Truckee real estate values continue to soar as market remains hot
Prospective home-buyers take heed: the real estate market in the Tahoe-Truckee area is so hot right now, chances of finding affordable real estate are diminishing rapidly, according to many in the business.”[The market] has been outstanding,” Golden Bear Mortgage Corp. Loan Officer Mike Mulligan said. “It’s really hard on the first-time buyer. First-time home-buyers are almost priced out of the market. What we’re seeing is that they’re moving out of the area, to places such as Sierraville and Loyalton. It’s getting more and more difficult.”Mulligan said the local real estate market is driven by activity in the Bay Area and Central Valley, and while the economy in general is doing well, computer related businesses are booming. As a result, employee stock options have provided multitudes of Californians the opportunity to purchase property in this and other areas.As an example, Mulligan described a couple who recently paid cash for a second-home they purchased here. In the past two years, their combined stock options had provided them with more than $800,000 in liquid assets with which they purchased their new property.Typically, Mulligan said, it is not unusual for those paying $500,000 or more for a second-home to pay cash, but this year there are a tremendous number of cash buyers in all price ranges. These cash sales have slowed the business of lenders, he said.Nelson Van Gundy, president of the Tahoe-Sierra Board of Realtors and co-owner of RE/MAX North Sierra, said Realtors in the area aren’t absolutely certain why the market is exceptionally busy now, but that Bay Area economics are probably driving the market in this area. In general, he said, when the economy does well, the real estate market improves, especially where second-home sales are concerned.”People are making money and want to be here like the rest of us,” Van Gundy said.A strong economy and a busy real estate market, perhaps dominated by second-home sales, tend to drive property values up where the market is brisk. This situation is well received by current homeowners but can diminish the chances of first-time buying for many.”I’ve been in this business 26 years,” Van Gundy said. “The market is the best I’ve ever seen. Properties across the board are worth significantly more than they were one year ago. This is probably the least expensive these properties will be.”Dannette Arney, whose family has lived in Truckee for three generations, and her husband, Brian, recently purchased their first home after receiving 30 days notice to vacate the house they were renting due to a transfer of ownership. The Arneys have two children.”My heart aches for people who are where we were two months ago,” Dannette said.When Dannette and Brian began searching for a new place to live, they discovered rental costs on three-bedroom, two-bathroom homes fell between $1,500 and $1,600 a month.”I told my husband I’d eat rice and beans for a mortgage, but not for a rental,” Dannette said.And so they began searching for property they might purchase. They were advised by a lending company to get full-loan approval and soon discovered their price range.”For people who live here and work here, there’s nothing affordable,” Dannette said. “The market is just insane. It’s scary. It’s a very frightening market. We got the last house in our price range. You can’t find anything less than $170,000.”Indeed, information gathered from local experts verifies Dannette’s statements regarding the low inventory of affordable housing in this area. The Property Management Connection Inc. Property Manager, Debi Gorski, said rates on long-term rentals of three-bedroom, two-bathroom homes fall between $1,200 and $1,500 per month, while Realtor Toodie Marshall with Tahoe Resort Properties located this week two homes in the Truckee area priced below $150,000. These were electrically heated, two-bedroom homes built before 1975. Only one of these has a garage.While viewing houses which fell within the Arney’s approved loan range, Dannette said, her husband at first refused to even enter the fixer-upper they recently purchased, but she was able to convince him of the home’s potential. A decision was reached and the bidding war began.”We ended up going $6,000 over the asking price because there were eight other offers on this house,” Dannette said.She believes their offer was accepted only because they were lucky enough to gamble well, guessing at and offering the highest bid, and placing very few conditions on the terms of the sale.”That we got this house is a miracle of God,” Dannette said. “It is proof God loves us. To people who live here hoping to buy, good luck. It takes a miracle.”Tahoe Real Estate Group Realtor Rick Raduziner said seeing multiple offers on appropriately priced houses is not uncommon under current market conditions, nor is it unusual at this time to see houses selling for more than the asking price.”Our average market time for properties to be listed on the market has decreased significantly,” Raduziner said. “Often sellers will know within two weeks if they’ve priced appropriately because offers will have been presented within that time. In fact, we’ve been seeing multiple-offer situations, which often eventually result in contractual agreements over the original asking price.”Raduziner, whose office is located in Tahoe City, said the local situation where homes are selling quickly has resulted in a seller’s market, which is great, he said, for the seller, but can prove difficult for buyers and agents alike.”On the Tahoe side, the inventory is low,” Raduziner said.Low inventory means fewer choices for those wishing to purchase property at this time and requires decisiveness on the part of the buyer, Realtor Carol Fromson said.Fromson, with Prudential California Realty in Truckee, agrees that the market is competitive right now and offers advice to those seeking property in the area at this time.”Because the market is so brisk it is a must, it’s imperative, that buyers get prequalified so when they see the right property, they’re prepared to make a buying decision immediately,” Fromson said. “If two offers come in on a property, the seller’s going to want the strongest offer. Prequalification, a letter from a lender saying that the buyer is prequalified for this price range, puts a lot of strength behind the offer. When buyers see property they like, they need to make a buying decision immediately or someone else is going to pay for that property.”Though Fromson agrees the market is competitive, she cautions sellers to remain reasonable.”Sellers need to be realistic because, even in a hot market, when there are few or no showings, it means the property is overpriced and if there are a lot of showings and no offers, the property is still overpriced.”Realtor Tamara Perlman, who recently joined Coldwell Banker Fraser & Fraser Real Estate, said she has closely monitored the real estate market, in Truckee and elsewhere, for many years.”The market is extremely busy right now,” she said. “I’ve never seen anything like this, here or anywhere else I’ve lived. I think we’re getting a lot of pressure from the Bay Area.”Rumors that Alan Greenspan and the Federal Reserve Board would opt to raise interest rates at their Aug. 24 meeting initially led many market watchers to believe the nation’s real estate boom would begin slowing soon, as reported last week in The Christian Science Monitor. Mulligan at Golden Bear Mortgage said in anticipation of an interest rate hike, lenders typically raise rates in advance of the announcement. In anticipation of the Aug. 24 meeting, rates were raised one-half point about two weeks ago, he said.However, a key market index released earlier this week indicates that inflation has not risen as anticipated and Greenspan will probably not raise rates more than one quarter point. As a result, interest rates on home loans dropped early this week, defying market trend expectations.Placer Title Company Escrow Officer Terry Lindroth said that interest rates below 10 percent are still considered good interest rates and rate fluctuations in the past year have not dramatically impacted the real estate sales market.”Interest rates have gone up some in the past year,” Lindroth said. “[Refinancing transactions] have slowed but sales have stayed strong. The last two years have been very busy.”Lindroth added that the current year is one of the busiest she has seen since 1985, when she began working with title companies in this area.”We’re doing a lot of escrows,” she said.Tahoe Sierra Board of Realtors Governmental and Public Relations Coordinator John Falk said local realtors have indicated to him that the real estate business has recently been productive.”Anecdotally speaking, the market is hot,” Falk said. “It seems to be a very vibrant market. So far, it’s been a good summer.”Though Falk admits Realtors and property owners are enjoying current conditions, there is a downside to an active real estate market.”The stock of affordable housing in this region is woefully inadequate,” Falk said. “And a hot market only exacerbates that already critical situation.”
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