The third quarter of 2016 was statistically the strongest 90-day period ever for real estate in the Tahoe Truckee area. 522 residential properties traded hands over this span representing just under $500 million in total volume at an average price of $893,000.
Similarly, year-to-date figures for the region through 3 quarters already exceed many 12-month periods in the recent past. Total sales volume has exceeded $1 billion for the fourth consecutive year exceeding annual totals from 2006-2013. The number of transactions exceeding $1,000,000, $2,000,000 and $5,000,000 already exceed 2015 totals.
Much of the region’s high dollar activity has been concentrated in certain resort communities, namely including Martis Camp which has consolidated an overwhelming 18% share of the local market, however nearly every segment has shown increased velocity.
Despite these exceptional figures, values appear to moving along steadily rather than surging with high volatility that could indicate a corresponding crash. Median price has risen a steady 5% year over year.
Unlike the bubble years of 2004-2006, this run seems to be built on a stronger foundation. Leverage is minimal with tighter lending regulations requiring stronger underwriting standards and generally higher down payments. Low interest rates, while not a primary driver of purchasing decisions for vacation homes, have made carry costs more affordable on a relative basis offsetting increasing purchase prices.
Most notably, the economic conditions driving Tahoe real estate continue to be robust. Bay Area job growth has fueled the wealth creation integral to seeking and affording discretionary purchases like a home in Tahoe. Despite local prices being on the rise, values in comparison to many Bay Area markets are strong creating move-down opportunities for families looking to relocate and able to telecommute or otherwise generate income away from urban centers.
In addition to consumer driven purchases fueling the market, capital investors have taken notice of the demand for quality housing in the Tahoe-Truckee region. Last week, a $42.5 million deal was announced for developable land near the Heavenly base in South Lake Tahoe. Numerous other projects from Squaw Valley, Alpine Meadows and Northstar to Kings Beach and Tahoe City are in the works hoping to deliver new, modern product to a thirsty population of consumers.
The 4th quarter is often a quieter time of year with most resort consumers out of the region until ski season. With 262 currently pending with close dates scheduled prior to year’s end, it appears momentum will carry through the end of 2016.