2017, in Truckee, was the weather.  The ski areas around the Lake Tahoe region saw 6 to 8 feet of snowfall during the week, and then we received 6+ inches (I haven't heard official measurements) of rain over the weekend.  Week 2 may also get overwhelmed by the weather, as we have now switched back to snow, and forecasts are calling for 5 to 7 feet of snow at the resorts.

Sooooo . . . Tahoe Donner real estate sales did happen, but it was far from the primary story of the week.  In fact, just 3 homes were listed for sale, and just 4 homes went into contract.  The most interesting part about real estate activity was the 8 homes which closed escrow, including a $1.425 million home on Hillside.

Here are photos and details of last weeks Tahoe Donner real estate activity:

3 homes were listed for sale.

No home had price reductions.

4 homes went into contract.

8 homes sold.

Tahoe Donner Home Sales Activity December 19 - January 1

by Nicholls Real Estate Group

Happy New Year!

I didn't post last week, so this post covers 2 weeks worth of data . . .

Tahoe Donner homes sales were slow leading up to Christmas, but then the year ended with a bang as seven homes went into contract in the last 3 days of the calendar year.  There were also seven closings over the last 2 weeks.  Those closings are unspectacular, at first glance, but the average price of those sales came in at $346 per square foot.  It's a very small sample size, but still an impressive number relative to the $315/sq ft average which we hovered around most of the second half of the year. 

We are down to just 29 homes, and 8 condos actively for sale in Tahoe Donner.  We typically see some new listings hit the market in the first couple weeks of the year.  Hopefully that will be the case this year, because we really need it!


Here are photos and details of activity for the last 2 weeks:

3 homes were listed for sale (1 is already in contract)

3 homes had price reductions.

9 homes went into contract.

7 homes sold.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tahoe Donner Real Estate Sales Activity December 12 - 18

by Alan Nicholls

The Tahoe Donner real estate market was very quiet last week.  This is normal for the time of year, as people focus on family heading into the holidays.  The massive amounts of rain we saw probably had an impact as well.

We expect similar activity this week, followed by an increase in new listings and showings next week.  The first quarter has been very active the last 3 years, and we expect that to be the case again in 2017.

While there wasn't much activity, here are photos and details of what did transpire:

 

2 homes were listed for sale.

1 home had a price reduction.

2 homes went into contract.

3 homes sold.

 

Tahoe Donner Real Estate Sales Update Nov 28 - Dec 11

by Nicholls Real Estate Group

I didn't get a chance to post last week, so this update covers a 2 week period . . .

Real estate activity in the Truckee/Tahoe region is typically slow between Thanksgiving and Christmas.  The supply side certainly adhered with that history, with just 5 price reductions and 4 new listings (2 already in contract) in Tahoe Donner.  The demand side, however, saw solid activity, as 9 new escrows in a 2 week period is nothing to scoff at.  Particularly interesting is that 2 of the escrows are on homes priced over $1 million, and 8 of the 9 were priced over $600k.  There are also 10 new homeowners who are helping us pray for snow in their first winter!

Here are photos and details of all the activity from the last 2 weeks.

2 homes were listed for sale.

5 homes had price reductions.

9 homes went into contract.

10 homes sold.

 

 

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