Runaway housing market starting to slow
On this summer’s housing market, local real estate agents agree: it won’t resemble last year’s market in the least.
Homes will likely spend more time on the market and sell a bit further below their asking price.
In other words, things will likely return to normal after two summers of Mach 1 markets.
“What I’m seeing is going to happen here is that we’re going to go back to a typical marketplace,” Tahoe Sierra Board of Realtors President Kappy Mann said.
“It’s not going to be a scary market well, maybe a little scary to people who never saw it before.”
Those accustomed to last year’s market – which routinely saw homes selling for their asking price or more, as well as home-value increases of 5 percent monthly – should not panic if this year’s values increase at a more steady rate of 3 percent annually.
“Sellers can still expect equity growth, just not what they saw last year,” said Bob Bronswick, Coldwell Banker’s senior vice president and head of the company’s Sacramento-Tahoe region. “What we’re seeing is a correction.”
Between fourth quarter 2000 and first quarter 2001, the inventory of homes on the market dropped by nearly half, and the average price increased by more than $100,000.
In the fourth quarter of 2000, 67 homes sold in Tahoe City and Kings Beach, with an average price of $385,687 and an average time on the market of 81 days.
By contrast, 37 homes sold in the same area in the first quarter of this year, with an average price of $491,795 and an average time on the market of 97 days.
Another sign of a changing market is the gap between home sales and home inventory first quarter this year compared to last year.
According to Tahoe Sierra Board of Realtors data, 300 to 460 homes have been on the market every month from January to April, while no more than 60 sold in any one month.
In April alone, more than 450 homes were on the market, and fewer than 40 sold. Most of the inventory is in Truckee, with more than 260 homes on the market and fewer than 25 sold in April.
Like Bronswick, local real estate experts say it’s not reasonable to compare this year’s market to those of the past two years, markets they say are anomalies created by the instant wealth of Bay Area Internet companies and investors.
“The last two years were fueled by dot-commers cashing their stock options and living high on the hog – basically taking the money they’d made and blowing it all over the state of California,” Mann said. “When those dot-com companies went under and those people lost their jobs, that stopped.”
Just because homes likely won’t sell at the same pace this summer doesn’t mean the market will come to a screeching halt, experts agree.
“We expect it to be a slower summer generally than what it was the past two years, but there are no signs of price softening,” said Gerry Lambert of Lakeside Realty in Kings Beach.
“We do have low interest rates, which are very attractive, so we hope to have a strong summer.”
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