Tuesday, July 26, 2022 / by Sasha Spiegel
How did we get here and what created the HOT market of the past 2 years?
The past 2 years were record breaking especially in Resort Communities like Tahoe.
What led to this rapid increase in home values?
Record low mortgage rates.
Reduction in normal inventory: Property owners who normally would have listed their homes either
wanted to use their second homes to “get out” of the city, and work remotely.
Or were not interested in selling, as they were able to rent their second home at dramatically high rates of return.
Increase in Buyer Demand.
Buyers looking to “get out” of the cities and into nature created an unprecedented demand in resort communities.
The increase in rental return, also created buyer demand as they looked at the 2nd home as an investment opportunity.
This combination of record low supply & record high demand put pressure on the prices to go up.
Cooling down in an insanely hot maket.
Towards the end of 2021 we started to see some buyers pulling back as they were either burned out on losing on multiple offers or they were simply priced out of the market.
Starting 1st quarter of 2022, Interest rates increased and we saw a further decrease in buyer demand.
Starting the 2nd quarter of 2022 we saw an increase in inventory from 2020 and 2021. The inventory is similar to what we normally see, but seemed like a big increase based on the past 2 years.
Buyers are starting to come back to the table, but are cautious. With the increase in interest rates, buyers understand that their dollars don’t go as far. Some buyers are sitting on the fence waiting for the bottom.
This trend is creating a more balanced market, with buyers having more selection and ability to negotiate. Some sellers who were bullish with their pricing, are now having price reductions with the increase in inventory, further giving confidence to buyers that they now have more control.
A return to a more balanced market
This is not doom and gloom for sellers. It’s going to take a bit of time for the market to settle. In the meantime, we will see a bit of a holding pattern for both buyers and sellers with longer days on market and fewer buyers making offers on each property.
If you would like to create a strategy to sell your property in this type of market, or have general questions about either the value of your home or how this affects your property value. Please reach out to me, and we can schedule a consultation.