2008 INCLINE VILLAGE REAL ESTATE
YEAR IN REVIEW
Don Kanare Lakeshore Realty 954 Lakeshore Drive Incline Village, NV 89451 Tel: 775-831-7000 E-Mail Don Quick Links Search the MLS Weekly Market Update Weekly Market Archives Current Listings Best Buys Read My Blog Contact Don Home Page Monthly News Letter Current Newsletter Archived Newsletters  |
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December 2008 2008 Sales Statistics as of 12/16/08 Houses Condos Free Standing Total Units Sold 2008 80 63 22 165 2007 132 94 42 268 For Daily Updates on Incline Village Real Estate visit my web site at: www.InsideIncline.com BIG PRICE REDUCTION - 704 Golfer's Pass Rd- NOW ONLY $998,000 This Months Articles: With all of the volatility in the stock market during 2008 and upheavals throughout the global financial community, the Incline Village real estate market remained about as close to an oasis of stability as one could hope for. With housing prices around America dropping from 30% to as much as 70% in the most distressed communities, the minor 7% decline in the median price of a single family residence in Incline is about as good as it gets for real estate investors. It looks like overall unit sales will finish out the year with a decline of somewhere around 40% versus 2007, but with prices holding relatively firm it looks like Incline Village real estate is once again outperforming the stock market. If you are looking at the long-term horizon, the evidence is even more dramatic that owning Incline Village real estate is better than investing in equities. While the Dow Jones industrial average has slipped back to levels that we have not seen since 2002, property values here are at or above the levels that we saw in 2005 during the peak of the real estate frenzy. The main reasons that property values in Incline Village and Crystal Bay have been relatively well insulated center around a finite housing supply, the superior quality of life and the fact that there is no relationship between local property values and local incomes. We are not heavily dependent on any particular industry or business so the layoffs affecting the financial sector and industries related to manufacturing or sales have virtually no impact on property values here. The other important factor that helps to keep property values high in our community is that most owners have tremendous staying power. What I mean by this is, most of the purchases and sales that take place in Incline Village and Crystal Bay are discretionary and not the result of a job transfer or some other need to relocate. When sellers have the option of holding onto their property for their own personal enjoyment or they can rent it out to earn additional income it alleviates the pressure to sell at any price. So, although we may be in a period of relatively low unit sales for another year or two, it does not look like there is any danger of a wholesale price collapse in the Incline Village real estate market. There are a few pockets of extreme price weakness such as some of the condo complexes along the Southwood Boulevard corridor and moving up Ski Way towards Diamond Peak, and high elevation homes without a good view. Due to the sectors that are a bit weak, the overall condo market has witnessed the median price decline from $585,000 to approximately $500,000 this year. However, this still puts us above the median price of $485,000 back in 2005 and way above the median in 2004 which was $405,000. And frankly, condo prices ran up too quickly between 2002 and 2005, so this slightly downward adjustment is actually healthy for the local market. The chart at the top of this page shows the actual year to date sales and for 2007 and 2008.. The median price of houses dropped about 7% from $1,200,000 to $1,135,000. And condos declined about 15% from $585,000 to around $500,000. This has been a very interesting year in that only a handful of properties have sold close to the median price in both the single family residence and condo categories, while the vast majority of sales have taken place either significantly above or below the median. Consequently, just 2 sales of single-family residences above or below the median price can cause this number to fluctuate by as much as $40,000. Analyzing condo sales, I have found a better way to view the fluctuations of property values for condos in Incline Village is to look at the median price for a two bedroom, two bath McCloud and track the year-to-year price changes. In 2007 the median price for this type of condo was $575,000 and in 2008 it had dropped down to $549,000 which is a decrease of only 5%. Why then has the median price for all condos appear to have declined by 15% in 2008? I believe the reason for this, is due to the fact that an excessive number of lower-priced condos have gotten accepted offers as bargain hunters continue to scour the market. And in contrast, buyers looking to spend over $800,000 are purchasing homes at a rate of 4 to1 over condos. So, it will be very difficult for the median price of a condo to increase significantly during the next few years simply because once you cross the $800,000 price point buyers have lots of single family homes to choose from. If our condo market were taking a significant hit, then you would have seen the median price of a 2BR McCloud dropping by 15%, but that is not the case. One of the slowest parts of our market has been the lack of sales in multi-unit properties also known as investment residential. Since January 1, 2006 we have had only four sales in this category and I think the reason is pretty straightforward. Investors can't purchase these types of properties and hope to get break-even cash flow unless they make a down payment that is generally somewhere between 40% and 70% of the price of the property. In most of America, you can get break-even cash flow with as little as 20% down and sometimes even less. For investors seeking a cash on cash return, multi-unit properties in Incline Village generally don't provide the best numbers (except in rare cases). And since appreciation rates have slowed down, investment residential properties have lost their luster in our market. My prediction for the Incline Village real estate market in 2009 is that sales in units will be relatively close to the level we experienced in 2008, barring some type of extraordinary news (either good or bad) from the financial sector. I don't see prices making a major advance for at least 12 to 18 months based on current inventory levels and absorption rates. The strongest parts of our market will likely continue to be quality condos at low elevation (generally within walking distance of the beach), lake view homes and lakefront properties of all types. The weakest sectors will probably be the high elevation homes that don't have any special characteristics or a great view and the high density condos (especially inside units) where demand has dropped off precipitously. The recent decision by the Nevada Supreme Court to roll back our property taxes to the 2002 - 2003 tax year will benefit all property owners. This will make purchasing property in Incline Village and Crystal Bay even more attractive to prospective buyers. With our wonderful recreational facilities and fabulous location on the North Shore of Lake Tahoe where we get a least 300 days of sunshine each year, the long-term outlook for Incline Village property owners continues to be a positive one. BEAUTIFULLY REMODELED! - 2BR, 2BA, 1,089 Sq. Ft. - $559,000 Lakeview Home with Street to Street Lot Only $850,000! YOUR TAHOE PROPERTY: DO YOU NEED A LAND USE PLANNER? Prospective buyers and sellers of property in the Lake Tahoe Basin might find that a land use planner can be of value in determining the status of a property with respect to improvement potential and limitations. Buyers need to know what they are buying and sellers need to know what they are selling. A good way to minimize escrow period surprises for sellers is to contact a land use planner prior to listing the property for sale. For buyers, once a property has been identified for purchase, contacting a land use planner can help the buyer with existing issues that may impact the potential plans the buyer has for the property. Typically, a land use planner can check public records, such as county assessor’s records and TRPA on-line records. Where issues arise regarding permitted improvements, coverage, land capability classifications, the land use planner can explain what the implications of the records indicate, and formulate a strategy to address whatever problems may exist. Where necessary, a land use planner can also facilitate the hiring of a surveyor, civil engineer, geotechnical engineer, soil scientist and others, to assist the parties in evaluating the property. Obtaining an as-built survey is one of the best ways to document important aspects of the physical characteristics of the property, whether it is a vacant or improved parcel. Property boundaries, contours, location of improvements, easements, utilities, and other items will be shown on the survey. Because the Tahoe Regional Planning Agency (TRPA) has many regulations with regard to limitations on development in the Tahoe Basin, the concept of “coverage” is important to understand. Research of TRPA on-line records along with research on existing TRPA files on the subject property can reveal how much coverage is allowed, how much has been used, and how much may still be left for further improvement. A land use planner also knows who to contact at the local, county, state, bi-state and federal agencies to obtain information and direction in problem solving. A initial 1-2 hour consultation with a land use planner can usually be arranged for a modest fee, at which time it can be determined if further services are required. You may find that hiring a land use planning consultant isn’t really an expense – it’s an investment in a smoother marketing and escrow period for the seller, and an integral part of the buyer’s “due diligence” property investigation. Gary R. Taylor has been working in the Tahoe Basin for 23 years as a land use planner, and as licensed Nevada general contractor #0029169 (18 years), and licensed California general contractor #613579 (17 years). He can be contacted at PO Box 1715, Crystal Bay, NV 89402, 775 832 5074 office, fax 775 832 5078, mobile 775 742 1152, email: garyrtaylor@LTOL.com MOTIVATED SELLER!! The Benefits of Professional Property Management As a second homeowner, you may be considering the option of renting your property as a vacation rental. There are many considerations that you should make first before deciding to rent your property yourself vs. that of hiring a Professional Property Manager. Having a professional property management firm take care of your home affords you many distinct advantages. One of the most important advantages is having someone onsite should something go wrong. A professional property management firm is on duty 24/7. If a major storm occurs, they can assess the condition of your home and take immediate steps to repair and minimize the damage. They can ensure that your driveway is clear of snow or storm debris. They can handle renters who are too noisy or disruptive to neighbors. Another important advantage is that a professional property management firm will ensure that your home is in presentable condition by keeping it clean and well maintained. In short, a professional property management firm safeguards your property and protects your asset. While this is your home, strangers will use it. Can you tolerate the fact that people will use your home and there will be additional wear and tear on the property? In addition there will be more likelihood of damage. Veteran vacation rental managers caution that it is important to be emotionally detached and NOT emotionally invested in a home that is in a rental program. Vacation rental managers advise that homeowners should consider that once they agree to rent their home with a professional property management firm, they should consider the home as a business with obligations on both parties. The vacation rental management company will provide you with many services and benefits. In turn, you must expect to deal with maintenance, cleaning, and home upgrade issues. Keeping the home competitive in the rental market is as important as having the home available for rent. Once the home becomes a part of a rental program, the home is no longer available on an unlimited basis to you as the homeowner, or to your family or friends, particularly during high rental periods. Second homeowners should realize that the renting of a home is a contract with a third party and you cannot have access to the home until the guests depart. There are financial ramifications to consider. While generating income is desirable, you must evaluate the related tax considerations, funds needed to bring a home up to rental condition, and additional costs associated with renting such as contributing to marketing co-op funds, increased utility fees, and certain maintenance fees. A tax advisor may be needed to determine whether in fact this is a good investment for your property. It is important to note that there are regional differences, depending on where your second home is located. Many property management companies have minimum standards and requirements not only for furnishings and supplies, but also for owner usage, preventive maintenance, etc. Ask questions to determine the conditions to place your home in the rental program of a property management firm. 775-832-4646 - Local mike@goldfishproperties.com Searching For Incline Village Real Estate? See Prior Newsletters in 2008 May June July August September October Copyright 2008 Don Kanare - All rights reserved. Inside Incline is written and published each month by Don Kanare of Lakeshore Realty for property owners and others who have an interest in Incline Village and Crystal Bay. If you have any questions or comments, please contact me at 775-831-7000 or send an e-mail to: Don@InsideIncline.com |
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