South Lake Tahoe Market–Where is the bottom?

The question I hear over and over and over again:  “Where do you think we are in terms of the bottom?”

While no one knows the answer to that question there are a lot of indicating factors to watch closely over the next 3-6 months…..nationwide trends are indicating the “potential” for a leveling off of the rapid market depreciation that we’ve seen.

But on the flip side, I haven’t seen a single one of those articles weigh on the fact that there was a 3 months moratorium on foreclosures from a lot of the big giants–Fannie Mae, Freddie Mac and JPMorganChase/Washington Mutual.  If we recall, what caused the market decline in the first place is increasing foreclosures on the market driving the prices down in neighborhoods.  Well here we are about to have a flood of foreclosures hit the market again.

So the big question in my eyes is:   Has the government done enough to free up money for purchasers & consumer confidence risen enough so they continue buying (as the trend is increasing that pending sales went up in March) and will it be enough to balance the onslaught of new foreclosure listings about to hit the market in the coming months?

Stay tuned to find out but read these articles below…they both offer some great insight into the market trends and what to watch carefully for.

http://money.cnn.com/2009/05/04/real_estate/March_pending_home_sales/?postversion=2009050411

http://www.reuters.com/article/newsOne/idUSTRE53S3NK20090504

http://www.realtytrac.com/ContentManagement/RealtyTracLibrary.aspx?a=b&ItemID=6195&accnt=64953

South Lake Tahoe Market Trends

We’ve noticed a trend of interested buyers wondering when the best time to purchase a home is going to be in the South Lake Tahoe area. And of course sellers are always wondering when is the best time to put their home on the market.

Every market is unique and we feel the news media hype is not doing a good job of breaking down news for different market areas. Here is a graph that will hopefully help both parties evaluate the market more accurately in the South Lake Tahoe:

This graph shows how many months of home inventory on the market we have in relationship to how many people are buying them in the Tahoe area. “Inventory” refers to the number of homes that are sitting active on the market. The relationship between the homes sitting on the market and the homes actually being purchased is called the “absorption rate”.

Buyers:

If you are buying a home in South Lake Tahoe then you have more leverage as a buyer when the absorption rate is higher (20 months of inventory vs. 10 months of inventory). This is because with more competition, sellers have to be more competitively priced in order to sell. When the absorption rate is high, this is typically when we see prices dropping the most dramatically. We thought the attached absorption rate graph would be useful for you to know as you plan your Tahoe purchase.

Sellers:

Of course when the absorption rate is showing a lower level of inventory, this is when you are more likely to want to sell, as your odds of selling your home are greater. When the absorption rate is demonstrating fewer months of inventory, there is less competition, thus increasing the chance that a buyer will end up walking through your home and bringing you an offer. Now when the absorption rate is higher, it is important to note that these are the times when your home needs to be priced aggressively to sell. Your home has to look more like a “deal” and stand out from the competition as there is just way too much inventory on the market

Short Sale Mistakes That Can Cost You

Short sales are not easy for anyone involved—but most of all for the sellers. The web is filled with so many websites on how your credit can be affected, how one option to avoid foreclosure is better than the other—it is so hard to find the truth! The truth? Bottom line, every situation is different and you shouldn’t be making a decision about a short sale without talking to multiple experts about your unique situation. So which experts should you talk to? Not just one, but ALL of the below, need to be spoken to prior to knowing if a short sale is the right move for you:

Real estate agent/broker:
Find out what the market value is on your home through having the agent establish fair market value and to prepare your estimated proceeds from the sale. If looking at market value you cannot pay off the loan in full, one of your options would then be a “short sale”. This would be a good time to make sure this agent is familiar with short sale proceedings as well.

Tax advisor:
This is the important step many are skipping over! I just had a client call me today, ready to list his home short sale. I asked him about if he had talked to his tax guy. His answer? “No”…well, after insisting that he double checked he was so thankful. He thought he didn’t have to pay taxes because it was his principle residence but due to some catches on his refinancing, he would have had to pay upwards of $10,000 to the IRS! Bottom line: Do not take this info from anyone BUT your tax advisor. And if you don’t have one, pay for a one hour consult or you will regret it later.

Lawyer:
Only a lawyer can really tell you if a short sale is your best option. For many clients who I have insisted they visit a lawyer—they have found that bankruptcy was a MUCH better option for their situation. It is worth paying for a one hour consult to make a decision that could impact you for a long time.

Credit Counselor:
While there is a lot of conflicting information out there on websites over how a short sale vs. deed in lieu of foreclosure vs. foreclosure can affect your credit, I have found the only ones truly willing to talk about it are the credit counselor’s.