The South Lake Tahoe Real Estate market is following the rest of the nation and is recovering from a sharp downturn quickly. According to the California Association of Realtors: “The year 2013 can be categorized by a significant turnaround in the housing market across the nation.”
The lack of homes available for sale is beginning to constrain home sales but is contributing to a substantial increase in home prices. Existing single family sales for 2013 are predicted to fall 2.1% short of 2012, yet median home prices are expected to show a 28% improvement over 2012. The South Lake Tahoe Real Estate market is a great example. The median sales price is up 32.7% in the last 12 months according to the South Lake Tahoe MLS.
The increase in home prices along with a slight increase in mortgage interest rates has led to a decrease in affordability. According to CAR the current market conditions still warrant buying a home sooner than later.
Why buy now?
Interest rates are still at historical lows but are poised to increase in 2014. Over the last 12 months interest rates have risen about 1% from 3.5% to 4.5%. On average , a .5% increase in the mortgage interest rate increases the payment by about $100 a month on a $400,000 home. Most of the predictions for the 30 year fixed mortgage are at about 5.3%.
Interest rates have come down since their spike during the summer but the uncertainty over the Fed’s policies makes it unlikely for any improvements in rates.
Another reason to purchase a home in South Lake Tahoe sooner than later has to do with the new lending rules that go into effect on January 1, 2014 which are set to raise the cost of borrowing. The ability-to-repay rule and the associated qualified-mortgage definition will raise the cost of home loans and borrowers will be stuck with most of the costs.
For more information about the South Lake Tahoe Real Estate market please call Brent Johnson at (530) 416-2625 today!
Information provided by California Association of Realtors Market Snapshot