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The $500,000 South Lake Tahoe, CA House, Then and Now.

January 27th, 2009 categories: For Buyers, For Sellers, Lake Tahoe Real Estate, Median Sold Price Report, Sales Reports, South Lake Tahoe Statistics, South Lake Tahoe, CA

Good Fortune for Buyers is to be had in the Current South Lake Tahoe market condition.

Two guys are in a South Lake Tahoe bar drinking beer. One of them is staring at his glass of beer as if in deep, distant thought. “Have you ever wondered where the phrase egg in your beer comes from?,” he asks. “Can’t say I’ve thought about it that much,” his friend answers.

Still staring at his glass of beer, the first guy explains, “I saw it the other day in word-detective.com. Seems that G.I.s during World War II used Egg in Your Beer a lot.”

The $500,000 South Lake Tahoe house of today sold for $640,000 in 2005. He continues, “ I’m thinking, during wartime eggs and beer were really hard to get. Back then, having both was a metaphor for wishing for more good fortune than thought possible.” His friend jokes, “What does that have to do with the price of tea in China?”

“With China, not much,” the first guy answers, “it has more to do with that house you like that we just looked at again for the third time.” His friend laughs, “You real estate agents are all alike.”

“No, we’re not,” the first guy says matter of factly, “this is my way of trying to help you understand the South Lake Tahoe real estate market as best as I can,” he continues, “prices are down, more than it appears, and you get a lot more house now than before. It’s the best market we’ve seen for buyers in 5 years.”

“I’m thinking about it,” his friend answers as the bartender approaches. The first guy concludes, “Hey bartender, give this man another beer…, and put an egg in it, would you please!”

What Does Beer Have to do with the Value of a South Lake Tahoe House?
We realize of course there is a difference between bar tales, beer metaphors and houses, but the point of this missive very much symbolizes the South Lake Tahoe real estate market today.

The $500,000 South Lake Tahoe house of today is 14% larger than it was in 2005. There is opportunity to be had in the market now, much of it excellent, and on average both prices are lower, and one can get more house at the same price than before. (In the $500,000 price range, chances are much greater that the house will be less than 5 years old, and in better condition that before as well.)

The amount of opportunity varies from price range to price range, and from house to house certainly, but the existing price reductions combined with getting more house for your money are market realities representing significant savings.

The current market condition is consistent with predictions found in nationwide real estate news reports of further market decline. In fact, that decline is already here, factored into the market, as this report, and those here and here detail.

This all comes from a new, extensive study we’re doing that was somewhat sparked by a few recent comments from potential buyers that are at odds between what the market is, and what they expect it to be.(here)

Please review the entire background for this study at the top of our recent article here.

The $500,000 South Lake Tahoe House Then and Now:
Please look at the chart below, which details the average characteristics of a home purchased from $500,000 to $599,000 since 2003.

Also note the last column in the chart, with its numbers in red. These are the same characteristics for houses currently listed. It is from this chart that comes the following:

On average, the $500,000 South Lake Tahoe house available today was originally listed at more than $610,000, or 11% higher than it was in 2005.

On average it took 104% longer to sell a $500,000 South Lake Tahoe house in 2008 than it did in 2005.

On average the square foot value of a $500,000 South Lake Tahoe house that sold in 2008 was 16% lower than it was in 2005.

The $500,000 South Lake Tahoe house that is available today sold for an average of $640,000 in 2005.

The $500,000 South Lake Tahoe house that is available today is also some 14% larger than it was in 2005.

On average the age of the $500,000 South Lake Tahoe house that is listed today is 7 years newer than it was in 2005 (Those that sold in 2008 were 12 years newer).

Of the $500,000 South Lake Tahoe house that is listed today, 30% of those homes are less than 5 years old (44% of 2008 sales were less than 5 years old).

What it Means:The Bottom Line
The further decline you are looking for in South Lake Tahoe home values is already here, hiding in plain sight. A South Lake Tahoe home buyer does get a lot more egg in his beer today compared to before. The $500,000 house in South Lake Tahoe, CA listed today is more than 14% larger, and priced more than 8.5% lower in square foot value than homes sold in 2005/2006. It’s also newer and in better condition.

Coupled with the current 15% decline in the South Lake Tahoe median sold price, this represents at least another 10% – 15% decline in value as found in the average home listed in the $500,000 price range today.

We use the term “at least” above because the homes currently listed in South Lake Tahoe in any price range, including this one, will be sold at a further reduction in both current listed price and, correspondingly, price per square foot.

It appears that much, if not most, of the additional declines in home values as predicted in recent national real estate news reports are already factored into the home values of current South Lake Tahoe listings. (Rather than being found exclusively in the median sold price, it’s hiding in plain sight!)

The South Lake Tahoe $500,000 house since 2003.