The convergence of several different narratives meld together to explain the performance of real estate in the Tahoe-Truckee region during the first quarter of 2018.
Economic: A surging Northern California economy continues to deliver robust demand for second homes.
Supply: Historically low supply has shifted negotiating power into the seller’s favor creating upward pressure on prices.
Environmental: A peculiar winter delivered low snow in the early season; a scenario that actually facilitated greater real estate activity than during the previous winter when abundant snowfall hampered access. Tremendous late-season snow inspired visitation from would-be consumers under optimal conditions.
The convergence of these factors resulted in the strongest ever first quarter for Tahoe-Truckee real estate based upon a number of different metrics. Total residential sales grew 6% over the same period a year prior while total dollar volume leapt by 19%; indicative of a greater number of premium homes selling. In fact, 83 homes traded at prices greater than $1 million, 53% more than during the same period in 2017 driving average price up 12% to $971,767.
The luxury segment is driving both volume and price as premium, modern homes provide an opportunity for instant gratification to wealthy consumers. Martis Camp and Lahontan are two communities that embody this trend in particular. Martis Camp has been setting new benchmarks for an extended period of time. In Q1, 2018 that community saw 11 homes close escrow up from an already robust 7 in the first quarter of the prior year. Lahontan, a community in which the dichotomy between old and new product is most evident, has absorbed 7 already in 2018 versus just 1 over the same period a year ago.
Interestingly, vacant land experienced an unseasonable surge in activity during the first quarter. Winter’s deferred start allowed atypical access to property during this period leading to 66 closed transactions. Average price increased a modest 5% over this period driven by 3 premium Martis Camp sales topping $2 million. Figures adjusted to exclude that market outlying community show a 7% decrease in median price reflective of soaring construction costs diminishing that residual value of the land.
An imbalanced supply of available homes will create an interesting market dynamic into the second quarter; a period when a majority of the year’s inventory is brought to market. With consumers perched awaiting an option to inspire a purchase, well priced sellers will be rewarded.