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Lower inventory equals higher prices

The Incline Village / Crystal Bay real estate market is characterized by a finite supply of properties and increasing demand over the long term. In good economic times such as what we have been experiencing during the past couple of years, sales of houses, condos and freestanding condos in our community have ratcheted steadily upward while the inventory of properties for sale has declined to its lowest level in eight years. This change in the supply / demand equation has resulted in higher prices for properties of all types since the local real estate market bottomed out in January 2012.

Taking a look at the numbers there are a total of 179 houses, condos and freestanding condos listed on the Incline Village MLS as of this writing. That is a decline of 44% when compared with the same time two years ago and 18% versus the number of properties for sale on this date in 2012. With a total of 458 property sales in Incline Village and Crystal Bay during 2013, the current inventory has slipped to a supply of only 4.69 months. This is a dramatic turnaround considering the inventory had reached a staggeringly high level during the recession where it fluctuated between 24 months and 36 months at any given time.

Even with this very significant decline in the number of properties available for sale in Incline Village and Crystal Bay, prices are still well below the peak reached back in 2007– 2008. Since there is virtually nowhere to build a new condominium development in our community and more than 99% of all buildable parcels have already been developed, for all intents and purposes we have a permanently finite supply. As the population of our country continues to grow and more millionaires are created each year the demand to own a property on the Nevada side of North Lake Tahoe will only continue to increase.

However, the rising tide of real estate prices does not lift all boats equally. Single-family homes have generally seen a higher rate of price appreciation than other types of properties. And within this category, there is an enormous variation in price increases depending on location, view, ease of access, level of remodeling, floor plan, architecture and other attributes. Some homes have such unique characteristics that they continue to remain on the market after several years even though they appear to be reasonably priced. So, while the increase in demand coupled with the decrease in supply bodes well for the overall market, there will always be a certain percentage of properties in our community that appeal to a very small percentage of prospective buyers.

The lack of snow during the winter of 2013 – 2014 has permitted buyers a unique opportunity during what is normally a busy ski season to search for and purchase property. Without snow on the ground to obscure the landscape or the usual winter storms which make looking at property a less enjoyable experience, far more buyers than usual have been viewing dozens of properties every week. Sales activity this time of year will never approach the busy summer months, but we continue to see new transactions taking place several times a week.

Fortunately for the local economy the real estate market and all of the affiliated businesses continue to remain strong during an unusually weak ski season. Normally, the ski industry and the tourism that it brings to the Lake Tahoe basin is the primary driver of the local economy from December through April. But, the historically low snow levels and minimal operations at all of the Tahoe area ski resorts have resulted in a significant reduction in the amount of activity on the slopes. On the flipside, the unseasonably nice weather has provided contractors with the opportunity to continue working both indoors and out and keeping far busier than normal during this time of year.

Sellers who are thinking about putting their properties on the market sometime in 2014 may wish to test the waters in late January or until such time as the long-range weather forecast makes a substantial change. This is not usually the best time of year to list your property for sale. But with so little inventory, beautiful weather as far as the eye can see and buyers continuing to stream into the Lake Tahoe basin looking for their dream vacation home, listing your property for the next 30 days just might bring in a buyer willing to pay a fair price. Buyers would do well to continue scouring the market during the winter months if they want to strike a deal before prices rise further in the coming year.

Don Kanare is a Realtor at RE/MAX Premier Properties
Read his blog and weekly stats on his web site at www.InsideIncline.com