As 2013 comes to a close with real estate sales at their highest level in the past eight years, it's a good time to take a look into the crystal ball and see what the future holds. With only 194 houses, condos and freestanding condos listed for sale on the Incline Village MLS as of this writing we are beginning the New Year with a relative shortage of inventory for the first time in nearly a decade.
The law of supply and demand tells us that a shortage of supply coupled with increasing demand will cause prices to rise during the coming year. However, in the micromarket of custom homes in Incline Village and Crystal Bay a rising tide does not lift all boats equally. There are some pockets of excess supply, such as in the Mountain Shadows condominium complex where there are currently eight properties listed for sale and there are a few places exhibiting a shortage of supply (there are presently only two condos for sale in McCloud). Depending on how many new listings come on the market during 2014 in each subdivision, we can anticipate a rather wide variety of price disparities throughout our community.
A disproportionate number of single-family homes with either a lake view or a low elevation location sold in 2013. Demand for these types of properties continues to remain strong and there is no reason to believe that this will change anytime soon. Anyone with a lake view home who kept their property off the market during the recession may wish to consider putting it up for sale in the coming year. Even if your property is a fixer-upper or a tear down, there is a finite supply of lake view properties which should continue to put upward pressure on prices for these types of homes.
The unseasonably warm and pleasant weather during the first two weeks of winter has contributed to more buyers than usual looking at property during the Christmas and New Year's holiday period. During the past week four more properties went into escrow ranging in price from a small lot at $40,000 all the way up to a spacious Lakeview home on the highly desirable East Slope offered at $1,987,000.
When real estate sales activity remains relatively steady during what is traditionally the off-season that is generally a good sign that the market will remain strong during the coming year. It is very likely that we will see 400+ sales of houses, condos and freestanding condos in Incline Village and Crystal Bay during 2014. This means the current inventory represents less than a six month supply which historically has led to steadily higher prices in our local market.
With more properties getting multiple offers than in years past, buyers who lose out in a bidding war generally tend to be more aggressive with subsequent offers. This has a tendency to change the psychology of buyers and their agents with a greater percentage of offers being written closer to the asking price. As buyers realize that the transition has been made to a seller's market there is both an increased sense of urgency and a perception that lowball offers which would have been considered a couple of years ago are no longer getting much attention.
Sellers with quality properties in good locations who establish a reasonable asking price can anticipate getting a lot of showings and should be prepared for the possibility of handling multiple offers. This does not mean that sellers can put a pie-in-the-sky asking price on their property and hope that the greater fool theory will prevail. The reality is that buyers have more market information than ever before thanks to the multiplicity of resources available via traditional methods and the Internet. Buyers understand that times have changed and prices are rising but that does not mean they are going to pay an unrealistically exorbitant price. However, we are seeing some transactions where buyers are paying a slight premium for the enjoyment of a particular property that meets their specific needs.
Barring some type of an economic or environmental catastrophe it appears that 2014 will be a good year for real estate sales on the Nevada side of North Lake Tahoe. There is such a tiny amount of raw land available for purchase that buyers for the most part will have to be satisfied with acquiring a piece of property that is already developed and either remodeling or doing a tear down / rebuild to create their dream home at Tahoe.