This past year has been a curveball for real estate in the Lake Tahoe Basin. While prices were already steadily increasing, the pandemic and mass exodus from heavily populated areas that followed, blew up the housing market.
Online real estate platforms show historically low inventory along with the skyrocketing prices all around the lake.
Real estate brokers both agree that low inventory and rising prices will continue for the foreseeable future.
California has seen six years of double digit growth in sales according to Deb Howard, broker and owner of Deb Howard & Co.
According to Howard, on the South Shore there are currently 51 residential listings with a median home price of $1,275,000. There are 99 pending sales with a median price of $750,000 with the overall median home price at $673,000.
California Association of Realtors updated their 2021 forecast to show an increase of home sales by 11% and 8% increase in home appreciation.
According to Howard, at this time last year, the median home price was $435,000. This shows a current market upswing of 54% and sales have doubled since this time last year for the same period.
However, more narrowly in the basin, similar trends are occurring.
“Much of our current markets in both California and Nevada have been shaped by the lack of inventory, Bay Area business models and changes in the response to the pandemic,” Howard said.
Howard refers to the shift of those from out-of-town coming to the basin last year as the “pandemic migration.”
“Impacts of the pandemic and exacerbated by this migration is the absorption of what was already a limited supply of inventory and fueled a huge demand for our every real-estate product, be it cabins to lakefront and everything in between,” Howard said.
With new business models such as remote work, along with the ability to live in a desirable location, the pandemic exacerbated an already limited inventory and competition by creating a huge demand for the real estate at Lake Tahoe whether it was a small cabin or lakefront property.
The current absorption rate is below 1% and continues to trend lower, which simply put, means there are more people wanting to buy homes than are available leading to an absolute sellers market.
According to Howard, from last year alone there was a 54% increase in home prices, doubling of sales and numbers continue to steadily increase.
“We will continue to see high demand with very limited supply,” she said in regards to her spring forecast.
Howard believes those who bought homes in the basin during the “pandemic migration” are here to stay even if schools open and vaccines are more available. She predicts that new buyers will at least be here for the 5-7 year life-cycle of owning a home.
“Those that went through the season’s highs and lows mostly likely will be here to stay,” she said.
Sabrina Belleci, broker and owner of ReMax North Lake Tahoe, says that even if homeowners decide to return after schools open, she forecasts they will keep their homes as second homes.
She said that a majority of people buying homes in the last year were from out of the area but familiar with the basin whether it was for vacation or a second home. Many with a second home made it their primary residence.
However, those who have been in the area for a while are seeing enormous equity in their homes, inspiring them to continue to sell.
As homeowners see their property value skyrocket, realtors forecast they will continue to sell and that there will be an “uptick” especially post-pandemic.
“There is a pent up demand for getting out and enjoying life again,” said Howard.
Howard also predicts that after the pandemic people will be looking for a change and the more widespread availability of the vaccine will bring more feeling of safety to do so which could potentially free up inventory in the future as communities become more vaccinated.
“This will free up a bit of inventory and hopefully we will see a more balanced marketplace for our residents, but also local housing, which is problematic as it relates to the spiraling home prices,” said Howard.
Belleci says that she sees real estate in the basin continuing on the same trajectory with inventory opening up “a little” in the spring, but she does not see the demand dropping unless there are unforeseen economic repercussions.
Belleci says that while competition from buyers is still high, she has been seeing it dropping a bit in the recent months. Even as competition begins to minimize, Belleci says that people are still getting discouraged with the unbalanced market, but there is hope.
Belleci says that buyers still need to expect to pay over and above to get a seller to accept and buyers will still need to be prepared to make several offers before being accepted.
Howard says that there is hope due to the low interest rates, but the best option for buyers who don’t have an enormous offer, should consider properties like duplexes or mother-in-law units that have the potential to be rented out for additional income to help make payments.
“We have left our locals behind,” said Howard.
Belleci and Howard both say there is work being done for more affordable housing in the basin.
“There is plenty of housing in the basin, they are just sitting empty,” said Belleci. “Over 70% are sitting empty.” Many of the empty houses are secondary houses or short term rentals.
The Tahoe Regional Planning Agency, along with other partners, is working on more affordable housing, housing options and incentives. In January, their Governing board approved a 248-unit workforce housing project in South Lake Tahoe south of the “Y” on surplus land which was donated by the California Tahoe Conservancy. Last year, the TRPA created the Tahoe Living housing working group in efforts to bring housing advocates, the public and others together to discuss policy changes for more affordable housing possible around the area.
Due to Measure T, many vacation rental property permits will be expiring in South Lake Tahoe, which could potentially open more inventory, but realtors are waiting to see what the impacts will be.