Jennifer Fortune is as bullish on Lake Tahoe real estate as anybody. She’s been serving buyers and sellers in the pristine neighborhoods of the southern region of the lake for a decade. As an agent with Chase International, she is active on both sides of the California-Nevada state line, and she’s enjoyed the weather-related ebbs and flows of the local market on a mostly upward trajectory—until this summer.
With the siege of the 219,267-acre Caldor Fire, which as of mid-September has yet to be contained, Fortune’s confidence and that of the hundreds of agents across the American West who’ve made a living in heavy forest communities—some, like Lake Tahoe, are world-renowned for their scenic beauty and gorgeous estates—is beginning to wane in the face of such devastation.
Currently, more than 100 separate wildfires are raging from as far east as Minnesota. According to Cal Fire, the emergency management authority for California, which has, by far, the most wildfires, 3,285 structures have been damaged or destroyed this year with at least three fatalities and the scorching of more than 2.24 million acres in California, alone.
The Caldor Fire by Lake Tahoe has crushed the summer home-buying season, which usually climaxes around Labor Day weekend, and forced the evacuation of thousands, including Fortune.
“I don’t see how it cannot have an impact on the market,” Fortune says on her 13th day of evacuation. “We’ll recover, but this has to have an impact.”
Even in areas where there isn’t an immediate danger, the roads are closed, the forests are inaccessible and the air quality is poor. Fortune indicated some have come back, but most who planned on buying or selling are delaying their plans.
Fortune expects the full impact of these fires will not be known for weeks or maybe months, and then it will all be up to the winter ski season. If it’s a snowy winter, that could bring in skiers and support the economy as well as reduce the risk of another dry summer next year. Dryness and winds are the biggest triggers for forest fires.
However, there are major issues that have to play out before then—mainly insurance. In California, there is a state-mandated moratorium preventing insurance companies from canceling or non-renewing policies in Siskiyou, Lassen and Plumas Counties for a full year. People who want to buy can’t get a new policy and existing ones have gone through the roof—up 80% over the past two years in some cases, Fortune says.
Sabrina R. Belleci, a broker/owner with RE/MAX North Lake, has been active in the Lake Tahoe region for 12 years. She’s been through several of these multi-season drought cycles in that time, but she suggests the current state of the markets is much more complicated due to COVID-19.
“COVID is stretching out the seasons,” Belleci says. “Normally, it starts to slow in the fall, but I think it will be okay. People are relocating and getting out of California and the higher income-tax states. There is still quite a bit of demand.”
The trend aligns with Fortune’s thesis that an underlying demand for the Lake Tahoe lifestyle will eventually resurface. It’s just not clear how long that will take. If it’s just a brief market correction, that actually may be easy for the market to withstand since it was running so hot prior to the fires, fueled by new remote workers from all over the U.S. who became untethered from their office jobs on account of the pandemic.
Most expect that greater trend to remain even if to a lesser extent post-COVID. Still, a quick rebound in Lake Tahoe is probably not in the cards due to the sheer amount of clean-up to perform and institutional hurdles to clear. The first wave is trickling in with bargain-seekers looking to take advantage of the soft market and snap up a few of the waterfront trophy properties, Fortune says.
“The only buyers are people thinking they’re going to get deals,” Fortune says. “On the lake, a couple things went quickly, including a condo in three days for $2.5 million on the Nevada side. The desirable properties will hold up.”
Then, the Nevada side will likely rebound first due to the insurance situation, Belleci says, citing some of the higher-rated fire districts which reduce insurance premiums.
The timing on this, though, is anyone’s guess. Plus, reconstruction efforts could be unusually slow due to a shortage of materials and labor as well as logistical and accessibility challenges.
“No one is cancelling as much as they’re just delaying,” Fortune says. “The longer it takes, the more it could increase inventory in the mid- to long-term. It’s always changing, but I think we’re definitely in for a change. I think prices will drop.”
In the meantime, one group that is not waiting for the market to recover is the local bear population. Fortune’s home county, in which 700 residents lost their homes to the Caldor Fire, has also seen a barrage of bear break-ins after the evacuation. At least 70 have been reported, Fortune says. Upon being displaced by the fire, these hungry animals stumble upon vacant homes which, in some cases, have fully-stacked refrigerators.
“There’s tons of bear damage,” Fortune says. “People have to come home after being evacuated and then they have to clean up.”
Forty miles to the north, Broker Karen Degney of Realty ONE Group in Reno, Nevada, has been dealing with the effects of the Dixie Fire, which is four times larger than Caldor—1,329 structures have been destroyed, including 736 single and multifamily homes. She said its massive smoke plume has reached the Rockies, slowing the local real estate market and giving some clients buyer’s remorse.
“I’ve had more than one person bring it up,” she says. “One who was closing escrow said, ‘We wish we would have known about these fires, and maybe we wouldn’t have bought here.’”
Degney expects the fires from this summer to produce a ripple effect around Nevada and California. Those displaced by the Dixie and Caldor fires could move to the remaining large population centers: Carson City, Reno and what’s left of Southern Lake Tahoe. There is also a lot of back-and-forth as many local Nevadans split time in California’s Bay Area and Sacramento. That trend could be disrupted in the short-term as well, Degney says.
Degney says she talks to her clients at length about the drought and subsequent fire crisis to try to put the disaster into context and relieve their concerns.
“I tell them this stuff is happening nationwide,” she says. “We are in a drought, but we are in a drought on the whole West Coast. This isn’t normal. It’s extraordinary and the rest of the time it’s wonderful.”
Andrew King is a contributing editor to RISMedia.
