Celia Klein is a real estate agent with Engel and Völkers, a global company and lifestyle brand which has been offering high-end premium real estate services throughout North America, Europe, and Asia since 1977. Together with her partner Greg Boyle, Celia specializes in the North Lake Tahoe and Truckee luxury markets. She is dedicated to providing high quality, unsurpassed services to her clients, based on quality, honesty, and ethical business practices.
How did the Tahoe-Truckee real estate market do in 2017?
The real estate market in both North Lake Tahoe and Truckee was very strong in 2017, in fact it was a record breaker of a year! As a whole the area saw 1,478 residential (single family home and condo) sales. This amounted to over $1.3B for 2017. This was up by 7% from 2016. The average sales price rose by 9%, with median sales price up by 2%. We are in a very strong market up here right now.
What were the most important trends in the local housing market last year?
What stands out the most is the historically low property inventory. I know that this is not a unique problem, and that we are seeing low inventory all over the state. That said, we still broke records on sales volume for 2017.
Was the Tahoe-Truckee real estate market a buyer’s market or a seller’s market in 2017?
Most definitely it is a seller’s market. I am hoping that we will see property inventory rise in the coming weeks, but there are so many buyers right now that I don’t see the market shifting any time soon.
What was the most traded property type in the local housing market last year?
Single family homes is the big winner by far. We had 1,079 single family home sales compared to 399 condos/townhouses.
How does the Tahoe-Truckee real estate market look like for 2018? What are the major changes from last year?
I don’t think we are going to see a lot of change. There are still real estate investors out there looking for a way to diversify, adding to the already large pool of second home buyers currently looking for real estate properties. The one change that I do see coming is that the housing market is starting to price out first time home buyers. With interest rates on the rise, spending power is down, yet prices are still on the rise. Usually when we see the interest rates start to go up, we then see home prices start to stall, but, with such low inventory, it is unlikely that this is going to happen. Local homeowners looking to upgrade are also finding the lack of inventory a deterrent to listing their entry level homes. Compounding this problem is the fact that the real estate market is so tight that making an offer with a contingency to sell your existing home is not going to be able to compete with a second home buyer who is ready to go.
In what ways is the Tahoe-Truckee market similar to the overall California real estate market and in what ways is it different?
The market for California real estate is so large with too many separate regional areas to compare as a whole. Because so many of our buyers come from the Bay Area, it’s a little easier to compare to that market, so that’s what I am going to refer to. Generally, we tend to lag a bit behind what is happening in the Bay Area housing market. What is happening with property prices in the Bay Area is not quite what is happening here in our area, but as mentioned, we are seeing good appreciation locally too. So far we are still in the single digits for price appreciation, but in some of our micro-markets we are seeing double digit appreciation.
Which property type is dominating the local housing market this year?
The single family home is king with 190 sales closed as of April 5th. Condos and townhouses are behind at 73 so far, and with vacant land we have seen 19 sales.
You specialize in luxury homes. Tells us a bit about this specific property type in the Tahoe-Truckee real estate market.
The luxury market is very exciting right now. We have already seen 30 sales of homes over $2m in the first quarter. In 2017 there was a total of 96 sales over the $2m benchmark, only 11 of those sales closed during the first quarter, so we are tracking to surpass last year’s numbers. The most compelling aspect of our luxury market is the diversity. This market is amenity driven, and no matter what your lifestyle is, there is going to be a perfect fit for you. Lake front estates, ski-in ski-out lodges, premier golf course communities, there is something for everyone. The legacy estates that dot the crystal clear shores of Lake Tahoe with their breathtaking views are in my opinion unsurpassable. But, if you are a skier, maybe a penthouse in the village at Squaw Valley is going to be what makes your heart race, or a ski-in ski-out property at Northstar’s Mountainside development. For the avid golfers, Truckee is your perfect home base. With six golf communities, there is no shortage of options. In Martis Valley you have three gated golf communities with fantastic amenities, all are 5 minutes from the Truckee airport, which is extremely convenient for many homeowners.
Are there any specific laws and regulations which homebuyers, real estate investors, and/or landlords should have in mind when they approach the Tahoe-Truckee real estate market?
For sure, there are so many regulations that vary from area to area. For real estate investors looking for short term rentals, there are neighborhoods and HOAs that restrict the ability to rent out for less than 30 days. South Lake Tahoe has taken it a step further and has issued a moratorium on short term rentals. Another problem that a property buyer may run into are the tight regulations in the Tahoe Basin. There are strict regulations on land coverage, so you need to find out what is possible on a property before you buy. Even adding a patio or a driveway can run you into land coverage issues. Landlords of long term rentals have it a bit easier. We have a huge shortage of long term rentals in our area. If you are a landlord up here, you will not run into any problems keeping your property rented. It’s very important for a property buyer to – number one – work with a knowledgeable local agent, and – number two – do their due diligence!
What’s the most popular investment property financing option in the local housing market?
We have a lot of cash buyers up here, especially in the tighter markets where you are seeing multiple offers. Obviously a property seller is more inclined to accept the cash offer over the financed offer. If you have to finance, my advice is to work with a local lender, or someone you trust and have worked with in the past. If you are going to purchase with financing and you are trying to compete with cash, you need to have the confidence to come in with a very strong, compelling offer. I would strongly advise to not go with a web based lender, their rates are lower for a reason, and it’s not because of good customer service.
What interest rates do local mortgage providers offer in the Tahoe-Truckee real estate market?
Interest rates have been steadily on the rise. If you are going to finance, and you think that you are going to purchase in the next 60 days, I urge you to work with a lender to get a 60 day lock now. As of today, rates are already at 4.75%. It’s actually funny that we consider that high, before the recession rates were at 6% and that was “historically low” at the time.
Why is now the right time to invest in a real estate property in the Tahoe-Truckee housing market?
First, there’s no indication that we are going to see pricing fall anytime soon, and we are tracking to keep appreciating which should give buyers confidence. Second, it looks like the new tax rate on income property is going to drop. And last, the Tahoe-Truckee area is growing. We are starting to see the payoff from the response of having been such a popular tourist destination. Downtown Truckee is expanding with the Rail Yard project bringing a new movie theater, additional restaurants, artist lofts, and retail spaces. Traffic mitigation is happening in Tahoe City with the downtown bypass re-directing through traffic for the West Shore. There is talk of better public transportation and designated shuttle lanes to help ease the skier traffic we experience on winter weekends. The Squaw Valley and Alpine Meadows ski resorts, which are already under the same management, have plans to connect the two resorts with a gondola. This will make it the 3rd largest ski resort in North America! Even our local schools are getting upgrades.
What are your forecasts about how the Tahoe-Truckee real estate market will perform in the coming period?
I wish I had a crystal ball! We do lag behind the Bay Area real estate market by 6-12 months, this is a good indicator but not infallible. My best guess is that we are going to continue to see property prices rise steadily for the next year and a half. If interest rates go sky high, we may start to slow, but with so much cash in the market, it’s not likely to send pricing down. We have some new construction projects breaking ground over in Tahoe City, Squaw Valley, and Truckee that will all help with property inventory for second home buyers. I don’t expect demand to go down, we are a very desirable year round destination that is still improving. Tahoe-Truckee is and will stay a base camp for adventure and enjoyment of the mountain lifestyle.
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