Matty’s Minute: A March Market Update
An undisclosed backcountry location…
The trajectory of the Tahoe-Truckee real estate market is often defined by a dynamic formula of economic, seasonal, and environmental factors. In addition to the obvious want for a mountain home, whether as a primary or secondary home, consumers must be able to afford the property that satisfies their needs ranging from modest to extravagant. To search for a property, the consumer most often needs to be in the region. As such, environmental conditions, including ample snow, generally must align.
At other times, the market can overpower the seasonal factors and transcend patterns evidenced in otherwise balanced market conditions. This moment, wherein demand is overwhelming supply by a factor of four, would be one such instance except for extremely constrained supply.
Yet, as Tahoe enters a typically busier moment for real estate with generally ample snow, accessible roads, and a seemingly unending pool of would-be buyers, transactions have declined. In fact, February posted the fewest number of residential transactions since May, 2020; the first month of measurable pandemic-related data.
The obvious reason for this decline is not any threat to real estate values, in fact, quite the opposite. The local real estate market has become so constrained for quality supply as to show diminishing returns on transactions. Over the preceding two years, complaints about inventory have dealt more with rapid absorption of new listings but ultimately resulted in a better-than-average quantity of transactions. In this moment, supply has become so constrained even consumers perfectly well qualified and prepared act quickly without options.
Currently, inventory of residential properties stands at 114 listings, or about 22 days’ supply based upon 2021 absorption rates. Further parsing the data, just 86 listings are available in the immediate Tahoe-Truckee area, of which just 20 are priced below $1,000,000 and 3 of which are single-family homes. Given that the median home price in February was $949,000, this leaves an extraordinary number of buyers disenfranchised.
In fact, the average price of $1,665,000 achieved in February is among the highest single-month figures ever realized, driven by three 8-digit transactions in Martis Camp. Additionally, stout figures were achieved in each of Lahontan, Gray’s Crossing, Olympic Valley, and various lakeside communities.
The arrival of spring often delivers new supply to the marketplace as structured winter holidays pass and homeowners evaluate the remaining utility for them in owning mountain properties. While a substantial number of the quality homes listed year to date have been consumers moving within the market to a more ideal property for their circumstance, the end of winter often reveals those that have exhausted the use of their mountain home and are ready for new adventures. The result is often a glut of inventory from late April through Memorial Day; a phenomenon that is misaligned with the shopping habits of the typical Tahoe consumer and results in extended time on market.
Savvy sellers are recognizing the extreme dearth of supply in the current marketplace and seizing the opportunity to come to market now given the opportunity to stand out among limited competition. This increases the probability of multiple offers which, in turn, increases the potential net proceeds to the seller.
While threats abound, domestic and abroad, economic and diplomatic, every twist and turn over the last two years has resulted in incrementally more people finding detachment from physical workplaces and prioritizing the attributes inherent to a mountain lifestyle.
As always, please contact me for a deeper dive into current market dynamics, and/or to schedule a listing consultation or a tour today.
-Matty