Buying Opportunities: The Good, The Better, and the Bountiful about South Lake Tahoe’s premiere neighborhood, The Tahoe Keys.
(Update: In the time it took us to mount this post today, a Tahoe Keys home has closed. It is the first sale of 2008. We'll update that here, and comment on it in a subsequent post. Otherwise it will not affect the buying opportunities this article explores.)
(LAKE TAHOE REAL ESTATE BLOG) There’s been much about the Tahoe Keys in our two posts below. One has to do with an agent taking exception to us reporting that there have been no 2008 sales to date in our premiere South Lake Tahoe neighborhood (read it here).
The post above gave rise to the post immediately below this one (read it here). This article discusses in detail the importance to the South Lake Tahoe real estate market of reporting real estate data that’s both accurate and relevant to our area homeowners and potential buyers.
Image above courtesy of Peter Tye at 2viewmedia.com.
With that behind us, and hopefully you’ve read them because there’s a lot of information in both, lets lets show you in detail the state of the Tahoe Keys real estate market right now. We have recently updated the Tahoe Keys here (all current listings and escrow, w/ statistics), but this exercise will go into a lot deeper detail.
About the Tahoe Keys :
As seen in the images above, the Tahoe Keys is a South Lake Tahoe neighborhood characterized by canals, a lagoon, a meadow, marina and the lake.
Nestled between two magnificents, the blue splendor of Lake Tahoe and the towering majesty of the snow capped Sierra above, the Tahoe Keys is the only South Lake Tahoe neighborhood, other than lake front properties, offering direct lake access. “Waterfront homes”, they are called.
There are some 1,000 homes here, most with docks and boats in their back yard. Other homes open to expansive meadows and a few front a small lagoon. Some of the Tahoe Keys homes that do not have direct lake access come with boat slips in the Tahoe Keys Marina, which also offers slip rentals for those that don’t.
In addition to being the heart and center of South Lake Tahoe boating paradise, the Tahoe Keys also offers it’s homeowners vacation home rental opportunities, ranging from modest to robust annual income.
For obvious reasons, the Tahoe Keys is one of the most desirable South Lake Tahoe neighborhoods. Consistently there are as many, if not the most home sales here in any given year.
To date this year, though, things are a little different. Because there are no home sales yet in the Tahoe Keys in 2008, and there are plenty of homes on the market, with more coming, we are seeing perhaps the greatest buying opportunity in the Tahoe Keys in quite some time.
Lets take a look at key Tahoe Keys market factors to best understand what buying opportunities there are right now.
Supply :
- At present there are 46 Tahoe Keys homes on the market (5 more are in escrow).
- There will be an increase in the number of listings throughout the summer (one already today as we were writing this).
- See a list of all of current Tahoe Keys listings here.
Time on Market :
- Of all Tahoe Keys sales in the last 365 days (calendar year), the average days on market is 174. (In other words it takes about a half year to sell a Tahoe Keys home in our current market.)
- 40% of the Tahoe Keys listings (18 homes) have been on the market longer than 6 months, 8 (17%) of which have been on the market a year or more.
Demand :
Tahoe keys demand is down, obviously. Without that, greater buying opportunity would not be so prevalent. The current lack of sales is a buyer's friend. As the chart at right indicates, the absence of any Tahoe Keys sales in the first four months of this year is remarkable. It has never happened before. It should be noted, however, that the first three months, along with November, of any given year traditionally produces the fewest Tahoe Keys sales.
Normally, Tahoe Keys buying activity and demand is greater between Memorial day and the 4th of July than any other time of the year. This reflects the normal sales increases seen in July, particularly August, and September. (Note August of 2006, though, which was in the onset of the current buyer’s market conditions.)
Absorption Rates :
The two charts indicate the total number of Tahoe Keys sales per year since 2003, and the monthly absorption rates over the same time period.
The monthly absorption rate is simply the average number of homes sold per month. It is another way of checking market demand. Normally we look at the absorption rates for the overall market, with specific looks at a year of activity, and six months of activity, and the last quarter of activity. This gives us a rather unique POV to identify any new emerging market trends. (See all current South Lake Tahoe absorption rates here.)
In the recent past, the most sales in the Tahoe Keys was in 2005. The fewest in 2006, though 2007 was only slightly more productive. The jury is still out on 2008, though if we were ever intending on owning a Tahoe Keys home, we would certainly be encouraged at the opportunity of buying in these advantageous market conditions.
Price :
The price range for Tahoe Keys homes sold in the last 365 days is between $550,000 and $2,500,000. Homes without direct lake access normally sell for less. Homes with docks and lake access will sell for more, and generally values increase the closer a home is to the inlet leading to the lake (see photos above).
There are a number of actual lakefront homes in the Tahoe Keys as well, none of which have sold in the last calendar year, two of which are currently listed and have been on the market significantly more than a year each.
The chart contains Tahoe Keys median sold and average sold prices since 2002. A few notable things to point out in this chart are:
- Home values are certainly off their 2005 highs.
- There are only 5 homes in escrow. As such, the “escrow” number on the chart does not necessarily constitute an overall change in value... yet. (More data is needed before that can be responsibly determined.)
- Most real estate professionals consider the Median Sold Price more respective and relevant of market condition. The median is the exact middle, whereas the average sold price is more skewed, and therefore distorted, by sales at the extreme ends of the market range.
- There has been much fluctuation in Tahoe Keys values, with annual changes in the market being as much as 39% more (2004 to 2005) and 13.5% less (2005 to 2006).
- With no sales to date in 2008, it is certainly possible we could be seeing further declines in Tahoe Keys value. This is absolutely the climate for buyers to take advantage of, before the market stabilizes, and then moves toward a seller’s market again (as a buyers market always does).
Current Mindset of Sellers :
We don’t know all of the sellers who have their home on the market, and as such we’re certainly not privy to what each of them is thinking about the current Tahoe Keys market condition.
We do know one seller though, one we represent, and currently his home is in escrow (and we hope it will remain so until it closes). He is getting a fair price for his home, one that is supported by recent December sales, though it is meaningfully less than the top of the market price he asked for after the market changed two years ago. One could say he is a motivated seller... who has become more reasonable over time. Unfortunately however, if he had been as reasonable in the spring of 2006 as he is now, and we begged him to be, his home would have sold for significantly more then than it will today.
In a buyer's market in particular, when we ask a Seller to lower their price, we are doing so to get them more for their house, not less. Some Seller's understand that, and these are the lucky ones because most don't. The idea is to get ahead of market change, to not let time erode one's price position. When a Seller does that, their house sells.
Sellers who insist on a price strategy that is above reasonable market reach will not sell their home until they accept market reality and get in line with it. The longer that takes the less their house will yield. In the case above, that has been exceptionally painful to watch... because we care, there is a family and children involved, and they have become friends.
As noted above, there are 46 Sellers in the Tahoe Keys at present. Some, like ours did eventually, have already accepted market reality and are ready to move on with selling their house and their family plan. Others though remain in denial, headstrong and standfast. Like head-in-the-sand-ostrich kinda types, they are perhaps more easily identified by a few favorite expressions: “I-don’t-really-have-to-sell” and "Lets see if we can get lucky."
It’s unfortunate, and the market would be better off if Sellers in denial of current value would take their homes off of it, but that’s just the way it is in a vacation home resort market. Some sellers truly do not have to sell their homes, and like you if you were in their position, they have the right to sell, or not sell, their house at any price they so choose. If their's is a house you want, well... you know. (OMG, this is a wonderful country!)
The Seller to Look For?
The key, then, to finding the best buying opportunities in the Tahoe Keys is to find denial-free Sellers. Here’s a few thoughts to help you consider how to find them.
First lets consider time on market. Sellers who have had their home on the market longer than the average time it takes to sell a Tahoe Keys house, or more than 180 days, are a good place to start. This is not a absolute denial-free zone, though, so we’ll have to add a little more criteria to help find the best potential opportunities.
Lets add how long a Seller has owned their home as another factor. Sellers who purchased their homes in 2005 did so at the very top of the market. Those, and Buyers who became Tahoe Keys homeowners thereafter, who are Sellers now and have their homes on the market may be faced with selling at a loss, as the chart above indicates. Rather than being steadfast in refusing to accept market facts, Sellers facing a loss are likely to be more rigid in both attachment to their price, and negotiations with a buyer, than a Seller who is facing gains.
As noted above, there are a few less than 1,000 homes in the Tahoe Keys (we’ve got 965 homeowners in our database). There have been 120 homes sold since January 1, 2005. Another 131 homes sold in the Tahoe Keys in 2003 and 2004. Another way of looking at this is some 75% of all Tahoe Keys homes were purchased before 2003, or about 750 homeowners would make money, and some significantly, if they sold their Tahoe Keys home right now.
As a buyer you want to look for homes in the Tahoe Keys that have been on the market for more than 180 days; whose owner has owned their home for more than 5 years; that appear to be priced reasonably in the first place. (There are other sure-fire excellent opportunities as well, but we’ll discuss that with you not far below.)
How to Best Find Properly Priced Homes :
This one is really easy. Use an agent you already trust and look at all of the numbers. If you don't already have an agent, we’re happy to do that for you, in fact we’re eager, and here’s a sample of what all of the numbers means to us, and the market analysis work-ups we’re known for providing.
Each one of these workups is house specific, and we include every relevant sale back to 2003. You’re one email or phone call away from us doing one for you.
Foreclosures (NOD’s) and The Bank Owned Tahoe Keys Sale: (REO’s)
Yes, these are most excellent opportunities too. At present there are at least 3 homes in the Tahoe Keys that have received notices of default, which is the first stage in the process of foreclosure. One of these is listed more than $200,000 less than what it sold for in late 2006. The other two are not on the market currently.
There are 5 Tahoe Keys properties that have received notices of a trustee sale, which is the last step in the foreclosure process before bank repossession. None are on the market currently. (Call or email us immediately if you might be interested.)
There is 1 home that is a bank owned property (REO). It too is not on the market presently.
All of the homes here in the various stages of foreclosure may present notable buying opportunities, particularly those in the later stages of the process.
There are also 2 Tahoe Keys homes at present that are “short sales”, which means they are being sold for less than what is owed to the bank for each of them.
In addition there are 4 Tahoe Keys homes on the market that are owned by real estate agents, which may present a reasonable buying opportunity. Three of the current Tahoe Keys listings also have specific wording that the Seller is “very motivated.”
Summary :
Current market conditions present good buying opportunities in the Tahoe Keys. It is a buyers market.
Properties to look for are either priced reasonably within the range of current market reality; or have been on the market for more than 180 days, and have been owned for 5 years or more, or are a combination of all 3 of these factors, which is better.
The best method to know if a home is priced reasonably is to work with a real estate agent you can trust. If you don’t already have one of those, call or email us.
There are some Tahoe Keys in the process of foreclosure that may be excellent deals as well. Currently there are no bank owned properties for sale, but some are coming. As they appear on the market, these could be something very much to consider.
The South Lake Tahoe Keys Market will continue to get better throughout the summer... like it does every year.
The South Lake Tahoe Real Estate Market so far this year.
All South Lake Tahoe, CA Homes in Escrow... with Statistics.
1 new Bank Owned Property in South Lake Tahoe last week.
An exact count of NOD’s, NOT’s and REO’s is difficult to assess. Homes come into, and go out of foreclosure daily. They also go into escrow, and sell daily as well.
8 new Notices of Foreclosure in South Lake Tahoe last week.
Notices of trustee sales (NOTS) in South Lake Tahoe last week.