Caution: Positive South Lake Tahoe housing news here |

Caution: Positive South Lake Tahoe housing news here

Richard Bolen

While researching the South Lake Tahoe market data for a real estate seminar last Saturday, a few interesting market indicators emerged.

These, coupled with the recent national employment news, adds up to more positive indicators for the U.S. housing market in general, and certainly South Lake Tahoe in particular.

Let’s be sure we understand that we are still moving at a snail’s pace as it relates to the overall U.S. housing industry, but we did see a 16.3 percent increase in South Lake Tahoe housing demand in 2010 compared to 2009. This is one real positive market indicator.

Here are five more positive market indicators:

1. Exactly 507 single-family homes sold in South Lake Tahoe, Calif., in 2010. This is the most homes sold in the last 5 years (153 more sales than the 2008 low).

2. Of the South Lake Tahoe homes put up for sale in 2010, more homes sold than those that failed to sell. This is the first time that has happened in the last 5 years.

3. South Lake Tahoe home inventory, or supply, is now near a neutral market, or a six-months supply. (An inventory of less than 6 months is a seller’s market, and more than that constitutes a buyer’s market. Two years ago, for example, there was a year-plus home inventory, which remained throughout much of 2009.

4. The South Lake Tahoe increase in home demand points toward eventual growth in home values.

Demand changes are what drives and changes home values in a real estate market. Before home prices declined, a decrease in demand came first. That decrease in demand started in the last half of 2005. Home values in 2006 remained essentially the same as those of 2005, but as the decrease in demand solidified throughout the year, the inevitable home value decline became more and more apparent. If an increase in demand continues, home values will eventually respond accordingly. They always do.

5. Interest rates are still near historic lows.

These last two points are particularly important for home buyers. The time to buy is now, before demand eventually causes prices to rise, which could still take a while. But mortgage interest rates are ever more volatile and unpredictable.

The mortgage interest rate for a day last November was 4.15 percent. That was the historic low. It was 5.05 percent, almost a point higher, three weeks ago. This week the national average on a 30-year fixed home loan is about 4.8 percent.

Let’s use the purchase of a $300,000 home as an example about interest rates:

n If one took out a $300,000 loan when the interest rate was 4.15 percent, the monthly mortgage payment would have been $1,245.

n If one waited to save 10 percent off the price of a house, or $30,000 less in this example, and took out a loan for $270,000 when the interest rate was 5.05 percent, the monthly mortgage payment would have been $1,363.50, or $118 per month more.

n Over the span of a 30-year loan, or 360 months, a buyer would pay $42,800 more for a $300,000 loan than a $270,000, all because the interest rate rose from 4.15 percent to 5.05 percent.

n The average interest rate for 30-year mortgage loans over the last decade is 6.2 percent. If one were to take out that same $270,000 loan at that average rate of 6.2 percent, it would cost $152,640 more than if the buyer would have bought the same house for $30,000 lower when the interest rate was 4.15 percent. Or, that same house would cost $109,840 more when the interest rate was 5.05 percent.

The national average mortgage interest rate is 4.8 percent. If you are thinking of buying, need we say more?

– Richard Bolen is a Realtor with McCall Realty who blogs about the local real estate market at

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