Reno-Tahoe Real Estate Market Update | May 2023

 

The current state of Tahoe–Truckee real estate reflects a market struggling to find identity. Buyers and sellers both perceive leverage over one another leading to conflicting metrics that reflect record low transaction volume, an equally tight supply of available listings, general pricing resiliency, and increasing time on the market.

 

 

 

Equally disparate are the factors underlying each of the data points above. Unambiguous is the complete absence of distress among homeowners which combined with the continuation of very high usage even among those who’ve returned to primary homes in the Bay Area has led to rigid adherence to pricing at or near peak levels. Would-be purchasers have faced interest rate increases (a relatively minor factor among cash-capable second home buyers) and overwhelming snow conditions that rendered the region unreachable for much of ski season. Void of bargain sales, many consumers have chosen to simply wait until greater options arise and conditions allow for visitation.

 

While the much-anticipated buyer’s remorse from COVID-era purchasers has generally not materialized, the overly abundant winter is driving a slightly larger normal spring listing season. Currently, supply has only increased by about 10% from winter lows but promises to balloon somewhat by Memorial Day.

 

The relatively small collection of homes to have sold heading into the spring shoulder season shows a lower average sales price than recent months; a factor of more available supply and optimal touring conditions for those in the market rather than eroding prices.

 

For example, in March, the average home sale was $1,975,000. Premium sales in this period were driven by three homes in Martis Camp plus a pair in each of Lahontan, Northstar Mountainside, and Gray’s Crossing. Whereas April was led by a single sale in Schaffer’s Mill before falling to less-premium neighborhoods around the Tahoe Basin leading to an average sale price of just $1,098,000.

 

A stubborn snowfall is deferring the opening of Tahoe’s summer attractions including many golf courses, trails, and access to the lake itself. This will continue to defer activity until access is available, simultaneously allowing time for economic conditions to become more apparent. While inventory may double during this period of waiting, it would still just barely approach a neutral market; likely topping out around 4 months of supply. As such pricing is not likely to move meaningfully while the total number of transactions languishes until summer.

 

As has often been the case when non-economic factors restrain a normal flow of transactions, demand becomes pent up and releases with velocity once conditions allow. As such, look for the second half of 2023 to deliver greater results by a significant factor.