Although it feels like an eternity since we’ve had snowfall in Tahoe, we are only 38 days into winter. We have 51 days to pick up the pace. We’re all praying for snow! Not only for those of us who live for playing in it but for the sake of the lake and preventing another drought year. We typically get most of our snow in February and March, an average of 72″ and 74″ so there’s still hope!
Mortgage rates dropped slightly this week after moving upwards for the last 5 weeks; the 30-year fixed mortgage rate falling from 3.56% to 3.55%. The unemployment rate has dropped to 3.9%, close to the pre-pandemic level of 3.5%. In addition, inflation soared to its fastest pace in the last four decades. In order to keep inflation under control the Fed announced they may increase short term interest rates which has a domino effect from banks to consumers and eventually to 30 year mortgage rates. The National Association of Realtors predicts that by the end of this year rates will be around 3.9%, inline with the ten year average. What does this look like for the average 30 year mortgage? I have included a link below to the 2021 median home price by state. I’ve also included a link to the BankRate.com mortgage calculator where you can plug in the current 30 year mortgage rate and decide if the monthly payment difference is worth missing out on the current market and long-term investment in real estate.
Here are some examples in our local market: The 2021 median condo price on the East Shore of Lake Tahoe was $699,000, at the current interest rate of 3.55%, the monthly payment with 10% down would be $3368. If mortgage rates rise to 3.9%, as predicted by the end of 2022, the monthly payments would be $3493, a difference of $125 per month. For a single family home in 2021, the median was $1,425,000, the payment at 3.55% is $6798, at 3.9% the payment would be $7053, a difference of $255 per month. This may discourage some first-time home buyers but is not likely to affect our market as our average price per square foot is still significantly low for the majority of our recent buyers who are investors and families from out-of-state who have taken on permanent work-from-home positions. For example, the average price per square foot in the Bay Area in 2021 was well over $1000 per square foot compared to the Nevada, East Shore of $577 and $631 per square foot for condos and homes respectively. I sent out my in-depth market update to everyone on my mailing list in January. If you would like to be included in my quarterly updates please email me with your current address and I’ll add you to my mailing list: Mail(at)CraigZager(dotted)com.
Median Home Price by State:
Resources: World Population Review, Bank Rate, National Association of REALTORS, Market Watch, NNRMLS