Truckee-Tahoe Market Update — July 2020
Welcome to July. This crazy year has been unprecedented, and who knows what the next six months will look like? The purpose of this update is to provide some context into what we are seeing in Truckee-Tahoe’s tourism sector, the rental market, real estate, and provide some predictions on what we think the second half of the year will hold.
Tourism: Reports from the Tahoe Prosperity Center and Tahoe Truckee Community Foundation suggest that over half of the Truckee-Tahoe workforce was laid off or furloughed in March and April. 68% of our economic activity in the Tahoe Basin is tied to tourism and we live and die by the out-of-the-area visitor traffic. However, based on gradual re-openings of the economy, we have seen a tremendous increase in visitors and businesses opening back up with restrictions for social distancing. As one local vacation-rental property management company told us, “If we don’t have a normal July, we’re done!”. The Truckee Chamber of Commerce heard this message loud and clear and kicked off a campaign proclaiming, “We are Back!” and is welcoming visitors (and encouraging masks and social distancing, of course). With the recent spikes in COVID-19 cases in Nevada and Placer County, only time will tell whether or not this bump in tourism will last or if we will see lockdowns again.
Rental Market: Landing Locals has been tracking the volume of rentals through our site, Zillow, Craigslist, NextDoor, Facebook Marketplace, and Facebook groups; inventory has been VERY tight and prices are on the rise. As of this writing, there are less than 10 active seasonal and long-term rentals in all of North Lake Tahoe, Truckee, and Donner Summit/Soda Springs with the average price over $3,500/month and the highest being a whopping $8,900/month. Our hypothesis is that most vacation-home rental owners and second-home owners have relocated to their homes and are occupying them as full-time rentals at least for the rest of the summer.
The other fascinating thing is just how many renter inquiries are coming from Bay Area transplants. With the announcement from major Silicon Valley employers that their workforce could go remote, we’ve seen a flood of people seeking temporary and long-term housing in the Truckee-Tahoe area. Their inquiries include questions about internet speeds and often suggest they are willing to secure housing sight-unseen and offering to pay for the whole lease term upfront. As a reminder, the mission of Landing Locals is to prioritize locally employed applicants seeking housing, and you can read more about how we do this here.
Real Estate: from our broker, Matt Hanson: ” Extraordinary activity is leaving many people to wonder what is going on. Just three months ago our local multiple listing system (MLS) showed just 108 pending sales. By far the lowest I have ever seen it. As of this writing it sits at 510 — I don’t believe I have ever seen it over 400. These numbers include everything from single family homes and condos to vacant land and shared ownerships. A near 400% increase in three months is extraordinary in my book. Some highlights include the sale of a home in Tahoe Donner that listed at $559,000 and closed at $771,000. It sold for $625 per square foot while the next highest per foot price had been $455 square foot. Tahoe Donner has nearly 4x as many homes in contract as are actively available. The Tahoe Basin is getting in on the action too with just 62 active single family home listings and 95 pending sales from Kings Beach to Rubicon Bay. For our immediate area there are 178 single family homes for sale and just 62 of those are below $1M. The average list price is $2.1M and the median is $1.6M. Vacant lots are also getting snatched up throughout the region with 88 pending sales.
What is fueling this market appears to be a significant influx of buyers from outside the area looking for second homes as well as full-time residences. The exodus from high density living is on the move. The influx is not just from the Bay Area either. I have had a number of contacts from Southern California buyers. Record-low interest rates are another strong source for the push. Rates are near 3% and have seen some as low as 2.75%. I also believe people are looking for other places to invest as the stock market seems to ignore global economic issues for the time being.”
Predictions: 2020 has been unpredictable at best. Truckee-Tahoe will continue to be a desirable place for people to visit and the Landing Locals’ team is optimistic about the future of our economy. However, with the flood of out-of-the area renters and buyers, we will continue to see pressure on an already fragile housing market. The upside of a set of new full-time residents is that we’ll diversify our economic reliance on tourism, but those who work in essential jobs will continue to feel left behind with limited rental inventory and higher prices. Landing Locals has just announced a partnership with the newly-formed Tahoe Truckee Workforce Housing Agency to prioritize employees of four public agencies, and we look forward to continuing to find and unlock new housing for our local workers.