Median Tahoe home up 27 percent: 70 percent go to 2nd homeowners
November 3, 2005
With South Lake Tahoe-area property values just hitting an average of $525,000 and the lakewide average hitting $1 million, Paul and Tonia Farrar consider themselves lucky they’ve got their piece of the Tahoe lifestyle. They’ve visited for 20 years and believed it was time to buy a home.
Despite the national and statewide discussion of a near-bursting housing bubble, the quest to own a home has been quite fulfilling to buyers, sellers and agents in Tahoe. The inventory and days on the market have remained steady at just over 300 homes and about 100 days, respectively. And the market is still driven by second homeowners – which constitute 70 percent of those who have houses on the South Shore.
For five months, the Farrars have actively sought a second home in the mountains that would complement the north San Diego County home they own outright. In April, they looked at a 2,000-square-foot home in Tahoe Island listed for $699,000. They were patient and gave themselves until Labor Day weekend to make an offer to agent Dennille Knudsen, who said Thursday she wasn’t in a hurry to sell.
It closed at $650,000, and they moved out of their Tahoe Keys condominium.
“Real estate is more expensive here than we originally thought. And a lot of properties went down at least $20,000,” she said, while moving in and beating the winter storm forecasted this week. “It’s not the glamorous house that I thought I needed, but it’s comfortable. And our son, (Matt, 32), likes it.”
Her theory was in line with what many real estate agents are saying about two types of Tahoe sellers. One is highly motivated to sell because of urgent factors such as moving for a job. The other takes his or her time, with some property owners putting their houses on the market for a higher price than what they think they’ll get.
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“They’re testing the waters,” said Madeleine Gutierrez, an agent for Coldwell Banker, McKinney & Associates.
Gutierrez has seen a slight tapering off of listings compared to September, but that’s understandable in such a seasonal market.
Like many agents, she has a strong faith in this resort market. She had just returned from a California Association of Realtors conference in San Diego with experts projected resort housing markets will see a higher appreciation than most areas in the state – at least a 15 percent rise.
The feeling among industry insiders is the leveling off of prices is still anticipated but not to the higher degree interested parties experience in the Bay Area or Sacramento. With such a keen sensitivity to supply and demand, prices could soften because sellers will realize they’ve possibly overpriced their homes.
That’s what Tony and Donna Donnelly of Elk Grove – who own two homes there – may have discovered when they listed their third home in Tahoe Valley for $645,000 in mid-July. It’s now going for $595,000.
“The people looking have died off. We’ve seen that in the Sacramento area too. There’s an explosion in home prices,” he said.
“Our resort market is still considered a bargain compared to the Bay Area,” Chase International agent Sue Lowe said Thursday. “The housing market isn’t driven by people losing their jobs.”
More than 80 percent of those who buy at the lake – especially on the high end – hail from a primary housing market like the Bay Area.
“These people are going into their third, fourth or even fifth house. And, they have the means to not put it in the rental market,” she said.
And the agents selling the upper end of the inventory aren’t thrown by the number of days on the market because some take one- to two years to change hands.
“One percent of the population in the U.S. can afford house priced over $1 million. That’s our average now at the lake (as of Sept. 30),” Lowe said. “The only bubble bursting is the popping of champagne.”