Lake Tahoe feels the heat
The luxury home market is heating up — and so are temperatures
National Issue /
Jan.January 05, 2022 02:00 PM
By Emily Landes
Selling at $46 million,
this 5.3-acre lakefront estate is one of the biggest residential
sales in Lake Tahoe history.
Working 12-hour days in San Francisco, Jaqui Braver's thoughts often drifted to the mountain villa she was building in Lake Tahoe, where she pictured herself skiing powdery snow and breathing Alpine air. This past summer, a year after leaving the Bay Area for her "fairy tale" log house, her journey to happily ever after hit a speed bump: The wildfires that are now an annual occurrence across the West threatened her brand- new home.
"I was really scared," she said. "Look at how long it took me to achieve this dream, and now that I'm here, I have to worry."
That doesn't mean Braver's ready to flee. Like many new homeowners in the Tahoe area, she's clinging to her property, saying climate change is just a new reality. It's hotter in the summers, and last ski season had the lowest snowfall in the past five years. But she's on a months-long waiting list to have air-conditioning installed, and the ski resorts were ready to crank up the snow-making machines before a series of "atmospheric rivers" dumped five feet of snow in a matter of days in December.
Local agents say that most of the buyers who've been flooding the Tahoe market since the start of the pandemic are, like Braver, undeterred by the effects of climate change in the bucolic mountain community, which straddles the state line between California and Nevada. Sales in the region, which doubled or even tripled in some areas, were much more affected by the open-ended work-from-home and virtual schooling policies of the past 20 months of the pandemic.
Today's buyers are younger than the retirees of the past, and they're less likely to make a permanent commitment to the region, which may be a reason they worry less about climate change. Plus, even immediately after the fires, big-name buyers — including Larry Ellison — were adding to their Tahoe portfolios, leading credence to the view that the area is still a smart buy. At the end of last year, the region saw two of its biggest residential sales ever, with the $47.5 million close of a 2006 home with 150 feet of lake frontage and a $46 million deal for a 5.3-acre lakefront property inspired by Yosemite National Park's Ahwahnee hotel.
"I have to imagine it's a once-in-a-career experience," said Jeff Brown, owner of Tahoe Mountain Realty, which specializes in sales in the Truckee region.
Smoking hot market
In May 2020, there were fewer than 100 residential sales in the Truckee area, according to Tahoe Mountain Realty data. By July, sales had jumped to 322, the most in one month, and the area stayed above the 300 mark until November 2020. Prices have risen along with sales. In July 2021, the average home cost almost $1.6 million, more than 40 percent higher than in 2020 and 60 percent above 2019.
Brown has been selling real estate in the area since the early 2000s, and he said he's seen a "full generational reset" in that time. For the retiring baby boomers who traditionally made up the market, a home in Tahoe was "the trophy at the end of a hard-won career," he said. But the newest buyers are largely Gen X families in the middle of their careers with flexible work arrangements that allow them to use their Tahoe homes for longer and longer stays.
They don't want the traditional A-frame cabin in the woods, Brown said. They're looking for something larger and more luxurious for their "Bay Area wage and wealth profile."
"The pandemic was an accelerant of things that were already in motion," he said.
Gen X buyers don't think of their purchases as a "generational home," unlike the boomers before them, and are making decisions about the next five or 10 years, Brown said.
Some aren't even committed to the homes they bought at the start of the pandemic, when there was a frenzy just to get out of the Bay Area. Brown said that within months of buying in Tahoe, many of his agency's clients bought bigger, more permanent homes and found they could still make a six-figure profit on their "starter" properties.
The fire season this past summer was the first "event that sent people home" since the pandemic began. The fact that the smoke-filled air and evacuations coincided with schools reopening and kids' team sports starting up again eased decisions to head back to the Bay Area.
"There's no question that hurt us, but there was a pause on buying, not a cancellation," Brown said. "I do think that memories will get longer and longer over time, but so far, that's not the case."
Meteoric expectations
Going into the holiday season, the mania had died down. Gone are the days of FaceTime tours and buyers making offers sight unseen, Brown said. The issue now is that sellers have "meteoric expectations" for how much their homes are worth and no financial need to lower asking prices.
"A motivated seller will reveal themselves almost immediately, and, by and large, these are not motivated sellers," he said.
In South Lake Tahoe, where properties are generally more affordable than North Lake, the average price rose to $750,000 in 2021 from $480,000 in 2019, according to MLS data. In December, Compass opened its first South Lake Tahoe office with 20 agents to deal with the surging demand.
"The luxury market has been more robust in the last year than I have seen in the 21 years I have been in real estate here," Tina Tinnell, sales manager for Compass South Lake Tahoe, told South Tahoe Now.
Buyers who are ready to give up their California ties altogether have been drawn to the tax advantages on the Nevada side of the lake. The median sales price for a house in Incline Village and Crystal Bay was $2.53 million in April, almost triple the number from just a year ago, according to Compass.
The market has "softened a bit but is still at a pretty fevered pitch" after the fires this past summer, said David Marriner, sales manager of the Compass office in Incline Village.
"It's almost expected that you could have fires in Lake Tahoe" after years of wildfires in Bay Area second-home communities like Sonoma and Napa, he said.
As for a lack of snow putting a damper on ski buyers, Marriner says that's always been a cyclical phenomenon. In a drought year, the resorts just fire up their snow-making equipment, he said.
Following the ultra-wealthy
The ultra-wealthy buyers with "unlimited buying power" such as Mark Zuckerberg, who bought two side-by-side mansions on the lake for about $60 million in 2019, and Ellison, who has an estimated $200 million lakefront estate in Incline Village and has been buying up multiple resort properties there in the past few years, make the merely well-off homeowners feel good about Tahoe's future, Marriner said.
"If Larry's spending that kind of money, we're seeing the tip of an iceberg in new development," Marriner said.
Despite her smoke-filled summer, Braver also remains positive about her future in Lake Tahoe. She said she'd only leave if her house burned down, but her fairy tale future now includes a five-year goal to buy a second home in Mexico or San Diego, like many of her neighbors, so she has an "escape plan" if future fires come close.
"Most of the year, it's heaven," she said. "The fire season is just a little blip in time that you can manage very easily."
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