Real Estate Articles Home

Why The Subprime Lending Debacle Will Have No Effect on the Incline Village Real Estate Market March 20, 2007

Newspaper headlines across the country are screaming about the subprime lending debacle and the effect this will have on real estate prices across the country. Painful cries that the sky is falling can be heard from media outlets all over the nation. When you live in the lovely utopia at Lake Tahoe known as Incline Village very often you're immune to most of what goes on in the outside world. The case of subprime lenders going under may be of great interest in the major real estate markets but it is a real yawner in a community where the median price of a house is now $1,260,000, condos are $575,000 and half the purchases of properties over $1 million are all cash.

There are several factors that make the Incline Village real estate market not subject to the woes of the subprime banking community. First and foremost is that the small percentage of people who actually borrow money to finance their purchase here are generally so affluent and have such great credit ratings that finding a subprime loan in Incline is about as easy as finding the Loch Ness monster. You've heard that he's out there but you don't have any real evidence that the creature exists, the same goes for subprime loans in Incline Village.

Another way to look at things is that I'm a real estate agent with a six-figure income and yet I am one of the few homeowners in this community with a net worth under $1 million. I might even be one of the few property owners in Incline Village with a credit score under 800 and I actually had to get a mortgage when I bought my house in June of 2005. The typical Incline Village property owner is between the ages of 40 and 70, retired, semi-retired or will be within a few years, is purchasing their second, third or 10th home and has a net worth of several million dollars. I don't see too many of these folks diving into the subprime market for their loans. If anything they might lose a little bit of money in their investment portfolios if they owned stock or put some money into the mortgage pools that funded these subprime lenders.

Not to offend anyone else in the country who has to work for a living, but we consider the low end of the market for Incline Village real estate to be anything under half a million for condos and under $1 million for houses. Moderate price properties are up to $1 million for condos and between $1 million and $2 million for houses and then we get into the high end. And don't get me started on the super high-end end, that's the strongest part of our market with only a handful of lakefronts for sale as compared to over 20 lakefront properties in Incline Village on the market back in 2004. You can't find anything habitable in the way of a lakefront property in Incline Village for under $5 million and that would generally be a tear down cabin or a flag lot with only 20 feet of lakefront and no real view from the house. I don't see too many people buying lakefronts shopping for loans in the subprime market and that's if they need financing in the first place.

The fact of the matter is there is practically nobody who lives in Incline Village who actually works here to earn the money they need to pay the mortgage. Heck there aren't that many properties here with mortgages, especially in relation to the rest of the country. And with virtually no more raw land on which to build in the nicest community at Lake Tahoe (which just happens to be on the border of CA the most populous state in America and NV the fastest growing state in America) I don't see demand for Incline Village real estate slacking anytime soon. So, while subprime mortgage holders, lenders and their backers are chewing on their fingernails across the country, the property owners in Incline Village can't wait for tomorrow because their investment gets better looking everyday!

Copyright March 2007 - Donald M. Kanare - All Rights Reserved