Election Impacts on Tahoe Real Estate
The 2018 election is a big one for the country with national, state and local issues impacting a wide variety of topics all across America. As of this writing just after Election Day, we are awaiting the final results on Measure T. The tally so far shows Measure T winning by only about 100 votes out of approximately 4500 votes that were cast. This Measure is directly targeted at the vacation rental market in South Lake Tahoe.
Measure T only affects property owners on the California side of South Lake Tahoe and does not affect any other communities around the Lake. So property owners in Incline Village and Crystal Bay can breathe easier knowing that the vacation rental market will continue to thrive into the foreseeable future.
If Measure T passes it would phase out roughly 1400 vacation rental properties over the next 3 years. Owners of a primary residence outside the commercial and tourist core districts would be allowed to rent their property for up to 30 days per year. The passage of Measure T would eliminate approximately 80% of the privately owned vacation rentals in South Lake Tahoe. The impacts of this would have a ripple effect throughout many aspects of the community. But in this article we are only going to address those issues that directly impact the residential real estate market. There are other economic, humanistic and social issues that will be affected and we will leave it up to other authors to address those topics.
The greatest beneficiaries if Measure T passes will be the owners of vacation rental properties located in the commercial and tourist core districts along with the hotels and motels at South Lake Tahoe and Stateline. Essentially it’s a simple economics issue of supply and demand. If the demand remains the same (or increases as we’ve seen over time), the reduction in the supply of rental properties will lead to price increases. Assuming the 1400 units being eliminated can accommodate on average 6 people, this means a loss of 8400 beds from the rental market. The actual number could be higher or lower but it’s a pretty dramatic loss of accommodations for the area.
Real estate prices for residential property outside the commercial and tourist scores will likely flatten out or decline. While the properties that are able to legally be used as vacation rentals will probably increase. By reducing the available supply of vacation rental properties the remaining legal units will receive more bookings and increased revenue during the course of the year. These property owners will also be able to charge a higher nightly rate thereby pushing up their annual revenues even further. When it comes time to sell the property, they will be able to show better revenue numbers which makes the property even more valuable.
Owners of vacation rental homes in Incline Village, Zephyr Cove, Tahoe City, Kings Beach and other Lake Tahoe communities will likely see a slight uptick in bookings if Measure T passes. If someone wishes to visit Lake Tahoe and there are not enough accommodations at South Shore, then they will likely find another place to stay as opposed to canceling their trip entirely. There could be an increase in shoulder season visitors, but that depends a great deal on the whims of Mother Nature. And if Measure T does not pass, then the residents of South Lake Tahoe will have to figure out how to deal with the various unresolved problems caused by any misbehaving vacation renters staying in the community.
Weekly Real Estate Update
Statistics gathered from the Incline Village MLS on 11/4/18
Houses Condos PUDs
For Sale 107 48 21
Under $1 million 21 36 8
Median Price For Sale $1,975,000 $624,900 $1,295,000
YTD Sales 2018 159 170 55
YTD Sales 2017 145 175 48
New Listings 8
In Escrow 5
Closed Escrow 13
Range in Escrow $150,000 – $2,195,000
These statistics are based on information from the Incline Village Board of REALTORS® or its Multiple Listing Service as of November 4, 2018