Posted in Real Estate Market Pulse | South Lake Tahoe

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In March 2020, as COVID became a surreal reality, the housing market froze. However, after a few unpredictable months, residential real estate has experienced explosive growth! With a nation chained to their homes
and the need to move to the new norm of teleworking – more space, larger homes and a better quality of life are in demand. With frantic buyers seeking refuge from more urban areas, coupled with low mortgage rates, the real estate market has been sent into turmoil. After falling 18 percent from March to April 2020 and another 10 percent from April to May 2020, sales of existing homes rose again by almost 21 percent in June 2020, according to the National Association of Realtors (NAR).

LA Times Staff Writer Sarah Parvini: “Many who leave the Bay Area don’t go far. Counties in the Sierra region, including Eldorado, have seen a large influx of migrants from San Francisco compared to 2019. About 4724 people.

People moved to Eldorado County in the fourth quarter of 2020, according to a March report – a 23.8% increase in entries over the previous year. In the neighboring counties of Amador and Placer, growth was 22.5% and 12%, respectively. ”

Eldorado County has seen incredible growth due to the pandemic and remains a place that many buyers find desirable for many reasons: larger homes (more bang for your buck), more land, better schools, a sense of community, quality of life, and more. central location with many amenities. Even the incredibly high rates of fire insurance have not stopped shoppers from heading to Eldorado County, which has seen the highest percentage growth in sales in the region.

With the influx of buyers, there was a lot of competition when buying a home. Based on my own experience with ads, all of my sellers received multiple offers that far exceeded the list price and incredible conditions. Buyers and their agents do their best to offer real estate to stay competitive. In the past year, stocks have remained low compared to previous years.

According to a June 2021 report from the Luxury Homes Marketing Institute: “The supply is not only shrinking as wealthy people buy additional properties, it has also been heavily influenced by the elderly, baby boomers and people living in an empty nest who have decided stay put. Every spring we tend to see a huge number of offerings from this demographic entering the market as they decide to downsize or relocate. It is predicted that in 2020 and early 2021, the “tendency to stay in place” will begin to change, and houses will gradually return to their previous state. to the market, especially if the pandemic remains manageable. “

Another factor contributing to the supply of housing stock is insufficient construction during the pandemic. Due to the increase in the cost of building materials, private projects and projects of developers have been suspended, which further affects and delays the entry of new stocks on the market.

Demographics and demand levels have changed over the past 12 months. With younger, wealthier millennials and their increasing
purchasing power, many of them may work remotely, which gives them more opportunities to relocate to more suburban areas, especially for those who receive
married and family families. At record low interest rates, they are taking advantage of the opportunity to buy rather than rent. Rentals are also far and away, with ridiculously high rental prices.

Referring to the table and bar chart above – the average number of days on the property market is significantly lower than in 2020. Ads fly off the shelf left and right, many of which sell for a higher price. This is not the case for all ads, but the bar chart will give you an idea of ​​how much buyers paid in excess of the list price.

This market cannot support itself, right? So what indicators indicate that the market may eventually slow down? Renowned real estate appraiser and housing analyst Ryan Lundqvist shares seven indicators of market mitigation (visit SacramentoAppraisalBlog.com for the latest stats in our area).

7 ways the market slows down

1) Selling takes longer: Last month it took an average of 12 days to
selling a house and 6 average days. Since June, it has taken two additional days to complete the contract. It’s still lightning fast, but slower than it used to be.
2) More homes are selling at or below list price: Right now, a few more homes are selling at or below list price.
3) Fewer Multiple Offers: For two months in a row, we saw fewer multiples in the Sacramento region. Keep in mind that the percentage of offers is still as high as ever.
4) More listings are coming to market: We still don’t have enough listings to meet demand, but there are literally hundreds of additional listings in the Sacramento region on any given day compared to a few months ago.
5) Slightly higher monthly inventory: We are seeing a slight increase in monthly housing inventory. Very insignificantly, it’s crazy to say that when we basically have houses for sale for half a month, but the supply has only increased by a few days.
slightly in most districts compared to a few months earlier. Of course, now we see that mortgage rates have reached their lowest level in several months, so let’s see what happens to the proposal in the near future.
6) We have reached the peak of a large number of houses: the dark blue line represents the average size of a house in Sacramento, and it grows and shrinks like a clock every year. You can see how the size usually peaks in May or June (except for the last
year)? Be that as it may, in June, the average size fell sharply, which is what we would expect to see in a normal year. This suggests that we are seeing normal seasonality.
7) Rumors on the street: I hear from many real estate agents, loan officers and appraisers that they have noticed a slightly slower atmosphere. I have not heard anyone say that the market is slow, but there is a lot of talk about slowing down. At the same time, I hear things like “My listing had 23 offers” or “We hit the price again,” which speaks to how competitive it is at the moment.

So what will happen to real estate in the next couple of months or a year from now? It’s hard to say … given the cyclical nature of real estate and a number of factors such as: economic changes, government policies and legislation, and other unforeseen circumstances that may arise … the real estate industry is constantly changing and continuing to evolve. we are in suspense trying to keep our finger on the pulse of the market.

SOURCES:
Ryan Lundqvist
Certified Residential Property Appraiser
Housing Market Analyst
www.SacramentoAppraisalBlog.com

Luxury Homes Marketing Institute report, June 2021.

CNBC website
Article: “The housing market is at a tipping point after a shockingly successful year during the pandemic.”
Posted March 12: National Association of Realtors (NAR) Growth Percentage Statistics

LA Times article
“Wealth, class and remote work are changing California’s thriving new cities as people flee the big cities.”
July 2, 2021: Sarah Parvini, staff writer.


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