Moderate Price Buyers Take a Vacation
There is always a certain amount of randomness to sales activity in the Incline Village real estate market since the vast majority of purchases in our community are discretionary and not the result of people buying a property due to a work-related relocation. As a result, there will tend to be flurries of activity for some types of properties or within particular price ranges, which also means that other types of properties might languish in the doldrums for a few weeks or even a couple of months.
It appears during the summer of 2013 that sales activity has been skewed towards the low-end and high-end with moderate price buyers taking a vacation during July and August. Nothing bears this out more clearly than the current statistics on the Incline Village MLS which show that only four of the 25 single family homes currently in escrow (including a few short sales) have asking prices between $689,000 and $1,195,000. That means that only 16% of the properties with accepted offers at this point in time fall into this price category. Contrast that with the fact that 46 single-family homes out of the 146 houses which have closed escrow in 2013 sold in this price range. Adding more fuel to this mathematical analysis is that 57 of the 169 homes currently listed for sale on the local MLS fit within these moderate range price parameters. So what does it mean when only 16% of the properties currently under contract are moderately priced when approximately 1/3 of the single-family home inventory and 29% of the closed escrows in 2013 are found within this range? In some respects, it's just an anomaly that sales during July and August this year have been skewed to the lower and higher price categories. Most likely, there are still a lot of buyers searching for properties between the high 600s and $1.2 million. However, many people shopping in this price range will look at properties during the summertime and then wait until September or October to make their purchase decision.
While sellers with moderately priced properties might be suffering from late summer angst, the reality is that sales continue to be generally strong across all price ranges for houses, condos and freestanding condos during 2013. Buyers shopping for lower-priced properties know that good values are few and far between so they feel the need to act quickly when they find a place they like. At the high-end of the market, the more affluent buyers are willing to pull the trigger because they know that the rising stock market has created a wealth effect, resulting in a lot more competition for luxury homes. Discretionary buyers looking to purchase properties that are moderately priced are generally in no hurry and are willing to wait for another property coming on the market sometime in the next year or two if they miss out on their first choice in 2013. Even though prices of single-family homes are up anywhere from 10% to 30% in Incline Village and Crystal Bay depending on the location, view, interior finishes, and other factors, discretionary buyers of moderately priced properties normally do not feel a sense of urgency to make a quick purchase decision. They know that with inventory levels hovering around a six month supply, sooner or later something that catches their eye will be listed for sale at a price that fits their budget. Many buyers looking to purchase properties in the high 600s to low 800s have a good inventory of quality condominiums and freestanding condos from which to choose. Quite often, the top priority for vacation homeowners is to reduce the amount of maintenance, landscaping and snow removal that they have to deal with so they opt for a property in a homeowners association instead of a single-family residence.
As of this writing, there are a total of 12 condos and freestanding condos under contract with asking prices between the mid-600s and $1.2 million. These buyers could have opted to purchase a single-family home but for whatever they reason have selected properties that are part of a homeowners association. If just 5 of these 12 buyers had purchased houses, the current in escrow sales ratio would be in line with the total year-to-date sales for moderately priced properties. There is no reason for sellers of moderately priced properties to go into panic mode while showing activity remains strong and properties in our community continue to get accepted offers practically on a daily basis. During just the past week 12 properties went under contract on the Nevada side of North Lake Tahoe, spanning the gamut from $275,000 all the way up to nearly $3 million. It would be nice if the distribution of sales were more even across all price ranges every week, but that will never be the case in a high-end vacation resort market such as Incline Village and Crystal Bay.
Sellers need to be patient while encouraging their agents to continue promoting their listings through a variety of marketing approaches. While there have been an unusually high number of sales for properties with asking prices above $2 million this year, sellers of moderately priced properties should be encouraged that total unit sales for all types of properties in Incline Village and Crystal Bay have rocketed to their highest level in the past seven years.