State of the State of Lake Tahoe Resort Real Estate - Spring '09

1) Prices decline!
The Lake Tahoe South Shore California market has experienced a continued decline in prices since May of 2006. The decline from the peak is about 18.5 % per the South Tahoe Assoc of Realtors (STAOR) (end of Feb stats) for sfd homes. This is paltry compared to the statewide average of reported price declines of 50% as per the CA Assoc. of Realtors (C.A.R.) (as of early Mar).

The price declines in the South Shore market place have lessened to a 8.4% decline this past month as compared to the previous month and is verging on a lessening of the decline trend. We look for any bright news. The decline while not a steep as many other markets, is attributable to the toxic loans that have generated foreclosure san short sales, yes even in our resort market trend.

2) Sales Increase!
Finally a ray of bright news in this dismal economy, albeit a small up tick we have experienced an increase in sale year over year of 5.5% increase in homes sold (same geographic range of south shore California, STAR reporting area). Median home price is just under $400,000.00. The market below median drives the sales units, the moderate range market above $500,000.00 is maintaining its unit sold (year over year) but the high end " luxury" market (above $1M) has suffered a 50% decline in units sold , but has experienced only modest declines in price.

3) Time to buy? Pending sales are up dramatically
The Impact of low prices and low interest rates is bringing out the buyers. But to move your property today it must be priced at or below the competition in order to get the attention and the offer. Pending sales have been increasing (year over year) for the past 12 month cycle and has finally translated into an increase (modest) in sales.
Interestingly the stats indicate that while distressed sales (foreclosures and short sales) make up a minority of the listing inventory, it dominates the pending and sold units of the past year.

4) Supply and Demand-
We have approx. 400 sfd units (inventory) on the market which has been tracking slightly less than previous periods (year over year). This is an indicator that the serious sellers are on the market and that the inventory is starting to move. However the absorption rate, units available "supply" and units in escrow "demand”, is still high at about 10 months and 15 months for units on the market vs sold units in Feb. per STAR stats. As the distressed inventory decreases the prices will stop dropping.

5) When is the market correction going to end and the turn around begin?
What are the factors that will create a balanced market (something we in the industry look forward to)? Is it off in the foreseeable future and will it be affected by the number of buyers entering the market?
If the attraction of the low prices (we're back at early 2005 and late 2004 pricing at the time of this writing) continues to drive the market.
Polishing off my crystal ball ... I anticipate a market turn around this fall and here's why.
a) Supply and demand is driving the inventory increase in sales and I anticipate this will continue exponentially though summer, which is typically our peak months.
b) As buyers recognize the investment value as well as the intrinsic benefits of property owners, particularly in the Lake Tahoe area, the sales will increase, fueled by the fact that the,
c) Values are hovering below the cost of construction and,
d) The cost of homeownership rivals rent payments and rental roi, gross multipliers and cap rates make sense.
e) They ain't making any more...Thank you TRPA, buildable land is in scarcity and will continue to be so due to the environmental constraints. A goal everyone has here in Lake Tahoe.

6) Stimulus Plan- is it stimulating?
At the time of this writing, the flow of money is just entering the pipeline. Credit available to the banks who in turn will lend to consumers to remedy the sins of the sub-prime through mortgage mods and new purchase money, is critical to stopping the escalation of foreclosures and short sales. Hopefully the impact will be to keep homeowners in their homes and attract new homeowners into the home buying market. The key piece is of course creating homeowners with realistic payments and purchase prices.
The tax credit is also attractive, and many states have their own tax credits too.
For more information on this go to my web site at www.realtordeb.com and see the home page articles and links.

Look forward to hearing from you with any questions or comments.
Here's to a healthy economy and real estate market.



Best Wishes,
Deb Howard
NV/CA Broker Owner CRS, RSPS, EPRO
Deb Howard & Company
Lake Tahoe's Real Estate Resource
866-542-2912 toll free
530-542-8657 fax
deb@realtordeb.com
www.realtordeb.com
3599 Lake Tahoe Blvd. Ste A
South Lake Tahoe, CA 96150