How Cooling Housing Prices Help the Economy:
Cooling home prices are not only a good thing for the real estate market but are also good for inflation and the economy. Housing prices are a major contributor to inflation. Housing prices jumping up at double digit rates in the past couple years are predicted to cause rent to continue to increase at double the five year average for at least the next two years. Housing prices are also a key indicator of whether the federal reserve will continue to raise interest rates. With housing prices stabilizing, the feds may not need to raise rates as high or for as long which could help us to avoid a recession.
Mortgage rates dropping made buying a home this week about 5% cheaper than it was last week. So…is it a good time to buy? There are many perks to real estate investing despite the ups and downs in the market as long as you are in it for the long haul. Real estate averages overall about a 10.6% annual return but there are lots of other benefits that you don’t get from other investments. One major benefit is passive income, whether the real estate market is up or down, this allows you to have positive cash flow while you wait for your property to appreciate.
Investing in real estate, especially in Nevada, comes with many tax benefits. You can deduct several expenses associated with owning an investment property, including your property taxes, interest, property management fees, insurance, maintenance, repairs, travel and costs of marketing your property to renters. When you eventually sell your property, as long as you reinvest the profit through a 1031 exchange, you can avoid paying income tax.
Real estate investments are also considered protection against inflation. When the prices of goods and services are rising, home values and rents typically increase, too. The increase in monthly income and appreciation help protect you financially when the costs of everything else is going up. And best of all, if you own an investment property in Lake Tahoe, you get to enjoy our year around playground!
As you can see from our numbers below, we still aren’t seeing much of a change in our local inventory or prices. We are definitely starting to see a slow down in the amount of buyers which will eventually help with some market stabilization but it might not be until after the summer crowds have left and probably not by much, for all the reasons we’ve been discussing in the previous weeks.
Here’s the numbers from our local market this week:
We had no new condos and 3 new homes come onto the market this week. We currently have 34 active condos ranging from $399,000 to $5,425,000; the median condo price is $845,000. We currently have 52 active homes on the East Shore ranging from $1,088,000 to $64,500,000 with the median price of $2,943,500. Here’s a year to date local update:
Local East Shore Lake Tahoe, Nevada Stats – All Year to Date
- Total Sales YTD: Condos: 57 | Homes: 47
- The Median Sales Price: Condos: $710,000 | Homes: $1,700,000
- Number of Sales Over $1 Million: Condos: 12 = 21% | Homes: 40 = 85%
- The Highest Priced Sale: Condos: $5,665,500 (Tahoe Beach Club) | Homes: $32,000,000
- Median Price Per Square Foot: Condos: $593.82 | Homes: $628.93
- Median Days on the Market: Condos: 69 | Homes: 76
- List to Sell Price: Condos: 99% | Homes: 96%
- Price Reductions this Week: Condos: 4 | Homes: 2
Your Realtor should not only be someone you trust in knowing the real estate market but also in wealth building, preservation and management. At the Zager Group, we don’t take this responsibility lightly. We are committed to continuously learning and sharing about making the wisest choices for our future and the future of our friends and clients. We pride ourselves in being experts in this field. If someone you care about needs guidance or recommendations, please share our contact information as we are honored to be able to help! If you would like to receive our in-depth market update or would like an evaluation of your property’s value we would love to hear from you! We’ve put together some information below that we think you’ll find useful. If you have anything you want to share with our community please let us know so that it can be included in future newsletters.
Thank you!
Craig Zager & The Zager Group
