The South Lake Tahoe Fire: What’s Next for our Real Estate Market?

July 5th, 2007 categories: Angora Fire, Lake Tahoe Real Estate, Stateline, NV

The Lake Arrowhead fire is a good study in comparison.

Now that homeowners and firefighters are no longer at risk, perhaps it is a good time to explore the effect the Angora Fire might have on our South Lake Tahoe real estate market. The bottom line is it’s crystal ball time, nobody knows for sure.

Our real estate market has never experienced something like this before. Correspondingly nobody here has ever gone through it either. It seemed logical for us to talk to those that have. The closest comparable circumstance we could think of was the Lake Arrowhead Fire in the fall of 2003. (click “read the rest of this entry” below)

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Lake Arrowhead, though smaller and not an alpine lake like Lake Tahoe, is similar to us in a few key aspects: it is a resort area and a second-home market. They actually have more homeowners who do not live at their house there than we do, about 72% there compared to about 65% here. That makes sense because the various communities around Lake Arrowhead are so much closer to a large urban market than we are.

As one remembers, the real estate market throughout most of the country, and very much so here, was on the upsurge in 2003. Both demand and prices were up, and were going to go higher. So what is different about the Lake Arrowhead fire and our fire here from the get-go is one was in a Sellers market, while ours unfortunately happened in a Buyers market. Another thing that is different is the Arrowhead fire happened in their traditionally slowest time of the year, while ours happened in the opposite. We were aware and thought about these key differences before we started talking to people in Lake Arrowhead earlier this morning.

The first person we talked to was Lewis Murray, President of the Lake Arrowhead Community Chamber of Commerce. He was happy to help, and yes he had heard about the Angora Fire. He told us what we thought he would, they did not see a significant real estate market downturn around Lake Arrowhead after their fire. There was an immediate short term, and very short at that, but not lasting effect. Murray said he thought it was because of the overall strong real estate market across the country at the time. There is consensus from us about that as well. 2004 was the biggest real estate year the South Lake Tahoe real estate market has ever seen.
We asked Murray more precise market condition questions about such things as: median sold prices before and immediately after the fire, percent of those that rebuilt after the fire and those that didn’t, and about lot sales thereafter. Not being in our business, Murray referred us to a Lake Arrowhead real estate agent, one like ourselves, who distinguishes himself by providing actual data online as a public service to his market all of the time.

Bob Bailey is an Associate Broker at Sky Ridge Realty where he has practiced real estate in Lake Arrowhead with his wife Patsy since 1989. It was a pleasure speaking with the stat guy in that market. He was most helpful; he also knows his stuff. I asked the the key what-happened-after-the-fire question. “It was dead for three months, we thought we were finished,” Bailey said, “then in about three months we saw a fast trickle back to our normal market.” Bob added, “there was no price decrease at all.”

We talked with Bailey to further detail and qualify his response for a moment. The Lake Arrowhead fire started at the end of October and continued throughout the first week of November. We asked specifically about the “dead” months and when the resurgence started. It turns out that the deadtime was almost 4 months; the start of the upturn was around mid-February to the beginning of March, 2004. We deducted from what Bob said that their market returned very quickly in March and was in full swing a very short time thereafter. The spring of 2004 was big for residential real estate everywhere. There was a vigorous optimism across the country for purchasing real estate then that has been gone for some time now (since the last quarter of 2005).
As our real estate market normally drops off in November and December, we wanted further clarification from Bailey about Lake Arrowhead’s traditional buying patterns and absorption rates in the winter months. We found out it’s much the same as ours. Bob confirmed that the immediate dead time in their market as a result of their fire happened during their slowest months of the year; it was just deader.

We asked Bob about Lake Arrowhead’s market resurgence, “Did you do anything special in terms of P.R. and marketing to help bring the market back?” “We didn’t do anything. At first we were stunned, we didn’t know what to do. Nobody had ever been through something like this before,” is what he said.

Then he gave all of us something to consider. He talked about the one thing he thought that helped them most, other than the extraordinary overall home buying appetite we all saw in 2004. “When asked about the fire,” Bob said, “we told people the fire happened in one very small, defined and limited area, and that everything else in our market was safe, intact, and unaffected.”

In about six different ways, Bob elaborated on the importance of delivery a unified message about the market. He said this is the one thing he would encourage every real estate agent, and the local real estate boards here to repeat to every buyer and seller in their database. In our market, what Bob says here just so happens to be true too. Exactly. It happened in a very limited location and all else is unaffected. Knowing our buyers and sellers, though, this is something we all will likely have to repeat often.
We asked Bob about the damaged and destroyed properties. “It has taken about three and a half years for that to return to normal,” is what he said.

One thing we also found out this morning was that The Tahoe Daily Tribune had already talked with the Lake Arrowhead Community Chamber of Commerce. To us, this is consistent with the exceptional job The Tahoe Daily Tribune has done in reporting the Angora Fire.

Summary:
The Lake Arrowhead fire immediately affected the local real estate market. It lasted for three months, then rebounded consistent with national real estate trends and market conditions. It appears that the fire had little or no overall impact on the Lake Arrowhead market, at least as reported to us by both the local Chamber of Commerce and top real estate agents in the area.

The Lake Arrowhead Fire:
When: October, November, 2003, lasted one week.
Fatalities: 4
Acres: 150,000
Homes Destroyed: 993
Forest Conditions: Healthy forest and bark beetle-devastated stands of dead and dying trees.
Wind Conditions: Santa Ana Winds.
Cost: $1.2 billion, does not include loss of income generating capacity, lost recreation opportunities, and degradation of ecosystem services.

The Angora Fire: (South Lake Tahoe)
When: June 24, 2007, lasted one week.
Fatalities: 0
Acres: 3,500
Homes Destroyed: 254
Forest Conditions: Healthy forest and bark beetle-devastated stands of dead and dying trees.
Wind Conditions: Strong Southwesterly winds.
Cost: $141 million, does not include loss of income generating capacity, lost recreation opportunities, and degradation of ecosystem services.

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This entry was posted on Thursday, July 5th, 2007 at 11:38 pm and is filed under Angora Fire, Lake Tahoe Real Estate, Stateline, NV. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

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