Real Estate in South Lake Tahoe, 2009 Is The Time to Buy!

When you ask someone what they think about the real estate market, most people have only negative comments and feelings. I think the reason for this is all of the negative information that the media beats into our heads every day. 

            One statistic that caught my attention was that “one in ten homeowners is either in default or in foreclosure.” To most people that statistic sounds very bad, but is it? That statistic also means that 9 out of 10 homeowners are able to make their payments. What would you think if 1 out of 10 homeowners were poised to take advantage of  the current buyers market and invest in more real estate? Sounds like good news, but it is not a doom and gloom gut wrenching ten o’clock news story

I began investing in real estate in South Lake Tahoe about 8 years ago. I was really into it. I would read investing books, articles, and talk to other investors as much as I could. I remember reading a book about a real estate investor who purchased hundreds of houses in Phoenix Arizona during the tough real estate market in the early 1980’s. I remember this well because our market was going up and up, and it was difficult for someone like me to be able to buy a bunch of properties. I thought to my self “I will never have the opportunity to buy in a buyers market like the rich investors I read about.” Boy was I wrong!

When the market started declining I thought it was terrible. I had been building spec houses and buying lots as fast as I could. I ended up loosing on the last couple of specs when the market really began to slip. I was just happy to dump them when I did. After that I was ready to change my investment plans and to adapt to the market. The buyers market that I thought I would never see was developing, and I am ready. Are you ready?

It is now a buyers market, but why are buyers still sitting on the fence? Buyers were willing to over pay in 2005 using risky sub-prime loans, but are now scared to buy when the timing could not be any better!

Here is the reason why there are “fence sitters” in a buyers market.

• Fear- Buyers are scared of paying too much for a home. This makes sense, but where was the fear during the peak of the market?
• Competition- It is human nature to want something that someone else has. I see it with my kids all the time. Sometimes the only reason you want a cirtain thing is so the competitor can not have it, or you just want to win the battle. I notice this when there are multiple offers on a property. A lot of times buyers will end up paying more for a property just to win. In a buyers market there is not a lot of buyer competition, so there is no sense of urgency for buyers to get off of the fence.
• Lack of  Knowledge about local markets – This is especially true for real estate in South Lake Tahoe. South Lake Tahoe is mostly a second home market, and is more stable than other areas. We have a lot of out of area buyers who don’t realize that our market is not as bad as most others. In 2008 foreclosures only accounted for 26% of sold homes in South Lake Tahoe. The national average was about 40%.

Why is 2009 the year to buy Real Estate in South Lake Tahoe?

• NAR expects existing home sales to rise 6% to 5.3 million
• NAR’s affordability index is expected to rise and stay around 128 in 2009. This means that households earning the national median income have 128% of the income needed to buy the national median-priced house.
• The inventory of homes for sale in South Lake Tahoe is good, for now. There are still motivated sellers, foreclosures, and other great properties to choose from. As buyers get off of the fence, the inventory will shrink, and you may not find exactly what you are looking for.
• Interest rates- Interest rates are historically low, and a 1% rise in interest rates can equal as much cost as a 10% increase in the sales price!
• It is impossible to time the market- The buyers who are sitting on the sidelines waiting for the bottom will not see it until it is too late. Inventories will be lower, prices will be higher, and buyer competition will be back.

As long as buyers are looking to invest for the long term, now is the time to buy. The market has gone down, it is a buyers market, and historically the market has always gone back up!

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For more information about South Lake Tahoe Real Estate please call Brent and Jill Johnson Today!