2023 Year-End Review: Tahoe-Truckee Real Estate Insights and Emerging Investment Opportunities

Truckee Tahoe Mountain Homes: Your Trusted Real Estate Partner in North Lake Tahoe-Truckee

Residential Properties – Single Family Homes and Condominiums Activity for the Calendar Year 2023

Truckee-Tahoe Residential Sales Summary 2023

Total Residential Sales:

As your dedicated real estate agents in Tahoe and Truckee, we’ve experienced a year full of surprises and challenges. The 2023 real estate landscape in North Lake Tahoe-Truckee was shaped by several factors, including extreme winter conditions, inflation, rising interest rates, and shifts in the national real estate market.

This year, we observed an 11% decrease in residential transactions compared to 2022, falling 30% below the five-year average and 28% below the ten-year average, marking a significant shift in the Truckee-Tahoe real estate market.

Median and Average Sales Prices:

The decrease in transactions was paralleled by a slight softening in prices. The median price of a residential sale dropped by 3.6% (from $1.1 million in 2022 to $1.06 million in 2023), while the average sales price decreased by 6.2% (from $1.646 million to $1.544 million).

For single-family homes, the median price decreased by 4% (from $1.23m to $1.181m), and the average price dropped by 6% (from $1.849m to $1.742m).

In contrast, for condominiums, the median price saw a 1% decrease (from $735k to $726k), but the average price actually increased by 12% (from $895k to $998k).

However, prices remain significantly higher than pre-COVID levels in 2019. For single-family homes, the median sales price is up by 59% (from $745k to $1.181m), and the average sales price has increased by 53% (from $1.135m to $1.742m).

For condominiums, the median sales price rose by 69% (from $430k to $726k), and the average sales price surged by 80% (from $555k to $998k).

Active Residential Inventory:

Active Listings:  We are currently in the peak of winter, a period typically associated with lower inventory levels. There are 230 residences on the market at present. Last year, around this time, approximately 180 residences were actively for sale, while in 2019, the number was closer to 400. Long-term data suggests that inventory is still at historically low levels pre-COVID, at about 60% of the five-year average and 40% of the ten-year average for this time of year.

Current Pending Sales: There are 55 pending sales, a decrease from 62 at this time last year.

The current inventory represents just over 4.2 months of supply relative to December’s activity. Historically, any figure below 5 months of supply indicates a seller’s market. However, this is the most balanced market we’ve seen in years.

Sales Under $500,000: In 2023, there were 60 residential sales under $500k, accounting for 6% of total sales, consistent with 2022’s percentage.

Mid-Range Market Sales $500,000 to $999,999: This year, 407 residences sold in this range, representing 40% of total sales. In 2022, sales in this range constituted 37% of total sales.

High-End Home Sales $1,000,000 to $1,999,999: A total of 381 residences sold between $1m and $2m, accounting for 37% of total sales, matching the 2022 figure.

Luxury Home Sales Over $2 Million: 180 residences sold over $2 million in 2023, making up 18% of total sales. This bracket includes 46 sales over $5 million, with 7 exceeding $10 million. In 2022, there were 226 sales over $2 million, representing 20% of total sales, including 46 sales over $5 million, 15 over $10 million, 2 over $20 million, and 1 over $40 million.

Looking Forward: What’s Next in Real Estate Trends?

The robust “COVID boom” in the real estate market is now behind us, and the region has been experiencing below-average activity for the last 18 months. However, the inventory of homes for sale hasn’t substantially increased, and prices have only slightly softened.

Will market activity change dramatically in 2024 compared to 2023? It’s unlikely, though unexpected factors could influence the market.

A strong stock market and declining interest rates typically bolster demand in our local market, suggesting potential for increased activity in the coming year. The upcoming election will also be an interesting factor to consider.

Low inventory will continue to significantly impact the supply side of the market. Currently, inventory levels are less than half of what was typical pre-COVID during this time of year.

The frequency of multiple offers on properties has diminished, and bidding wars have almost disappeared. However, price reductions are occurring in only about 5% of listings each week, indicating a lack of a strong downward trend.

We anticipate below “normal” activity (by pre-COVID standards), measured by the number of transactions, to continue in Q1 2024. However, we remain hopeful for an uptick in transactions as the year progresses.

For Sellers: This is still an advantageous time to sell compared to 2019, which was considered a healthy market back then. Expect shorter times on the market and significantly higher sales prices.

For Buyers: This is the most balanced market we’ve seen in the past three years. You now have the advantage of negotiating prices, inspecting properties with standard contingencies, and negotiating repairs. Although interest rates are rising, locking in now could be beneficial, with the possibility of refinancing if rates decrease.