If you’ve scanned through online real estate marketplaces like Zillow or Redfin, you’ve probably seen the minimal amount of home listing around the basin. More and more people are finding communities around the lake to be even more desirable during the pandemic.
RE/MAX Real Estate broker and owner Sabrina Belleci says that this low amount of inventory is from a vast majority of people escaping urban lifestyles and she doesn’t see that changing for the upcoming year 2021. She believes that prices will continue to rise around the lake and inventory will remain low.
For years there has been an increased amount of people moving to the lake from the Bay Area and Silicon Valley areas to predominantly purchase a second home or for retirement, but COVID-19 created a sense of urgency for those on the fence about buying a second home away from the hustle and bustle of the big city.
Belleci says that people from out of the area are predominantly the ones purchasing homes right now.
A majority of the folks buying homes are looking for a full-time residence for at least the next 6-12 months and they are buying with the intention of possibly making the home a vacation home in the future. While future plans are still uncertain due to the pandemic, many know they might have to return to the city for work and for those who have kids, more options are available in bigger cities.
“Our prices are actually affordable comparably to where people are coming from,” she said.
Due to COVID-19, many city jobs have transitioned to remote working and distance learning has been implemented, which has allowed those who already have a second home in the region, to escape to Tahoe and occupy those homes that usually sit empty for a portion of the year.
“These are historically low numbers for inventory,” said Belleci. “It’s a very interesting market right now.”
However, she says that there have been more sales this year than in previous years. Standing inventory is getting swooped up within 48 hours of listing. People are continuing to list properties receiving a major return of investment.
Those who bought homes, even just 3-4 years ago are seeing a 50-100% return on their investment creating an opportunistic market for those who want to capitalize.
Homes, due to design or other specs, that normally wouldn’t sell in Tahoe for at least 9-12 months are now selling in 30 days. Some of these properties are selling in a week and paid with cash. Sellers are even getting multiple offers over asking price.
“We only have so many homes in the Tahoe area and not many new builds,” Jackie Gilpin, real estate agent for Compass Tahoe in South Lake Tahoe said in an email. “I think the low inventory will continue, and thus the demand will continue and over asking offers.”
She says that the homes that are not move-in ready and over-priced will take longer to sell even in this market.
“Updated homes or ready to move in are desirable for buyers as contractors are so busy and getting material in a timely manner is more difficult with COVID-19,” Gilpin said.
“In June, locals got priced out of the market,” said Belleci.
She also says that loans are taking time to get right now because of the lack of appraisers and the time it takes to wait for approval is making offers less competitive which is really hindering first time home buyers.
“It’s a grim outlook for the local community and real estate agents,” she said. “It’s pretty cutthroat, only 15% [of real estate agents] have control of the market.”
Belleci says that low inventory and skyrocketing prices are only getting worse.
Not only does she see this issue in real estate, but she says that rent is shooting through the roof right now.
The scarce inventory of rentals has pushed a rental that usually would go for roughly $1,500 per month to $5,000 per month.
“It will be very hard to find housing in Tahoe in 2021, even more so than it was in 2020,” says Belleci.
For local, first time home buyers this looks like it would be a great time to buy on the surface with relatively low interest rates. Interest rates for jumbo loans are ranging from 2.88-3.25% for conforming to a 30-year fixed mortgage and putting less than 25K down.
“I think this dynamic real estate movement we are experiencing may continue as long as the interest rates are as low as they are,” said Gilpin.
However, locals and first time home buyers are being priced out according to Belleci. She says that even though it is absolutely a sellers market, there is still hope.
Belleci and Gilpin both recommend several things including working with a local agent, specifically one who lives and works in the community you are buying in because they know the ins-and-outs of the town.
Local agents sometimes can be the first to hear of new listings or even potential listings.
Work with a local lender, as local as possible, and get pre-qualified for a loan.
Be diligent and write a clean offer. Move fast and if you’re serious about a home, don’t drag your feet. Prove that your financial situation is sound and pay cash if possible.
Belleci says if you have family you can temporarily borrow from before refinancing, it would make your offer more competitive.
Finding a property that needs a little work or remodeling. Those from out of the area might not be willing to put an offer on a home that needs work and it could allow you to negotiate.
Be ready to prove that you live and work in the community, to some sellers this is very important.
“There are many programs out there for first time home buyers, ask a local lender,” said Gilpin. “Also, getting creative with a personal heart felt letter does still work. As realtors, we have had to get creative with our offers to make dreams happen for the buyers that don’t have endless cash. Its been a huge learning experience, and customer service with our clients is more important than ever. People need kindness more than ever, and in real estate, it’s no different.”
Belleci says that agents are excited and the increase is good for local business, but it comes with responsibility to educate new community members ranging from trash issues to coexisting with Tahoe’s wildlife. Belleci says that it is an interesting dynamic in the real estate world on an ethical and moral level.
She said, “Real estate agents have a duty to the community.”