Nominally, the Tahoe-Truckee real estate market posted another strong month in February. Total sales units equaled the prior year exactly though sales were generally focused on modestly priced inventory.
Closed transactions generally follow 30-60 days from contract thus are a lagging indicator of overall market conditions. The volatility of equity markets in recent weeks have created a level of uncertainty that may have ripple effects in the months to come. Inherently, real estate in Tahoe is a lifestyle choice more than a core necessity for most consumers. Such discretionary purchases are generally made out of emotion; out of a drive for a lifestyle enhancement for a busy family rather than driven by specific metrics of wealth. Despite a market correction, most indexes remain at pricing roughly equivalent to Q3, 2019 during which time activity in the Tahoe real estate market was steady and balanced. Comparing that moment to now, values have perhaps slid slightly, adjusting for typical early-year activity, while purchasing power has only increased with historically low interest rate.
The near-term performance of the Tahoe market is subject to debate. What remains indisputable is the utility value inherent to such property ownership; quality time spent in a beautiful and healthy, unplugged environment. Our consumers, largely Bay Area families, contemplate Tahoe homeownership as a second home. This is an important distinction from a vacation home in that they often come with great frequency for short visits that round out everyday life. In this way, Tahoe is an antidote to hectic schedules, conference rooms and commuter traffic. Tahoe is a chance to unwind, pursue wellness and appreciate the beauty of nature. In this way, Tahoe is a recession-proof commodity.
The historical performance of local real estate has followed typical trends booming during up markets and contracting during recessions.
Consumers that have rode out these cycles have generally enjoyed reasonable, market rate appreciation but have yielded quantum results in lifestyle. Timing the market is a tricky proposition and threatens to erode the most irreplaceable commodity; time.
The cost of ownership has improved with the events of recent weeks. While nearly every consumer we interface with is more than capable of a cash purchase, the access to historical low interest rates has allowed purchasers to efficiently leverage purchases without sacrificing much liquidity in the market.
Future reports will detail today’s events on our local market. Regardless of those outcomes, Tahoe will continue to be a special place where families will make enduring memories.