Tinkers Knob, is a mountain overlooking Truckee. It’s a great place to see the whole picture. Truckee is not a large town, just about 16,000 people and sitting in a narrow valley surrounded by towering mountains which support a thriving ski industry and summer and winter resorts and sports.
While our town has had its’ share of foreclosures, short sales and other distressed sales, it has not been as unfortunate as other small communities.
We wonder, in light of our current financial climate, when the end to our housing dilemma will have been reached. Unfortunately, no buzzer will sound to signal the bottom. Cautious optimism is beginning to surface, however. We are finding interest rates lower than they have been in 20 years. This includes even jumbo loans. The key ingredient, Buyers, have begun to reenter the housing market and have swelled our sales for the past several months. The government is pumping billions of dollars into the housing market to bolster and encourage citizens to purchase homes.
There has always been a time when people look back on a period of time when it was said, “I wish I had bought a home then, look at how expensive they are now”. We feel that now is that time. Once the stimulus has run its’ course and the artificial supports no longer apply, we see several things happening. The first is that as foreclosed and short sale home inventory is reduced, prices will again begin to rise, along with interest rates. This, mainly because the present low interest climate is not sufficient to maintain lender profitability without government support while lenders are being far more selective than the good old days. The cost of money will have to rise because of the government pouring billions of dollars into the economy. We reason that there are no free rides. Sooner or later, the cost of this bail out will have to be reckoned with and I’m not sure that this price tag has been defined, even by its’ architects. Nor, has the impact of future inflation been determined. On a brighter note, however, home ownership has always been a hedge against inflation.
We are seeing homes that sold for well over a million dollars selling today for $900,000. Contractors are selling their new homes at 10% to 20% below their cost to build just to dodge bankruptcy. Homes that sold 2 years ago for $700,000, are now selling for $550,000. There are cute little homes that can be bought in the $250,000 to $300,000 range.
Just as the best time to have bought stocks was probably December or January of 08 and 09, so too, today, and the next few months will have been the time to fulfill dreams of owning premier mountain property, at a fire sale, price.