Tahoe In Turmoil

Since the fall of 2005 appraisers in the Tahoe/Truckee area started to notice a new trend as home prices went from a feverish upward momentum to a a slowdown. Nobody knew whether the slowdown would last a few months, a few years, or a decade. As we enter one of the worst financial crisis' since the great depression it appears that until the global credit situation rights itself we are going to be in a period of instability.

I remember talking to some Realtors in 2004 when house pricing in the Tahoe area was going through the roof and I was constantly asking when they thought a slowdown would take place. Some of these Realtors stated that it would be a long time due to supply constraints and that possibly Tahoe is one of the areas of the country that would not slow down. In 2004 we were seeing home appreciation of 1+ percent on a monthly basis. For appraisers it was hard to appraise home purchases because of the limited availability of comparables. If an appraiser were to use a comp that was 2 months old it would support a lower value for the purchase due to appeciation in the market. It was a hard time to put the pieces together and support value.

In the summer of 2005 we started seeing the dream of a Tahoe home fall to the wayside for more and more people as house pricing started to fall out of line with demand. A basic ranch style house with a 2 car garage in Glenshire was selling for over $500,000! By the fall of 2005 it had started, people were sitting on the sidelines and home prices began to fall. This started a ripple effect through the Tahoe economy which is more like a tidal wave today. The Tahoe economy relies heavily on the real estate market, whether it is construction, sales, appraisals, property management, etc. and when there is a slowdown it is felt by many.

Today we have seen the start of one of the most destructive financial crisises in modern history and we are unsure of what the future holds. A bailout of $700 billion has been passed, but this only accounts for about 7% of the total mortgages out there and does little to help "Joe 6 Pack" that is struggling to make ends meet. It is going to take job creation and consumer confidence to bring us back to where we need to be to have a healthy economy. For many of us that meens that we are going to have to do what it takes to make ends meet. Whether that is taking a second job, cutting back all non esential costs, eliminating travel, or other cost saving measures.

I still feel that Tahoe is one of the best parts of the country to own a home or second home. The recreation is world class, the people in this area are vivid and full of life, and if you can make it here you can make it anywhere, sorry New York. Alpine Appraisal Group, Inc. is dedicated to helping their clients meet their real estate goals with dedication to honesty and integrity. If you ever want to go over market information please contact us, we would be glad to answer your questions, and help you in this time of instability.