For Tahoe – Truckee real estate, the first half of 2022 carried through the momentum of previous years wherein historically low inventory was met with surging demand driving pricing up at an astronomical rate. Whether this momentum carries forward or proves to be the start of a taper within a bell-shaped curve will be determined in the waning months of the year.
In the first half of 2022, inventory held at between 1-2 months’ supply; painfully biased in the seller’s favor in a market where equilibrium is 6 months. This has driven both median and average price up by more than 15% year-over-year.
While the total number of active residential listings has nearly tripled from the beginning of the year, total supply remains at less than a 3-month absorption rate. Thus, this increase, typical of Q2 once ski season has come to an end, is the equivalent of slowing from 120 mph to 85 mph in a 65 miler per hour zone.
In a normal year, July through December sees double the volume of the first six months. To date, 631 residential properties have transacted, exactly 34% of 2021’s total. Premium sales in luxury pricing categories are all well ahead of this pace driven by continued demand for newer, modern homes within highly amenitized communities.
While the concept of a cabin in the woods is an eternally romantic notion, the idea of a home that is more contemporary in appearance and less likely to incur deferred maintenance is highly appealing, particularly for the consumer not occupying a primary residence. Further compelling are communities that offer programming consistent with the activities a family seeks is Tahoe. Because of geographic and regulatory constraints within the Tahoe Basin, these properties are mostly found with Truckee addresses nearly tripling in recent years.
Despite warning signs for the national housing market, the Tahoe economy remains very strong. Demand from the Northern California feeder markets is present and qualified with the increased flexibility of remote work, even if more limited than during the height of the pandemic, is increasing interest in having a foothold in a mountain community.
Sales in recent years have included very little over-leveraging or speculative purchasing that would lead to panic selling in an environment of rising interest rates. Utility among homeowners, both primary and those occupying as second homes, remains very high indicating that a cascade of new inventory is unlikely.
If change from the peak of real estate hysteria in 2021 is now evident, it is that consumers are more cautious in their purchasing behavior, taking the time to ensure that value is reasonable, and homes are in proper condition. Barring greater headwinds then those already present in the national or geo-political economy, we expect the remainder of 2022 to be a more balanced period for real estate activity in the Tahoe Truckee region.
