Home Prices Aren’t Declining, But Headlines Might Make You Think They Are
If you’ve seen the news lately about home sellers slashing prices, it’s a great example of how headlines do more to terrify than clarify. Here’s what’s really happening with prices, especially in beautiful Lake Tahoe.
Home Prices Are Still Rising
Despite the dramatic headlines, home prices in South Lake Tahoe and across the country are higher than they were a year ago and are expected to keep rising, albeit at a slower pace. A recent article from Redfin notes:
“Price Drops Hit Highest Level in 18 Months As High Rates Dampen Buyer Demand.”
This might make you think prices are declining. While it’s true that a recent report from Realtor.com shows 16.6% of homes on the market had price reductions in May, up from 12.7% last May, it doesn’t mean overall home prices are falling.
Understanding Asking Price vs. Sold Price
The key is knowing the difference between the asking price and the sold price. The asking price, or listing price, is what a seller hopes to get for their home. However, sellers can't just put any price on their house and expect it to sell for top dollar. Today’s buyers are savvy and budget-conscious, especially with higher mortgage rates. Therefore, sellers may need to adjust their asking prices to attract buyers.
If a seller isn’t getting much foot traffic, they might lower the asking price to reignite interest. This is often due to initial overpricing. Price reductions are not a sign of falling home values but rather a realignment with market conditions.
Mike Simonsen, CEO and Founder of Altos Research, explains:
“Not only is the share of homes with price cuts elevated compared to one year ago, but more price cuts are happening each week than last year.”
The final sold price, however, is the amount a buyer actually pays when the transaction is complete. Here’s the crucial point: actual sold prices are still rising and are expected to continue doing so over the next five years.
What Does This Mean for Home Prices in South Lake Tahoe?
The increase in price reductions does not mean overall home values are declining. Instead, it signals that demand is moderating, prompting sellers to adjust their expectations. Despite more price reductions, home values continue to grow annually. According to the Federal Housing Finance Agency (FHFA), home prices increased by 6.6% over the last year.
This trend holds true in South Lake Tahoe, where the real estate market remains robust due to its unique appeal. The natural beauty of Lake Tahoe, with its crystal-clear waters and stunning mountain views, continues to attract buyers, ensuring that property values remain strong.
Good News for Buyers and Sellers in Lake Tahoe
For buyers, more realistic asking prices mean a better chance of securing a home at a fair price. Enter the market with confidence, knowing prices are stabilizing rather than skyrocketing.
For sellers, understanding the need to adjust your asking price can lead to faster sales and fewer price negotiations. Setting a realistic price from the start attracts serious buyers and leads to smoother transactions.
Bottom Line
While the uptick in price reductions might seem troubling, it’s not a cause for concern. It reflects a market adjusting to new conditions. Home prices are continuing to grow, just at a more moderate pace. In a unique and desirable location like South Lake Tahoe, the real estate market remains strong and promising for both buyers and sellers.
