The Negotiation Gap

You will notice that when I am formulating an opinion of the real estate market, I often use stats from Tahoe Donner.  While Tahoe Donner is in Truckee and 20 miles from the lake, it is the only community in the area  with both a setting consistant enough and sample size large enough to provide meaningful conclusions.  In Tahoe Donner there are more than 6000 single family homes. The terrain is consistantly alpine and the number of homes with either a golf course setting or panoramic view are not significant enough to influence the average value in the area.

The graphs linked here ( 2007 / 2008 ) illustrate what I call the negotiation gap.  The negotiation gap is the difference between asking price and sales price.  Plottiing the sales of single family homes in Tahoe Donner, Jan-May this year and last year clearly illustrates how this gap has grown.  And as this rift grows so does the Buyer’s advantage in this market. And not just in Tahoe Donner but every where in this market.

By the way, inventory is also ballooning…

I’m sure that the average buyer’s position will continue to improve this year as inventory and market time increase and I don’t see the economy providing a positive compensating influence anytime soon. Inventory in Tahoe Donner has gone frome about 120 to over 150 in the last couple weeks.

 

There will be a stage in this market where sales will increase significantly as buyer’s finally decide to take advantage of the conditions. Probably starting this summer.  There won’t be an immediate correction in prices though. The supply in just to great.  The supply must come down below 6 months.  Today its over 10 months.  I believe this means the smart buyer is looking for their dream Tahoe home now while there is still a problem.  By the time you’re part of the solution it is too late.

Now What?

 My last day at Alpine was Friday. The spring conditions were great.  I’m going to miss this ski season. Fortunately it lasted nearly six months.

 

Next season is just short 6 months away.  So now that skiing is finally over and we’re into the quietest time of the year, what’s next?

Maybe it’s finally time to look at real estate up here at Tahoe. Were you discouraged as prices rose through 2005 and gave up on a dream?  Maybe you thought the opportunity to find something special was gone. Maybe you are waiting for the the headline in the paper to read “REAL ESTATE HITS BOTTOM”.

Maybe it has and there are plenty of signs that now is a good time to act. 

Why now?

Today at our sales meeting my broker, Trinkie Watson commented that “this is the slowest market we have ever seen”.  When you consider the source, this comment carries a lot of weight. You want to buy low, right?

Now consider these stats comparing 1^st trimester sales from 2005 and 2008 on the Westshore and in Tahoe Donner in Truckee:

2005 Westshore	2008 Westshore
55 Homes Sold	20 Homes Sold
137 Days on the market	164 Days on the market
Sold 2.7% below asking price	Sold 8.2% below asking price

 

2005 Tahoe Donner	2008 Tahoe Donner
65 Homes Sold	53 Homes Sold
67 Days on the market	127 Days on the market
Sold 1.4% below asking price	Sold 4.3% below asking price

What do you see?  I’ll tell you.

1) Sales are way down and

2) Market time is way up.

And best of all, Seller’s are negotiating again.  On average, Sellers are 3 times softer than they were in 2005.  That’s the opportunity! The opportunity to negotiate.

Time isn’t necessarily on your side.  This market has been on hold now for more than 2 years and prices on average haven’t moved much since 2005 , up or down. See my January 4, 2008 post.  The opportunity is a clear Buyer’s market where negotiation really pays off.

 

 

3 Sports & 1 Spring Day

 

Selling real estate here is very inspiring and today it inspred me to do a few of my favorite outdoor activities.  Actually the market has been cooperating with this kind of inpiration alot lately.

Archery with the rising sun in Hurricane Bay.

 

 Spring skiing at noon at Alpine Meadows.

 

Mountain biking into the sunset on the Emmigrant Trail.

Cedar Shores

About a mile north of Tahoe City is a wonderful lakefront home called “Cedar Shores“. The address is 1780 N Lake Blvd.  It’s a little hard for me describe why I like it so much but I really do.  It just feels good to be there.  The setting feels good. The home sits on a bluff above the lake facing south.  The attention to detail feels good. The inside is warm and inviting even for its size (about 7200 sq. ft.) and the entire space is tangible. There are no distant orphaned spaces.  The finish materials inlude  marble from Italy, travertine from Turkey and floors, cabinets and trim detailed in alder, hickory and pine. The attention from the lake feels good.  It has a marvelous view into every room of the house.

The other lesser highlights include a over an acre of property with 100 ft. of beach frontage, 2 permitted bouys and a 26″ boat slip at the Tahoe City Marina. There is also a 1600 sq. ft. guest house on the property finished as beautifully as the main house.

The property is offered at $11,995,000

Hurricane Bay Split – SOLD

 

The Yurosek home on Hurricane Bay closed escrow yesterday.  This home is a split lakefront which sits just across the hiway from the lake.  As I reported last week, I consider this property to be one of the nicer splits on the lake.  Check these photos. It is set back from the lake so the impact from the road out front isn’t too bad.  The property is also very well landscaped with plenty odf lawn out back and away from traffic.  The inside is also very well done. This property came with complete plans to expand in place. Significant value considering the time and effort associated with agency approvals.

The property sold for $3,100,000 after being on the market for 261 days.  The original price was $3,649,000.

I am a little surprised that it closed over $3,000,000.  While the location and setting are well above average for a split, the property has no pier.  The market was suggesting somewhere just under $3M to me. Nonetheless, Hurricane Bay is a prime location and the home is great.  Precious property indeed.

The Best Split

 

 A split lakefront property is a property on the lake that is “split” by the the hiway between the home and the lake.  Therefore, your view and access to the lake is interrupted by the hiway and you must cross the hiway to enjoy the part of your property that is on the lake.  The main benefit to this arrangement is easy access the to lake acroos the street.  Many of these properties have bouys that go with property and some also have piers. The other beneift is the price.  A split lakefront with the key qualities would be priced a couple $$million higher if it were a true lakefront.

Every once in awhile a split lakefront will come on the market that doesn’t suffer as much as most from the hiway running through the yard.  This is usually because the home is set back from the road and above it. This will provide a nice view without traffic streaming through it.

Recently, two of these have come on the market. One is the Yurosek place in Hurricane Bay.  It just went into escrow. They were asking $3,145,000 down from $3,649,000. It is scheduled to close in a week. The other is at the north end of Agate Bay.  This property is fantastic! The home is beautiful and newer with a panoramic view directly south down the length of the lake.  It also includes a pier with a boat lift and bouy.  There are no other splits like it.

Priced now at $3,195,000 I expect it will get some attention.  Call if I can help > 530-414-1388

 

 

 

 

 

The “Key Qualities” Lakefront

    Every once in awhile there is sale that really adds focus and clarity to a particular segment of the market.  These experiences are little gems because you end up using them time after time to answer a common question about the market.  The question in this case is to the value of your basic lakefront home.  I’ve come to identify these as key qualities lakefronts and having developed this perspective I know it to be a sound one.

To me the key qualities include:

• A home with at least 3 bedroms and 2 bathrooms.  Its style inside and out maybe outdated but it has been well maintained and includes the modern conveniences of electricity, heat and plumbing. It is accessible at all times of the year.
• The property includes its own permitted pier and a couple permitted bouys.
• The beachfront is private and useable and the propertry is on a part of the lake that is deep near shore so that enjoyment of the pier doesn’t suffer when lake levels are low.

That’s it from my perspective.

Within the last 18 months there have been a few lakefront sales that provide some very real clarity to the value of a key qualities lakefront property.

At the end of the summer in 2006, I was involved with a lakefront sale that represented these key qualities and there value to me for the first time.  The address is 4540 N Lake Blvd in Carnelian Bay.  The house was built in 1964 and looks like a ranch house from the front. It was really quite plane but well maintained and presented the lake beautifully through big picture windows and from two large decks above the lake.  Nothing special. Pretty basic but on the lake with a pier and a couple bouys.

It was on the market for over a year but as soon as I took an interest in it it sold in a month.  It’s funny how that works.

Anyway,  this property got my attention when the price was reduced from $3.750M to $2.900M, roughly 25%.  It stayed at this price until it sold in September,2006 for full asking price.

It’s been fun to witness a couple more sales since that I would also consider as key qualities lakefronts, to confirm my opinion.  These are both in the Meeks Bay area. Both, about the same size as 4540 N Lake. Both on the market pushing a year and both starting above $3M and selling only after a price reduction to just under $3M.  These are

8227 Meeks Bay Ave ( closed June 07 at $2.675M)

and

8209 Meeks Bay Ave. (closed Jan 08 at $2.375M)

Since all three were negotiated from asking prices between $2.9M and $3.0M these outcomes also reflect the strenthening buyer’s position since 2006.

I’m not going to overthink it at this point so an average of the three, pegs the value of a key qualities lakefront at $2,650,000.

It turns out that this analysis provides useful insight to valuing many lakefront homes on the north and west shores since the median price of the 35 lakefronts sold over the last 2 years is about $3.700M.

 

 

 

 

Beyond the usual and ordinary

I don’t like the word epic to describe a memorable skiing experience.  The word has become overused and an uncreative term to describe an experience that evokes endless emotion for description on one of those days.  Yesterday was one of those days at Alpine extending beyond the usual and ordinary ski experience. I ski 3 days a week on average and 2 of those days are week days and then Sunday.  It is so great that skiing is so convenient here.  It’s not like playing a round of golf during the week where 5 hours later (and that’s fast) you find yourself  paining to be productive for the balance of the day.  I have a routine and route at Alpine that occupies 2 hours in the most spectacular way.

 With gear on the program starts at Roundhouse with a warm up run either making long fast turns on the groomers or on a powder day  over the top to Symphony Face to Banana Chute and across Red Trail to Gunner’s Knob . The next leg starts at at Summit Chair. From the top I head north traversing above Wolverine Bowl and Beaver Bowl to Estelle Bowl.  Back up the Summit chair and North to the High Traverse.  I like to pass through the Key Hole to the East toward the Lower Saddle to find the F Tree.  The 200 yards below the F tree rarely disapoint but on this day I was the first. I was truly blessed. Back up the Sherwood Forest chair I head to the Scott chair via Art’s Knob.

The finalle starts at the top chair Scott chair heading north to the Promised Land. I like the chute right underneath the rock face.  It is a special drop zone where the contrast  of the rock face above and the chute and valley below is breath taking.  I would linger their except that the rest of my day depends on the experience of this pitch and it’s recollection.

Snowshoeing Prosser Hill

     

Have you ever been at the top of Prosser Hill in Truckee? Its a little known climb.  That’s probably because Prosser hill isn’t much to look at.  It’s a hill and not a majestic peak. It’s also not easily accessible but the majesty is discovered at the top. While not reaching the heights of surrounding peaks, Prosser Hill sits all by itself and in a geographical location that exposes its summit to a 360 degree audience of our most popular mountain top  landmarks.  Surveying the scene clockwise from the east there is Verdi Peak and just the tip of Peavine Peak then Mt. Rose and Mt. Pluto. In the south the is the Truckee River canyon and Big Chief.  Beyond is Mt. Telac and Rubicon Peak at the south end of Lake Tahoe.  Continuing around there is Mt. Ellis and Twin Peaks along the West Shore.  There is Alpine Meadows and Ward Montain, Granite Chief at Squaw Valley, Mt. Lincoln at Sugar Bowl and Donner Peak behind Donner Lake and finally Castle Peak to the West.

I don’t usually get up to Prosser Hill in the Summer.  I find the best access on snowshoes over the snow.  There needs to be plenty though because the route from  Carpenter Valley Road off Alder Creek Road is up the south facing ridge of Prosser Hill.  With Plenty of snow the route is direct and up the ridge, otherwise there is alot of manzinita to navigate.  Many years access is only briefly available. It’s probably almost 2 miles to the top from the Carpenter Valley parking spot.  It’s not too steep and will take at least 30 minutes to climb depending on your pace and the condition of the snow.

Has the market dropped? 2008 property at 2005 prices.

          

Since this is my first post of 2008, I want to address the most common question asked in a conversation about real estate here.  Has the market come down? How far has the market dropped? Are prices getting better?

I am puzzled every time I am asked this question because it is the same question someone might ask about the price of gasoline.  It turns out however, that with a little sifting and refining of the available MLS data since 2005 that there are a handful of “residential commodities” to look at.  These are single family homes that sold in 2005 and again in 2007 without the benefit of remodeling between sales. They have not changed. Like a gallon of gas. Get it.

There are 14 homes that sold in 2005 and then again in 2007 that have not been changed, improved or remodeled and the group represents our area remarkably well. 8 homes in Truckee (4 in Tahoe Donner), 2 on the Westshore and 4 on the Northshore. 

Here are the results:

103%: The average asking price of the 2007 sale as compared to the 2005 sale.

-0.26%: The average 2007 sales price as compared to the 2005 sales price.

Carefull interpretation makes clear the answer to the question about the condition of the Tahoe Truckee market.  On average the market is down but only by the very slightest amount since 2005.  I call that flat. And the homes that sold in 2007 were priced just above the their sales price of 2005 on average before they sold.

So act now, Buyers!. 2008 property at 2005 prices. Prices like this can’t last long!