The state of Tahoe real estate: As the Caldor Fire spread, homes in its path were still selling

Sierra Sotheby broker Demian Black advised his clients, buyers Michael and Rhea Wisherop, to postpone the transaction, even if they lost their deposit. The home could burn down, and he doubted whether loan or insurance companies would sign off. His own office was forced to evacuate.

But the Wisherops were undeterred, and on Friday, the property sold for $684,500, $35,500 above its initial asking price. The fire shifted course, sparing the new purchase.

The Caldor Fire has spread to nearly 213,000 acres and upended the Lake Tahoe region’s idyllic status as a blue-skied pandemic escape, choking the area with smoke and displacing tens of thousands of residents. But real estate experts say the area’s booming housing market is resilient.

“I definitely anticipate a little bit of hesitation” after the wildfire, Black said. But “people have been coming to Tahoe for a long time.”

South Lake Tahoe’s median home price leaped 50% to $737,000 in the second quarter compared with to the prior year, according to Sierra Sotheby’s. Truckee, which saw an unprecedented increase in San Francisco transplants, gained 63% for a median price of $1.2 million.

“It was probably one of the greatest real estate markets up here that we’d ever seen,” said Camille Duvall, vice president of North Tahoe and Truckee at Sierra Sotheby’s. “When they can work from anywhere, they spend time here.”

Money is still flowing in, despite the nearby danger. Breck Overall, a Sierra Sotheby’s broker, had a $4.5 million sale close this week near Donner Lake and Truckee. The northern side of Lake Tahoe, where he works, is farther from the fire and air quality has been better.

“I’m not seeing a big shift, with people saying, ‘We’re not interested,’” he said. “I don’t really see that demand diminishing right now.”

The threat of the virus and more restrictions in the Bay Area will continue to push people to come to Lake Tahoe, he said.

Most of Overall’s clients are also fortunate enough to have the flexibility of easily relocating when the smoke thickens. In 2020, his team worked with 102 families, and all were purchasing second homes in Lake Tahoe.

“I haven’t had any of them call me and say, we want out,” he said. In his 18-year career, only five buyers planned to get rid of their other homes.

There’s been some push-back on the soaring prices, so Overall expects the rate of growth to lessen, but he’s doubtful prices will fall any time soon. Sellers are motivated to make a profit and few are under financial distress, he said.

There’s more uncertainty for renters.

Tristan Biles and his girlfriend moved from San Francisco to South Lake Tahoe during the pandemic last fall, excited for regular skiing trips and access to the outdoors.

Buying was too costly, but they were able to rent a condo next to the Heavenly Mountain Resort. “I never thought it’d be viable,” he said. “We saw an opportunity and jumped on it.”

What he didn’t expect: having to flee to Palm Springs last week.

He plans to return soon, and remains committed to Tahoe, and isn’t sure what it would take for him to leave. He would consider a place that offered the same amenities and fewer risks, but hasn’t found it.

“I think a lot of people don’t know what to think. You see it on the news, it’s really bad. Until you see it for yourself, you’re not sure what to make of it all,” he said. “I’ve been fixated on Tahoe for such a long time.”

Other parts of Northern California have seen more destructive wildfires. Yet housing demand has only intensified during the pandemic.

“Napa, Sonoma and Santa Cruz counties have obviously experienced terrible fires over the past four years, but their markets have always rebounded very, very strongly and quite quickly following the fires, and their median home prices are much higher than they’ve ever been,” said Patrick Carlisle, chief market analyst at real estate brokerage Paragon. “Buyers still want to live in these beautiful places. If history is any guide, Lake Tahoe will also rebound from the current crisis.”

Still, the fires present challenges. The Wisherops, who live in the East Bay, had wanted to buy in Tahoe for a long time after visiting frequently. The first obstacle to buying their home in South Lake Tahoe was last month’s Tamarack Fire, which jeopardized the insurance. But as firefighters contained the fire, the buyers were able to secure their insurance before the Caldor Fire became a threat.

“It never did impact the loan, or else we’d be out of deal,” said Michael Wisherop. “The firefighters did a great job.”

Roland Li is a San Francisco Chronicle staff writer. Email: Twitter: @rolandlisf

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