The Incline Village real estate market is off to a very healthy start in 2018.
The total number of sales for houses, condos and freestanding condos is identical to the same time last year at 44 units. What strikes us as being particularly unusual is the extraordinarily large number of properties currently in escrow. At the present time there are 26 single-family homes, 26 condos and 14 freestanding condos under contract. Considering that there are only 139 properties for sale, having 66 places in escrow is a ratio we have not seen in well over a decade.
The condo inventory is extremely low with only 38 properties currently listed for sale on the Incline Village MLS. Just nine condos have asking prices under $500,000 and we are seeing the bellwether two-bedroom McCloud approach the $600,000 price point.
Demand from buyers remains very strong across all price ranges. As properties in good locations hit the market we are witnessing a tremendous amount of showing activity and more multiple offer situations.
Since the economy in California continues to produce tremendous wealth, we anticipate a steady stream of buyers to all areas of Lake Tahoe. While the past several years have resulted in many California tax refugees moving to Nevada, that is only part of the equation. Housing prices in the Bay Area have appreciated to the point where properties in Incline Village actually appear relatively inexpensive. So, there is no sticker shock and if anything buyers are surprisingly pleased at how much bang they can get for their buck compared to many Bay Area communities.
Longtime observers of the real estate market will naturally start to question whether we are in or near a housing bubble like we saw in the first decade of this century. While there are some statistical indicators that might lead us in that direction, there are notable differences between the current state of the market versus the debacle a decade ago.
First and foremost is the fact that lending requirements are far more stringent and marginal buyers are not participating in the current price rally. If you can't afford a significant down payment and are not able to document your income, it's extremely unlikely that you will be able to secure a mortgage loan. While there will always be hard money lenders willing to charge above market interest rates to less qualified buyers, that has been reduced to an insignificant percentage of sales in our local market.
Also, the sustained stock market valuations have lifted the net worth of our typical buyer to a level where their overall economic situation is strong and their confidence is high.
The vast majority of purchases at Lake Tahoe are discretionary. So, buyers carefully evaluate their financial situation before taking the plunge. We are not seeing the rampant speculation of 2004 to 2007 where buyers were making a purchase and planning to flip the property at a profit in 12 to 24 months.
So, the big question is how much more room do we have to run?
Historically, Incline Village real estate prices go through a period of appreciation followed by a leveling off or decline before the next run-up surpasses the old highs. Since we have not yet exceeded the pre-recession peak in prices, the current cycle tells us we are likely to see more appreciation before any type of flattening occurs.
With demand greatly outstripping supply it looks like the strong market will continue barring unforeseen circumstances.
Sabrina Belleci and Don Kanare are the owners of RE/MAX North Lake. Read their blog and find weekly stats on their website at http://www.InsideIncline.com.