‘A broader problem:’ In North Lake Tahoe housing crisis, the middle class suffers | SierraSun.com
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‘A broader problem:’ In North Lake Tahoe housing crisis, the middle class suffers

By Shira Moolten
Special to the Sierra Sun
Local Realtor Brinn Talbot is putting her home on the market because of high demand, taking advantage of a seller’s market in the Truckee-Tahoe area.
Justin Scacco / jscacco@sierrasun.com
“The market is still very strong. We are seeing over asking prices. It’s still definitely a seller’s market,” said local Realtor Brinn Talbot.
Justin Scacco / jscacco@sierrasun.com

Six months ago, Justine and Kyle Marmesh were about to put an offer on a house in Truckee, but they didn’t quite have the down payment. Now, they’re about to move into the same house — as renters.

“It’s just ironic, like, oh my god, we just saw this house on Zillow six months ago,” Justine Marmesh said. “And here we are paying this person’s mortgage for them.”

The Marmeshes are not alone. As the housing market booms across the country, North Lake Tahoe continues to be one of the most sought-after destinations, and one of the most in crisis. Well before the pandemic, the lake was seeing more vacationers and permanent residents than ever before. During the pandemic, Bay Area residents left shut down cities to be closer to the outdoors. New homes were purchased, and vacation homes converted to primary residences.



Now, as the vaccine becomes widely accessible and the worst of the pandemic appears to be over, the trend seems to have accelerated, not reversed: living in Tahoe is becoming a luxury.

“The middle class is really threatened,” said Colin Frolich, the founder and CEO of Landing Locals, an organization he created to try and match local residents of popular vacation towns with long-term rentals, the same organization which found Justine Marmesh her new home. “That’s a worrying trend that’s happened over the last 10 years, but it’s just become a lot worse in the last 18 months.”



Brinn Talbot, a local Realtor, is one person taking advantage of the seller’s market.

“We haven’t seen a market like this, especially in Glenshire,“ she said. ”It’s the height of the market, and it’s the right time for me to sell after being here 16-plus years.

“We thought it would be a slow real estate season when the pandemic started, and then we were all wrong,” she added. “Lots and lots of new neighbors from the Bay Area. Why wouldn’t you live in Tahoe if you could?”

CHANGING DYNAMICS

Over the last decade, as Tahoe has gained popularity as both a vacation destination and, more recently, a permanent destination as well, the income gap in California has been steadily rising. According to the Public Policy Institute of California, incomes for families in the 90th percentile of earners have increased 60%, while incomes for families in the 50th percentile and 10th percentile have grown by only 24% and 20%, respectively. This is compounded by the fact that educated workers have become increasingly preferred over workers without college degrees.

The pandemic served as a catalyst for the widening inequality across the United States. The housing crisis is one of its many symptoms. Those able to work remotely were also disproportionately wealthier and more educated. Many of them left their cities to find housing in idyllic places like Tahoe because they could afford it. In what some economists are calling the “K-shaped” recovery, those at the top half of the “K” are bouncing back and buying homes, while those on the bottom half are struggling.

Over 2,000 new residents came to the area during the pandemic, according to Steve Frisch, president of the Sierra Business Council. Most of them were purchasing homes.

“There was some kind of psychic shift that occurred in our society that led people to question: Do I still want to live in the city? Do I need to live in the city?” Frisch said.

It’s not only luxury properties, either. Homes that used to be affordable for middle class buyers are now going to the wealthy.

“Those with the higher end jobs and more money and better credit scores are going to snatch them up first, because they look better on paper,” Frolich said.

That’s what happened to the Marmeshes. When the pandemic hit, Kyle Marmesh, a graphic designer, struggled to find work. As Justine Marmesh put it, “The first thing to go is funding towards making things pretty online.” The two moved out of Carnelian Bay to live with his parents in Reno, while she continued to commute to Tahoe City for her job as an urban planner. They assumed that once the pandemic was over they would be able to buy a new home.

“Here we thought we were doing something really responsible and hunkering down with our folks and quarantining and social distancing with our family, thinking everyone else was doing the same,” Marmesh said. “We had no idea people were going to be moving around as much as they did.”

Months passed, but nothing gave. The prices were too steep. The downpayment they had saved up wasn’t cutting it.

“Every time we set a goal to save towards, we’d meet that goal, and the housing market would just outpace us,” Marmesh said.

In the meantime, the two moved into a friend’s cabin in South Lake, which was meant to be income property, not a full-time residence, but was vacant due to the city’s new restrictions on short-term rentals. It was 650 square feet, built in the 1950s, with no insulation or heating. Finally, in a fortunate turn of events, the two turned to Landing Locals, and were matched to the first place they applied for.

Other locals haven’t been so lucky. Over the past six months, the cost of rent in Truckee has climbed by 25-50%, according to data collected by Landing Locals. Affordable options are not only hard to find, but existing options are becoming so priced up and sought-after that homeowners are selling, forcing long-term renters out of their homes, many of whom have had to leave the area entirely. Nearly half of the people seen by Landing Locals are seeking housing because the homes they were renting have been sold or reoccupied, Frolich says.

Steve Ause moved to Incline Village 20 years ago to work as a financial advisor. When the housing market boomed, he and his wife would watch Zillow every day, and every day, he said, the price of their home went up a few thousand dollars, sometimes tens of thousands.

Now, they’re selling their house to move into an RV community in Temecula while also trying to find a new place for their renter, who they met through a friend from church. He works three jobs at three different local businesses. The Craigslist ad reads: “Selling our home to take advantage of this crazy real estate market. Need a place for our excellent renter of 5 years. He’s a good guy (or he wouldn’t be here after 5 years!)”

The choice wasn’t simple for the two homeowners. Both in their 70s and still working, they plan to use the money to retire. But they’re leaving behind their family members and church community. Ause says his wife sometimes wakes up in the middle of the night in a panic.

“We have to look out for us and our retirement,” Ause said. “But I do feel bad. I don’t suppose most renters help their ‘rentees’ find a room.”

Other local homeowners prefer to convert their places to short-term rentals through Airbnb or VRBO rather than long-term rentals, so that they can book as many renters as they want with the option to spend time there as well.

“You can make a lot of money as a short-term rental,” said Frolich, who used to work for Airbnb. “It sometimes doesn’t pencil very well to convert to long-term.”

TENSIONS

Last summer, pandemic restrictions and stay-at-home orders meant fewer hotel and resort occupants, while day-trippers seemingly increased, according to Jeffery Hentz, CEO of the North Lake Tahoe Resort Association. This summer, alongside those day-trippers and the influx of new residents, hotels and resorts are anticipating record-breaking numbers of occupants. The lack of affordable housing for the “missing middle” means that, ironically, as pandemic restrictions ease and demand for vacation services increases, North Lake may not have the people or infrastructure to meet it.

Luciano Maurizi came to King’s Beach from Buenos Aires to work at Northstar California in 2019. When the pandemic hit and Argentina closed its borders, he ended up staying months longer than he anticipated, moving from place to place and working at Safemart, before eventually returning home. Now, he’s looking to return to Northstar for the winter season, but he hasn’t found anywhere to stay.

He emailed the same people who rented to him before, but they’d either sold their places, were no longer renting them out, or were renting them for much higher prices.

“They need workers from South America,” Maurizi said. “For the functioning of the mountain, it’s really important that we’re there. Winter’s cold and I don’t want to be on the streets.”

Steve Frisch of the Sierra Business Council used to be a ski bum himself. In his teens and 20s, he would couch surf while working on the mountain. He could always find a cheap place to live. Now, he says, in the age of the internet and remote work, Truckee and North Lake Tahoe are becoming professional communities.

“The unfortunate side effect is that it pushes the ski bum and the romance of that out,” Frisch added. “I will always have a sentimental love for that.”

Blame often falls on the outsiders. In local Facebook groups like Tahoe Truckee People/Rant, residents lament disrespectful newcomers while discouraging prospective ones.

In one post, a woman who had been vacationing in Tahoe for 40 years wrote that she had called six veterinarians and was still unable to find anyone to help her injured dog. She ended up having to go to Reno. “Sorry to say that Tahoe is no longer dog friendly,” she wrote. The comments were not supportive.

“Complain elsewhere, like where you actually live,” one comment reads.

“It’s a pretty prickly community to come into, especially being an outsider,” said Justine Marmesh, who grew up in Los Angeles. “You’ll rarely find someone who is born and raised here. Everyone thinks they can have some claim to their localism.”

Frisch thinks the tensions between locals and newcomers will diminish as the pandemic ends. “That was partly pandemic-driven and partly fear-based,” he said. “You can’t have a great, strong community if people are at odds with each other — we all came from somewhere.”

The reality is that North Lake is becoming increasingly elusive for everyone who doesn’t already own a house there, whether they’re hoping to enjoy the area for a few days, a season, or for life. The real divide seems to lie between the top half of the “K” and everyone else.

The same forces that drive residents apart might also bring them together. Recent policies limiting short-term rentals may help, as well as efforts to convert some of them to long-term rentals, such as the town of Truckee grant program, a combined effort of Landing Locals and Truckee, which offers property owners $3,000 to rent their homes long-term to locals.

Still, many existing affordable housing developments have been geared toward those making 80% of the average median income or below, not the middle class, something local officials are currently working to fix. New housing developments for local workers are now underway, such as Hopkins Village in Placer County.

“Truckee is a microcosm of a broader problem,” Frolich said. Perhaps it can be a microcosm of a broader solution, though that solution could take decades to reach.

Frolich was frank. He doesn’t think Landing Locals has all the answers: “We need entrepreneurs, we need government intervention.”

Frisch thinks that a silver lining can be found in this newfound focus on housing for the middle class, a need that existed in North Lake long before the pandemic illuminated it.

“This North Lake Tahoe-Truckee community is one of the most progressive and forward-looking communities in the state. They are really digging in to try to solve the problem,” he said. “You know, if the pandemic has highlighted the problem and the need for solutions, and it makes us work even harder to achieve those, that might not be such a bad thing.”

Shira Moolten is a freelancer with the Sierra Sun. Staff Writer Justin Scacco contributed to this report.


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