Truckee/Tahoe Market Update for April 2023

FOR HOMES SOLD WITHIN THE LAST MONTH

Source: Tahoe-Sierra MLS; all stats for single-family homes in Truckee-Tahoe as of 04/01/2023

6 months is a neutral market

Active inventory for the last 5 years 600

Number of Active Listings

500

400 2018-2019 2019-2020

300

2020-2021 2021-2022

200

2022-2023 100

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In this graph, the active listing data is layered year over year indicating home inventory is still below (a little under half of) pre-pandemic levels. Sales are being absorbed at a lower rate than the previous two years. Inventory peaked in July from the rapid growth in May–June of last year. As we begin summer, inventory continues to dwindle.

Months of Inventory is the interplay between active inventory and the number of sales in the last year. It can also be looked at as the amount of time it will take to sell all the properties currently on the market if no additional homes were added to the supply.

In the forthcoming chart, the red line represents where a neutral market begins, and each of the previous 4 years is represented by a colored line. The further below the red line each of the color year lines are, the more the market favored sellers. The first half of the last four years saw relatively normal market cycles. In May 2020, the market began to shift to heavily favor sellers, the start of the pandemic wave. In May 2022 another decisive shift in market dynamics began, moving towards a more neutral market. The first four months of 2023 seem to show signs of strengthening buyer demand.

Months of inventory Stacked Year over Year 7.00

6.00

Months of Inventory

5.00 2018-2019

4.00

2019-2020 2020 - 2021

3.00

2021- 2022 2022 - 2023

2.00

Neutral Market

1.00

0.00

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Months of inventory is historically on the rise during the summer months as inventory swells. The summer of 2022 inventory was much higher than most of the previous years, yet still far lower than it was in mid 2018 through mid 2020. As inventory continues to taper off slowly from the mid-summer peak, so too does the months of inventory fall.

We track pricing, both by price per square foot and broken down by different square footage ranges. This helps to control for a different mix of types of properties that sell over time, but also, helps to bifurcate smaller homes (that tend to sell for more per square foot) from larger homes.

It is also important to note that although this data seems to provide a relatively clear picture of how pricing is changing and has changed, it is naturally delayed by at least 30 days (as most escrows are at least 30 days long) and the sold price is not published until the home closes.

In other words, if sellers of homes suddenly started to accept offers for 10% more today, it would not be reflected in the data for at least 30 days.

Average PPSF $1,000.00 $900.00 $800.00 $700.00 $600.00 $500.00 $400.00 $300.00

$200.00 $100.00

3/1/2019 4/1/2019 5/1/2019 6/1/2019 7/1/2019 8/1/2019 9/1/2019 10/1/2019 11/1/2019 12/1/2019 1/1/2020 2/1/2020 3/1/2020 4/1/2020 5/1/2020 6/1/2020 7/1/2020 8/1/2020 9/1/2020 10/1/2020 11/1/2020 12/1/2020 1/1/2021 2/1/2021 3/1/2021 4/1/2021 5/1/2021 6/1/2021 7/1/2021 8/1/2021 9/1/2021 10/1/2021 11/1/2021 12/1/2021 1/1/2022 2/1/2022 3/1/2022 4/1/2022 5/1/2022 6/1/2022 7/1/2022 8/1/2022 9/1/2022 10/1/2022 11/1/2022 12/1/2022 1/1/2023 2/1/2023 3/1/2023

$0.00

<1500

1500-2999

3000-5000

Pricing obviously started to see a sudden and consistent run-up starting in 2nd quarter of 2020 and seems to have peaked around 2nd quarter of 2022 and the median has fallen between 12% and 17% since then. However, different areas and types of properties have been disproportionately affected by this shift. Through the first quarter, it appears we are seeing demand to push pricing back up for some properties although Q1 sales are already thin, so we’ll need to see this summer.

Sold over the last 5 years 2000 1800 1600 1400

Number of Sales

1200

2018-2019 2019-2020

1000

2020-2021

800

2021-2022 600

2022-2023

400 200

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Above we can see where the market is trending now (orange line), and where the market has been at the same time of year across each of the previous four years. Currently, the annual number of home sales are a little over 20% under the more normal 2018-2019 pre-pandemic level.

Overall new escrow data provides a solid indication of relative traction in the market over time.

Each data/date point reflects the number of contracts that were reported to the Tahoe-Sierra MLS as accepted for 2 weeks preceding the date. The data does not track escrows that were accepted, but then cancelled. The data will also miss a few sales between data points because the dates are at 1/2 month intervals and the data only looks back 2 weeks.

We chose to look at data this way because our Truckee and Lake Tahoe market rhythm is seasonal.

New escrow activity frequently correlates more closely with the weekends. By breaking the data cleanly into exactly 2week segments it is less likely to pick up an extra day that is disproportionately busy in the week.

Opened Escrows 4 years stacked 160

140

120

100

2018-2019 2019-2020

80

2020-2021 2021-2022

60

2022-2023

40

20

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Comparing 4 years of data, the blue line (pre-pandemic) and orange line (now) show the number of opened escrows is generally following what the pre-pandemic sale numbers looked like. There appears to be a clear trend emerging of sales tracking below the 2018-2019 level (the most recent “normal market”). It appears that the number of sales for the last 10.5 months is 39% lower.

If you would like a more specific look at what your home or neighborhood looks like in this changing market, please do not hesitate to reach out. We would be happy to provide you with a comprehensive value analysis of your property.