Real estate activity within the Tahoe-Truckee region typically tapers down in the final months of the year before ramping back up in the latter half of Q1. Layering in a slowing national housing market and a looming election year, it would be reasonable to expect a lackluster finish to 2019. However, a year that has defied central characterization, is instead going out with a flourish.
November 2019 saw 149 residential transactions close, a 4% increase over the previous year continuing an upward trend. Notably, the first 7 months underperformed the previous year by nearly 11%. However, the most recent 3 months have each outperformed the same month in 2018. Remarkably, the first seven months of the year produced 160 transactions at prices greater than $1,000,000. The most recent 90 days have exactly equaled this figure in less than half the time. Equally important, the total dollar volume over this period outperformed the same span of time last year by nearly 2% indicating that a greater number of moderately priced homes have transacted.
This corresponds to a lack of compelling inventory at the highest reaches of the market. For example, Martis Camp, a community that has set the standard for luxury real estate over the last several years, has lost over $76 million in transaction volume over the same span in 2018 as residential transactions have fallen by a third. Demonstrating that this is an issue with supply rather than waning demand, median price has leapt from $4,650,000 to $5,100,000.
This resurgence can be attributed to a number of factors some as simple as a drop of interest rates, while others are more nuanced including the unlocking of Uber shares six months post-IPO creating great liquidity in the Northern California feeder market. Sales in the year’s waning months are often driven by price reductions from sellers who may have sought ambitious values early in the year seeking the market ahead of a potentially long and quiet winter.
As evidence, transactions closed through July yielded 96% of their original asking price (Note: This is a different metric than asking price at the time of contract). In the most recent 90-day period, this dropped to 94% indicating that consumers were patient and disciplined in waiting for appropriate values to present. The discount from asking price (at the time of contract) to sales price is a remarkably consistent 97% through all conditions over the last several years.
The month of December can produce chart-topping results when buyers and sellers scramble to make tax-advantageous moves ahead of year-end or be monumentally quiet as consumers are out of the market in the month leading up to the holidays. Strong market momentum and sensational early snow presage a better-than-average start to the winter season.
Beginning December with the deepest snowpack in recent memory, Tahoe appears primed for an excellent winter to come. I look forward to connecting with you during your holiday travels. Please contact me for additional insights on the regional market and to learn about new and exciting projects happening at Northstar.