May, 2020 provided perhaps the only 30-day reflection of the impact that quarantine had on our market. And, given the typical lag, the data collected over this period is already irrelevant in the wake of a surging market.
In most cases, closings prior to May reflected market conditions when deals were consummated prior to the COVID-19 outbreak. As such, data for March and April generally reflected the robust market conditions throughout the first quarter of 2020. May closings were generally agreed to in the 30-45 days prior nearly perfectly encapsulating the period of shelter.
Remarkably, May showed the resiliency that has defined the Tahoe market throughout this unique period in time. 76 residential closings, while 25% lower than 12 months prior, is actually a slight uptick over April and dead steady on pricing. While transaction volume slowed, the Tahoe-Truckee real estate market showed no signs of distress reflecting stable and healthy conditions. Rather than panic, most sellers simply took a break from the market before re-listing in recent weeks.
Our market is afforded this luxury by virtue of being largely driven by second homes. Rarely is a seller needing funds to immediately redeploy to housing in another region which gives the luxury of time. Unlike a decade ago, leverage is modest leaving most homeowners with equity thus avoiding the short sale phenomenon that caused values to fall precipitously.
Seller’s patience has been rewarded as the Tahoe market has returned to a near frenzied state with pending sales having more than doubled in recent weeks. Clearly the shelter-in-place requirements have caused consumers to evaluate their setting and an overwhelming number are making quality of life decisions that involve lower density, mountain destinations. Particularly as remote work becomes increasingly viable, Tahoe’s healthy lifestyle is in high-demand.
All the more remarkable is that this bull run has occurred while local lodging options are restricted meaning consumers are being forced to make purchasing decisions via day trip or virtual tours. If overnight accommodations are able to reopen in the coming weeks, it is conceivable that the local real estate market could gain momentum, as is typical of the season, heading into the early summer months.
Less clear is what available inventory will look like. Presently, conditions are already tight with just over 3 months’ supply, approximately half of the options typically available this time of year. With home usage at or near an all-time high, plausibly few homes will be coming to market but for those making moves within the region. As such, a meaningful supply gap could be in our future as we head deeper into the summer.
Pre-pandemic trends including increased primary usage and a bias toward newer homes featuring contemporary architecture in amenitized neighborhoods appear to be gaining momentum. This will provide outsized benefit to communities like Gray’s Crossing, Old Greenwood as well as resort properties including Northstar’s Mountainside and Village Walk Skyline. Similarly, new construction, while remaining extremely expensive, is offering consumers the opportunity to create a retreat customized to personal needs in the setting they desire.
Whatever may be in store for the months to come, the quality of life in mountain real estate will be validated. I look forward to keeping you updated.