September 16, 2007 | Article
This May Be a Good Time to Invest in Lake Tahoe Real Estate
While many people are aware that South Lake Tahoe has become one of the country’s most popular resort destinations, even it today’s challenging real estate market, South Lake Tahoe continues to reign as one of the top-advised areas within California in which to invest in real estate.
In Lake Tahoe’s vibrant real estate market, inventory is approximately twice that of 2005, the median home prices are down slightly and the sellers are negotiating more than ever. Adding to the lure of the area, the word that South Lake Tahoe’s next redevelopment phase is underway is beginning to gain national attention. More details on this redevelopment is below; but most importantly, there is already enthusiasm that recalls the frenzy that took place following Vail’s purchase of South Tahoe’s Heavenly Mountain Ski Resort, it is almost certain that today’s lower values will not last long.
Larger Inventory Means More Buyer Options
The dynamic of supply vs. demand is definitely in the buyers’ corner. As of August 26, 2007, there were 586 single family residences for sale with 56 currently in escrow. This volume of inventory is considerably higher than the 366/96 reported in August, 2005 (although slightly less than the 594/46 reported August 31, 2006.)
South Lake Tahoe real estate continues to be affordable. When compared to other international resort areas, South Lake Tahoe’s median home price of $463,000 is a fraction of those found in Aspen, Colorado ($1,199,700.) Vail, Colorado ($791,000.) Park City, Utah ($605,000.) and our neighbor Tahoe City ($1,001,500.) Even when compared to the entire state of California’s median home price of $586,030, South Lake Tahoe real estate property values appear to be bargains—with the lake, mountains, blue sky and pristine seasons as added dividends.
Supply and demand and consumer confidence have played a great role in the negotiating strength of today’s buyers. As is common in the South Lake Tahoe real estate market, when the summer months begin to wane, sellers become more anxious to sell. In a nutshell, they want to close escrow prior to the first snowfall. As long as the inventory of homes for sale is up, there is greater room for buyers to negotiate the sales price and other accommodations. To provide some perspective on this price leverage, during 2005, the average home sold for approximately 98.5% of the list price. Today, the average home is selling for 95.8% of the asking price.
Following many years of planning, dreaming and hoping, the next phase of South Lake Tahoe’s redevelopment phase is underway. Mostly rundown motels, shops and similar structures have been demolished with plans for the future underway. In their place will be a 71,000 square foot convention center and two hotel-condominiums featuring boutique shops, entertainment and proximity to nearly all that the South Lake Tahoe Stateline area has to offer. Developers are anticipating this project to bring in approximately 180,000 visitors a year.
The Right Time to Invest In South Lake Tahoe Real Estate?
History would indicate that the answer is “yes.” South Lake Tahoe’s real estate values have generally escaped the dramatic declines that have affected various regions of the state throughout the years. According to Leslie Appleton-Young, chief economist for the California Association of Realtors®, “With credit drying up in recent weeks, we expect further weakness in sales over the next few months.” She continued to add that the decline in sales continues to be driven by both tighter underwriting standards since the start of the year and the adverse psychological impact of news and information regarding increases in foreclosures and the sub-prime mortgage situation.
At the same time, in South Lake Tahoe, a door seems to have been opened and according to a recent article in Inman News, one in five economists surveyed predicted a “meaningful” recovery in U.S. housing markets before the second half of 2008. About 38 percent expected a recovery in the second half of 2008, while 42 percent said housing markets won’t turn around until 2009 or later. Our recommendation is to take advantage of the opportunities that are presented within the upcoming months.
For us personally as well as professionally, we have found that owning Lake Tahoe real estate is a far more enjoyable way in which to watch your investments grow when compared to other options. When given the choice of sitting on a the lake beach and swishing down world-class ski slopes vs. pulling out hair out watching the stock market, our choice is clear.