September 2020 Tahoe-Truckee Market UpdateTMR Team, September 1, 2020 in Market Update
The story of Tahoe real estate has been well covered in recent weeks. Features from Wall Street Journal, CNBC, Forbes, and San Francisco Chronicle have chronicled the massive wave of residents seeking higher ground in light of remote work and distance learning. The opportunity to detach from a dense, urban setting in favor of less congestion and an enhanced outdoor lifestyle have fueled record setting demand for property in the Tahoe – Truckee region.
For the second consecutive month, the region shattered previous benchmarks for transaction and dollar volume while reaching new highs for average and median price. As well, midway through Q3, Tahoe real estate has eclipsed previous 12-month records for sales > $1,000,000, $2,000,000 and $5,000,000. All told, July and August combined for over 600 residential transactions totaling well beyond $800,000,000. Each of these figures exceeds the 12-month total during the previous housing recession.
As momentum has built over the last several months, the volume has soared. In August, the wave of premium closings surged the average sales price to nearly $1,450,000, the highest ever for a 30-day period by more than 16%. This surge is attributable to 46 closings over $1,000,000 in the resort communities of Northstar (11), Gray’s Crossing (9), Lahontan (6), Martis Camp (4), Old Greenwood (3), and Schaffer’s Mill (3); the continuation of a trend toward newer, highly-amenitized communities with homes featuring contemporary architecture and modern interior design.
This wave of activity has left the local market starved for available inventory. While demand remains stratospheric, active listings have waned to just to just 5 weeks’ supply; nearly 1/6th that of a balanced market. As a result, new listings, when priced correctly, are experiencing extremely competitive multiple offer scenarios often resulting in sales prices well above asking price. In August, sales under $1 million generated 1% above asking on average while those crossing over $1 million yielded 98% of ask.
Vacant land sales have experienced a similar meteoric rise in volume and price. Having spent much of the last decade languishing at pricing closer to the market trough than crest (due to rising construction prices), vacant land transactions in the last 60 days have leapt from just 40 in 2019 to 183 in July and August; a 450% increase. Like residential demand, this has created major upward pressure on pricing as dollar volume over the same 60-day period soared from $12.5 million in 2019 to over $80 million.
Under normal circumstances, September typically marks the end of the tourist season in Tahoe. While 2020 has been anything but typical, late Q3 / early Q4 generally represents the apex for demand as summer shopping merges with anticipation of winter. While all sense of normalcy has been suspended, it stands to reason that this sensational demand should last until snow becomes a logistical deterrent. Other forces that could suppress interest in Tahoe real estate would generally be positive indicators for the overall economy including a re-opening of traditional workplaces and a return to in-person schooling. In the meantime, Tahoe and Truckee have welcomed an increasing number of full-time residents who now look to make this move permanent; for as long as this moment persists.
Future months’ performance will likely pale in comparison to what we’ve just seen in July and August but only from the perspective of dramatically constrained supply. For now, we will remember these as possibility the most remarkable in the long story of Tahoe real estate.