Tahoe Market featured in SF Chron blog On The Block
November 1, 2016
The drought took a big toll across California, but was particularly hard on Lake Tahoe ski resorts. After all, who wants to go snowboarding if there’s no snow?
The decreased interest, plus the lingering effects of the 2008 financial crisis, also impacted the local real-estate sector, with both prices and sales volume taking a hit.
But just as the snow has returned, so have the buyers, according to data from Pacific Union. Sales increased 20 percent between January and September in 2016 compared to the same time period last year, with sales picking up considerably in the third quarter. Volume was up across all price points, but was especially strong for more expensive properties, with an 87.5 percent increase in home sales between $2 million and $3 million, and a 71 percent increase in sales over $3 million.
“The lack of snow over the previous couple of ski seasons has kept the Tahoe marketplace from fully rebounding post-Great Recession, however, this past ski season we saw a robust winter, which resulted in strong springtime ’16 sales for homes in Tahoe,” said Sally J. Gardner, Regional Executive at Pacific Union International for the Tahoe-Truckee region. “This momentum has continued throughout the 2016 year and we expect it to hold steady for the foreseeable immediate future.”
Rent or Buy?
But even though sales are up, average home prices are still relatively low. The median sales price from January to September was $484,500, which is up from a year ago during the same period ($445,750), but still much more affordable than home prices in the Bay Area.
Gardner estimates that half of Tahoe buyers are from California, with one-third of all buyers from the Bay Area.
“Homes in Tahoe are still considered affordable as compared to the Bay Area marketplace,” she said. “Many buyers are electing to not move forward with a remodel or an expansion on their primary residence, but instead are choosing to spend those monies on buying the experience of a second home in the mountains.”
For avid skiers and snowboarders, buying may make more sense than getting an expensive ski lease, she explained, citing mortgage interest tax deductions and rental income as two big financial incentives for the former.
“Many buyers are interested in some form of rental income and look for properties that would make for a good rental,” she said. “Ski leases for the winter months, typically mid-December to mid-April, are always in high demand.”
As home prices have gone up, so have vacation rental prices. For example, the Squaw three-bedroom, three-bath in the gallery above is asking $1,579,000, which works out to a monthly payment of $5,600 a month, assuming a 20 percent downpayment and 3.9 percent interest rate.
The same home can rent for up to $1,000 a night during the height of the season, according to the property’s agent Kristina Bergstrand, meaning a few weeks of rental income could pay for a few months of mortgage payments.
The math often works out for more modestly priced homes as well. The West Lake two-bedroom, two-bath with lake views in the gallery above would rent for $1,600 to $1,800 a week during the prime season, according to the sellers’ agent Cindy Hillery. The monthly payment would be only about $500 more, assuming a mortgage at 3.9 percent for 80 percent of the asking price of $625,000.
Then there are the less financial but still tangible benefits that come along with ownership, like the ability to leave bulky ski equipment at the home, bring a family pet along and make family memories over the years, said Gardner. Plus, she pointed out that if you own a home in Tahoe you can use it all year, not just the winter months.
“If you think the winters are awesome in Tahoe, you should check out the summers,” she said.