JessicaPyne - Jessica Pyne

The 2nd quarter of 2011 was a difficult one for real estate. The overabundance of snow throughout the quarter did not help! Deals transacted in the 2nd quarter are generally contracted 30-60 days prior, and the majority of the closings reflected in this quarter would have resulted from showings during the heart of the ski season. As has been oft-reported in this space, road closures and other non-economic factors, in addition to a national real estate market seeking traction, made for a challenging period.

As we look towards the second half of year, we know that, statistically, there will be a significant pickup in the volume of sales as evidenced by the chart to follow:

Typically, we would see a pickup from the beginning of the year to the end of Q1, with gradual growth through the 2^nd quarter before a slight lull about this time as we emerge from the shoulder season.

In 2011, the first quarter held to form but deal flow in April and May diminished significantly for reasons detailed above.

Clearly June showed some resilience, despite some unwelcome, lingering snow, as we climbed back above 100 sales units. With 183 sales currently pending, July is likely to continue on an upward trajectory. With some confidence returning to the market, it is easy to see that some pent-up demand exists for quality Lake Tahoe real estate that could poise us for a strong 2^nd half of 2011. If the crowds currently in town for the 4^th of July holiday are any indicator, the improvement could be explosive as we’ve rarely if ever seen such density.

Modest deal flow, regardless of the cause, is generally unkind to values as a certain number of sellers will have to find liquidity thus dropping price. As such, the average price per sale dropped by 5% from the same period in 2010; a fairly gentle drop given the 18% reduction in transactions. Distressed properties, including short sales and foreclosures, are the greatest culprits of this accounting for 36% of all closed transactions (a steady number relative to 2010).

Certain areas felt this impact more harshly than others. Certain neighborhoods had previously been able to avoid significant loss of value by simply avoiding distress sales and showing meager deal flow while maintaining some price integrity. At some point, gravity inevitably sets in resulting in overly dramatic price reductions. Among the most impacted was Lahontan with an 18% drop in median price. Case in point, the sales transacted in this high-end neighborhood included several that were short sales, foreclosures, incomplete construction or simply were marked down to attractively low prices. I will be very surprised if we do not see a rebound in values, specifically at Lahontan, in the second half of 2011 as less predatory buyers are able to see the community in prime conditions and find the best quality for their value rather than simply the best bargain. Similarly, vacant land in Old Greenwood had generally avoided the pitfalls of lots in other communities, namely Gray’s Crossing, by avoiding distress sales. As one REO and one short sale transacted in the past quarter, median price finally dropped to levels consistent with Lahontan and other higher-end resort communities.

The flip side of this equation continues to be Martis Camp, defying gravity with extraordinary velocity of both homesites and, now, completed homes. The developer has sold 50 properties already in 2011 with the prime summer season yet to come. As they near 100 completed homes the community is beginning to take form and with the opening of the clubhouse this weekend, the crown jewel of the community will be in place.

Best combining the concepts of value and luxury with good results has been the Northstar Lodge Hyatt.  With eight sales year to date, this project offers quality appealing to a discerning buyer while offering strong value pricing and perhaps the best opportunity for income in the resort community. A new, more conventional financing option has recently been made available on this product that, along with limited supply remaining, could spur even greater sales as we look toward the next winter season.

Several other communities appear to have worked some (never say all) of their distressed inventory and appear poised for stronger returns as the year goes on. Namely, Gray’s Crossing where inventory is down well below one year. 14 homesites have closed at median pricing identical to 2010 indicating a bottoming out of that market while just 11 remain.  Most significantly, the sale of completed homes has cleaned out all remaining bank-owned inventory leaving just six, including three instantly well-positioned townhomes, available.

Looking ahead to the second half of 2011, there exists the possibility for an extraordinary amount of news that could create buzz and excitement for the Tahoe region beyond standard market forces. Such events as the opening of the clubhouse at Martis Camp, new ownership at Schaffer’s Mill (formerly Timilick), the installation of a new chairlift, and construction of the Home Run Townhomes at Northstar promise to bring publicity that will rival the late-2010 news of Vail Resorts and KSL’s investments in Northstar and Squaw Valley. East West Partners have begun planning a very small, exclusive enclave of single family homesites on the mountain at Northstar to be known as The Glades.  This project will be introduced to the market in the 2011-12 ski season and will create an entirely new category of on-mountain real estate for Lake Tahoe.

Below you will find a series of historical statistics following the trajectory of real estate values for numerous communities throughout the Lake Tahoe region. Some will show modest increases year over year while others seek a bottom. As has been the case for the past several quarters, this trend is likely to continue until nearly all distressed inventory has been purged from the system. Until then, we will continue to celebrate the many successes apparent in the premium-end of the market and seek the best values wherever apparent.

Click on the links below to view pricing history for single family homes at Northstar and current pricing for properties for sale in Truckee.

Copy of Northstar Pricing Worksheet

Copy of Truckee Pricing Worksheet

Restaurant at Grays Crossing

Not only is there great value in the homesites at Grays Crossing but there are some incredible values in the homes and townhomes. The Fairway Townhomes were once listed around $1.4 million and now you can pick one up for about $675,000 (3bd) and they are built beautifully. Fairway Townhomes  This location is prime when living in Truckee only a few minutes from Downtown Truckee, I 80,& the airport. Grays Crossing offers: Grays Crossing Fitness Center/Men’s & Women’s Locker Rooms / Heated lap pool and outdoor hot tub. The Grays Crossing Jacobson/Hardy Golf Course. PJ’s Restaurant. Close proximity to the Jack Nicklaus Signature Old Greenwood Golf Course, close proximity to the Pavilion (swim, tennis, fitness and spa facility) at Old Greenwood away.This is truly the best kept secret in the Tahoe area due to its low snow load, great sun, & low traffic.

Please see this link to the limited number of value home listings in Grays Crossing, Truckee CA. Grays Home Listings

Village at Northstar

The ski season has mercifully ended for Northstar and many other resorts around the basin despite continued snow (and rain). Squaw Valley and Alpine Meadows are the lone resorts continuing with ski operations into the month of May. Reflecting upon the season, it is clear that the acquisition of Northstar by Vail Resorts has had a tangible impact on the resort already with much more to come. Despite the weather creating obstacles for many visitors to reach the resort during peak times, the crowds were strong – a testament to demand for a top-quality resort that consistent delivers strong family programming for the consumer.

While the flow of visitors will diminish significantly over the next six weeks or so, real estate will generally remain active as many of those having toured real estate over the winter season will now take action in anticipation of the summer to come (personaly I am experiencing this). Similarly, I would expect to see a run up of listing inventory as owners come through the winter and make decisions as to how a second home functions for their life.

There was some activity in the market this past week including a pair of sales at Lahontan:

• 12428 Tom Dolley closed escrow for $1,400,000. Listed for $1,495,000 it took just five days on market to find a buyer for this property. At $352 / sq. foot there is no wonder as this must represent a value well below replacement cost. Kudos to this buyer for taking quick action on a great value.
• Conversely, Lot #379 closed escrow after 963 days on the market for $180,000. Originally listed for $439,000, this sale would seem to define “chasing the market down.”
• At Martis Camp, the developer sold two properties this week in addition to the sale of Lot #3, a re-sale, for $474,000.

I was recently asked by a local appraiser my opinion as to whether a short sale should be used as a comparable in the same manner as a standard sale or REO. Instinctively I answered no given all the hurdles and time involved in transacting a short sale.  With timelines as long as six months to complete, while a lender evaluates both the property’s value and seller’s distress, a buyer has very little security in knowing whether they do, or do not, have a deal. Buyers often jump ship, as  more compelling deals become available… or they simply sour on the arduous and ambiguous process regardless of how compelling the deal.

However, the fact of the matter is that short sales have an impact on the marketability of all listings – whether bank-involved or otherwise. Often this impact is a stymieing effect given that short sales, even while pending bank approval, remain on the market alongside active listings with the subtle status change of “Active Contingent.”  Furthermore, because the goal of the seller in a short sale has no equity interest, their primary goal is to find liquidity in the fastest possible manner, often reducing price below market value. When these values are displayed alongside standard listings, it is not hard to imagine a consumer having a hard time accepting the “fair market value” standard sale as an appropriate value thus slowing the entire process.

A prime example of this can be found in the Northstar Village where a rogue 2-bedroom short sale is being offered for $590,000 or $489 / sq. foot well below the least expensive sale recorded within a relevant time period for a 2-bedroom of $615,000 ($506 / foot).  Removing this sale from the equation, the available inventory for 2-bedroom residences in the core of the Northstar Village is just six units with the least expensive being #2305 for $685,000 or $563 / foot and a reasonable jump to $820,000 for a much higher quality product at Northstar Lodge Hyatt just across the Village. Despite offering no indication that the short sale can get done (in fact two failed offers previously to prove that it likely CANNOT get done) the rogue listing is holding up the market by nearly $100,000.

While there can be many mitigating factors that present an argument in favor of the reduced price (i.e. furnishings, appliances, etc.) the consumer, utilizing the many tools now at their disposal including Zillow.com and others and without with benefit of interpretation from an expert, will only see the top line number.

The good news is that the remaining short sale inventory, both at Northstar and throughout the region, is extremely limited.  As values stabilize and even rise, I am confident that we will be able to eliminate this category of transaction and ultimately lose the term “short sale” from our vocabulary altogether.

Click on the links below to view current short sales and REOs in Truckee and Lake Tahoe.

Lake Tahoe Short Sales

Lake Tahoe REOs

Truckee Short Sales

Truckee REOs

Live your destination lifestyle year-round at the Resort at Squaw Creek in Lake Tahoe, where the ultimate in resort-style privileges join a world class location for a rare opportunity to reach the height of living well. You’ll feel right at home, but be treated like a guest, in your luxury condominium at the Resort at Squaw Creek. Ideally located at the base of Squaw Valley is a limited collection of fully furnished residences enhanced by luxury finishes. A recent recipient of the Conde Nast Top North American Ski Hotel award, this AAA Four-Diamond resort greets residents and guests with access to everything from a variety of ski slopes to luxury spas and convenient childcare.

Each resort condominium is fully furnished and impeccably maintained with slate entries, resort-style kitchens, fireplaces, granite vanities, LCD fl at-screen televisions and grand picture windows from which to view ancient ponderosa forests, lush meadowlands and the Sierra Nevada Range. Those who appreciate luxury amenities will benefit from recent multi-million dollar renovations, which include North Lake Tahoe’s most luxurious spa resort, a health and fitness center, two restaurants, in-room dining, a valet parking service, housekeeping services, onsite management, 24-hour maintenance, and a convenient kids’ care facility.

Squaw is a phenomenal mountain, KSL the new Owners of Squaw have committed to $30 million of on mountain improvements, which should help with the skier experience.

The prices for the auction are extraordinarily low, starting at $130,000 for a 1 bedroom and $185,000 for a 2 bedroom. Previous asking prices started at $374,900 and went up to $965,900 presenting a phenomenal purchase price value.

Here are considerations:

1. The HOAs for a 2 bedroom are about $1750 a month and this include utilities.
2. This would have to be a cash purchase, I do not believe that there are any lenders lending on this project right now.

For a cash buyer not too concerned about on going monthly costs, and they love skiing squaw I think that this is a great opportunity!

Never has sunshine been more welcome than in Tahoe over the past week. After a deluge of snow that has delivered 636 inches this season including 194” in March alone, and closed access to and from the region during some critical periods, the emergence of typical spring weather topping out in the mid-60’s has been more pleasant than ever.

Weather played a fascinating role in the real estate market through the 1^st quarter of 2011. Demand surged with the tremendous snow coming out of the holidays only to be stymied by the lack of access throughout basically the entire second half of the quarter. Despite these obstacles, total sales were nearly identical at 235 vs. 247 the previous year. Median sales price was $403,000 vs. $435,000 Q1 2010; a decrease of 8% easily attributable, again, to the weather as sales focused on entry level opportunities for full-time residents versus the higher-end resort properties that were frequently unreachable to the consumer.

It does not require a big leap of faith to believe that restricted access cost the region at least the 12 deal difference from 2010, most of which would have happened in resort neighborhoods at a higher price leading to, at least, equivalent value and sales velocity – a very positive indicator for the market (under this transitive theory).

The flip side to this theory is that we are likely to see more inventory than “normal” given the arduous winter as some number of existing owners will attempt to sell rather than deal with another heavy winter and perhaps some deferred

maintenance now due. This, along with ever present shadow inventory, could provide a nice equilibrium for the market as the pickings have otherwise been somewhat thin for a discerning buyer. The pace of inquiries this past (sunny and warm) weekend gave us a hint of how the winter could have been as well as a preview of a strong spring to come. A five year average shows sales typically lull at the beginning of the year only to pick up significantly towards the end of ski season and into spring, the slump again briefly around the 4^th of July (like Christmas, a holiday with structured events and the beginning of window-shopping season), before surging to the highest numbers of the year in late Q3, early Q4.  The assumption of pent-up demand from the winter in addition to this normal trend would indicate a busy quarter ahead.

Some highlights of the quarter past and to come:

• The strong velocity of sales at Gray’s Crossing continued from 2010 with four home sales and 8 land deals completed. Inventory in Gray’s Crossing remains almost nil with just six homes and eleven lots currently available.
• Martis Camp continues to dominate the market with 26 new sales in 2011, 15 in March. This summer will be the first opportunity to see Martis Camp in full operation with the clubhouse set to open in July and an increasing number of homes completed and residents in place.
• At Northstar, developer incentives on Northstar Lodge Hyatt have create a swarm of activity resulting in four total contracts and quite a bit of activity currently working. At current pace we may see sellout of that property in 2011.
• With a commitment to build at the first eight (of sixteen total) residences, the Home Run Townhomes at Northstar will be the first project to come out of the ground in several years. The developer has introduced several pre-sale incentives to provide purchasers with the benefits of ownership during the construction process.
• With new ownership in place, Timilick looks to move towards fulfilling the original promise of that community. Early word is that this will occur via construction of the clubhouse in 2011 while refining the master plan.
• Perhaps validating of the theory espoused above, Tahoe Donner (often referred to in this report as the Regional Bellwether) saw an increase in median price from $475,000 in 2010 to $514,000; an 8% increase.
• Of great personal excitement, we have the Amgen Tour of California coming through Northstar on May 15. This event, the largest cycling race in the US and among the top internationally, promises to bring great exposure to the region through visitation during an otherwise quiet time as well as a broad television audience.

Click on the image below to view the Truckee-Tahoe Real Estate Market Pricing.

Northstar Trees

It. Just. Keeps. Snowing. Northstar has received 52” in the past 72 hours in a snow “event” rivaling the most significant of the season. Northstar has reported 564” total snowfall for the season which is 161% of normal – for the entire year. With more snow in the forecast, we could be above 600” by the end of the week; the biggest winter since 1982-83. This is all welcome and certainly marketable news, particularly in light of Northstar’s announcement to extend ski operations an additional week through 4/24, except that the brunt of the storms continue to occur on Fridays, preventing a significant number of our customers from reaching us. Three of the past four Fridays have seen road closures on Highway 80 for some period of time when most Northern California families would typically be en route to Tahoe.

Northstar Lodge Hyatt was booked to capacity for the weekend, a very promising sign, but had a significant number cancel because they simply could not make it over the pass. Others turned around and stayed the night in the Sacramento area, only to make it up on Saturday for a condensed trip. The consolation for those that endured was absolutely phenomenal skiing with powder re-loads Saturday and Sunday of at least two feet per day. Read the rest of this entry »

Life at the Ritz Carlton, My office

I sent this out to my listing clients last week regarding the market and buying trends. I thought you all might find it interesting. The National Association of Realtors sent out an update that existing home sales dropped 9.6% from January – February: NAR

While our market is very niche, it did partially validate why our local market has been so slow (buyers not moving quickly), but  you can see in the graphs below that this time of year historically, has  low sales volume. I have my own theory’s  as to  why the market is slower during peak season – I think that buyers are out enjoying Tahoe, and after having their fill then they start seriously considering. That being said, sellers are usually bullish peak season, as they see so many people around. They start to feel a little more desperate towards the end of the busy season (whether it be winter or summer)- spring and fall are our shoulder season and it is pretty quiet.

The tragic global events of the past week have provided a much-needed reminder of the gift that is our region and how precious our time in the mountains really is. We are very fortunate to have the opportunity to be a part of such a remarkable community and, moreover, have the opportunity to share this extraordinary place with others as a part of our living.

While it seems trite to extrapolate economic meaning from the earthquake and resulting tsunami, civil wars, and economic uncertainty across the globe it will be interesting to examine whether crisis grounds the general public at home or establishes more regional  travel patterns as was the  case after 9/11. While we’ve had just one person literally claim to be re-thinking a Tahoe real estate purchase because of turmoil in the Middle East, there is no doubt that any economic instability makes consumers apply extra scrutiny to a discretionary purchase.  Tahoe has long offered an easy retreat from the Bay Area or Sacramento via a relatively easy 3-4 hour drive making frequent weekend visits the norm.  While surging gas prices certainly impact the ability of many families to visit as frequently, it also may serve to make Tahoe more attractive to those who may have otherwise been drawn towards fly-to market like Colorado or Utah. Read the rest of this entry »

The Woods Run

As if it were necessary to define the fickle nature of our market, the extreme weather patterns of the past few months provides a perfect example. Business was robust through the Christmas / New Year’s holidays as snow was abundant and we appeared destined to break out of the prolonged real estate slump. As the skies were dry through January and the first half of February, motivation for skiing waned with 75 degree temperatures in San Francisco. Finally the snows returns with a vengeance just in time for the President’s Day Holiday only have to the roads closed for two consecutive Fridays either blocked or condensing the holiday traffic for our consumers.

Nonetheless, the volume of transactions we have seen despite these conditions offers a strong testimonial of the demand for resort real estate in our region. In comparing our sales volume with counterparts in Park City and Vail, it is evident that Tahoe is on the front end of the recovery for destination resort real estate; particularly when factoring in the continued, gravity-defying sales at Martis Camp. Read the rest of this entry »

Northstar Ice Skating Rink

With the snow come our crowds. And with the crowds come our business. Northstar tweeted this morning that with the single inch of snow recorded overnight, they hit 100 total inches over the past six days; a dramatic end to the mid-season lull of the past few weeks. While snow through Friday night delayed the arrival of a majority of our guests, they are now here in droves to enjoy all that the resorts have to offer.

Continuing on the themes the last report, it was a productive week for sales of vacant land at Gray’s Crossing, Lahontan and Martis Camp as well as for entry-level homes at Northstar.

At Lahontan, there is at least one investor-type who has made offers on multiple properties. Two mid-range homesites are now pending sale including #275 for $179,000 and #379 for $250,000.  While I do not know whether this individual is the buyer, I suspect that they will trade at significant discounts if so. Additionally, the home on Lot #85 is now pending sale for $1,985,000. Read the rest of this entry »