Mammoth Real Estate Sales, June 17, 2018

Motocross and Marathoners Invade Mammoth, Summer Tourism Launches!

Market Summary:  May 27 – June 17

This report is for the past three weeks. The  Mammoth Lakes MLS is reporting 33 real estate closings for the period ranging from a low of $225,000 to a high of $1,765,000. Of the 33 closings, 31 were technically  financeable properties and 20 were conventionally financed. We are seeing more and more condo hotel units purchased with financing. Thirteen (13) of the sales were condos selling under $400,000. There were two (2) vacant residential lots sold. This three week period last year there were 36 closings. The 10-year Treasury has calmed down to under 3% and mortgage rates dipped a bit but remain slightly higher than most of the recent past.

Condominium Inventory

At the period’s end the condominium inventory is up 12 to 86. There are now 38 condos listed under $400,000 (the “bread and butter” of the Mammoth real estate market). There were 39 new condo listings in the period and 13 are already under contract and in escrow. The inventory is building but the buyer activity level remains high, especially for this time of year. It is not even summer yet, technically. This time last year there were 73 condos on the market, but the difference in the previous winters could have had an effect on timing.

Single Family Inventory

The inventory of single-family homes is up nine (9) to 42. There are now five (5) homes listed under $700,000 and all five have been on the market for less than a month. We’ll see how they fair in the next two months with lots of people (and potential buyers) flowing through town. There are 19 homes listed under $1M. There are some new properties worth looking at. This time last year there were 36 homes on the market.

Pending Transactions

The total number of properties in “pending” (under contract) in Mammoth Lakes is down seven (7) to 53 at period’s end. Of the 53 properties in “pending,” there are 20 in “Active Under Contract” status (formerly “back-up”). The 53 includes five units under construction at Creekhouse (Snowcreek Phase 7). Last year there were 67 pending properties at this point. The total number of pendings in the aggregate Mammoth MLS (which includes outlying areas) is down 19 to 92. While the market looks-and-feels active, and late spring/early summer lull is pretty typical in this market. As I said in my last Q&A, there will be plenty of price discovery in the balance of 2018. 

Market Updates and News

While I was was gone most of the period, the last week was incredible warm and delightful (except for today). Summer tourism has exploded and the Mammoth Motocross, today’s half-marathon, and a new yoga event has just piled it on. There are backpackers everywhere so the lack of significant snowpack in the back country has allowed early access and demand. Based on the last few days, it is going to be the summer of U-turns on Mammoth’s roads. Everyone needs to slow down and pay attention, cyclists included. And it would be helpful if the Town could get the lane lines painted on Old Mammoth Road. The visitors (and some local residents) don’t do well without the lines.

The May rains did in fact green-up the Mammoth region very nicely. The wildlife has plenty fo natural grasses to feed on. The next month should be a great time to be in the Mammoth region. Meanwhile, the Ski Area ended the skiing today. They milked a drought winter for everything they could. Hopefully, Alterra continues that legacy.

The local Town Council election is over and the three most experienced candidates were elected. The new Council will be seated soon and they have plenty of work ahead of them. It won’t be a major ordeal for them to “come to speed” on the process or issues. But wrestling with the challenges at hand may prove daunting.

The affordable housing crisis in Mammoth is one issue that is front and center. Especially because the Town has just acquired the 24 acre Shady Rest parcel with the intent to develop deed restricted housing. The State is promoting and incentivizing affordable housing so there are new opportunities. But the Mammoth Lakes Housing entity has come under greater scrutiny and the Director was just elected to County Supervisor. So the whole thing needs a major make-over, and quickly. Delays to action will only produce additional heat on this new Council. It is like starting over.

The Airport and Alterra’s desire to move the focus/traffic to Bishop will also be front and center. How are they going to make this happen?? And Alaska Airlines pulling out of air service just complicates things, or maybe not (what would happen if we had no commercial air service and a very successful winter??). Mixed in with that is the future of Mammoth’s TBID (Tourism Business Improvement District) and marketing. The TBID is the extra tax (1-2% on almost everything Mammoth) enacted some five years ago to essentially cover the Airport settlement payments and hyper-fund marketing. It is up for review and may become controversial. The direction of Mammoth’s intense (and expensive) marketing efforts is part of the discussion. Interestingly, a Q&A I wrote almost eight years agohas re-surfaced with some local attention. The column was written pre-Airbnb and pre-TBID, but is still quite fitting. 

Two of the new Council members ran on fiscally conservative platforms. There is likely to be an existing Council member who aligns in this direction (“counting to three” is always critical). So some new fiscal directions may be in the offing. And some change in Town staffing.

Both the school and fire department bonds passed. So the local voters have no problem increasing property taxes. Hopefully, it won’t compromise their ability to continue living here. And maybe the school district will be more prudent in the way they spend these new bond dollars. And maybe the current ice rink parcel can be negotiated for as part of community quid pro quo. I can at least dream. A return to common sense public planning would be nice.

After stepping away from the community (and real estate) for a couple of weeks, the affordable housing issue has additional concern for me. I believe the “telecommuting” that is becoming real in Mammoth will only exacerbate the problem. And likely drive real estate values (and rents) up even further. The amazing Internet service provided to the eastern Sierra and especially Mammoth by the Digital 395 program is beginning to have an impact.

It is simply allowing higher income earners the ability to spend more time here. It includes doctors who need to “read film” and all sorts of technology entrepreneurs and various market makers. They may be moving here permanently or with plans to simply be here for longer periods. I sense a real but quiet “creep” of this trend. Mixed with solid tourism and healthy construction activity, the demand for occupying both residential and commercial real estate is only increasing. The existing crisis could get worse in short order. The new Council needs to act intelligently and expediently.

And a new headache might be brewing for local property owners and the real estate industry; fire insurance. After last year’s devastating fires in California, insurers are looking more closely at areas that are adjacent to natural and potentially fire prone areas. The periphery of Mammoth certainly falls into that category. So far it hasn’t killed any transactions. State Farm is a major insurer in Mammoth Lakes (including the majority of HOA/condos) and they don’t appear to be taking on any new business but are renewing existing customers. We had a similar problem in the late 1980’s. We worked through it but it was a problem, and some mortgages were never funded because of it. 

The finalized portion of the upper Main St. sidewalk project is moving quickly, they might be down by the 4th of July week. That would be nice. Now if we could just get the last of the abandoned buildings around town torn down…

Noteworthy Sales

The sales of <$400,000 condos look to be a mix of new homes for local residents and units ultimately intended for nightly rental. The seven condo sales between $400-600,000 look to be nightly rental bound. But all of the sales are clearly pushing values up.

….Notable are sales in the Village, a 1 bedroom in White Mountain Lodge $435,000 and a 2-bedroom in Lincoln House at $615,000. Nothing super special about either unit.

An older and funky income property in Sierra Valley Sites (aka The Ghetto) closed for $805,000. So the trend continues. We may be close to the craziness of the mid-2000’s in this segment of the market….Further evidenced by the sale of a 1950’s lodging property in Old Mammoth closing for $1,500,000 cash. After literally years on the market, this seller finally found a buyer.

An older single family home sold for $805,000. The value appears to be pushed substantially simply by the fact that the home is located in a small (but isolated) area where the zoning allows for nightly rentals.


Favorite New Listing For The Period!

Buyers looking for low end homes are frustrated by two common features fo these properties; they are located on busier streets or there is no room to add a garage or expand. Here is one that has neither of those problems. This 1970’s built 3 bedroom/ 2 bath home is located on a very quiet residential street in the Majestic Pines neighborhood which is located between Eagle Base, the Sierra Star golf course and the Village.
   Further, the home is located on a nearly 11,000 square foot lot which is substantially larger than most residential lots from the era. And the home was originally built right on the very west property line and set-back. So there is plenty of room to add a massive garage with second floor improvements (master suite, kitchen) and even an additional ADU (caretaker’s flat). A unit like that could rent and cover the property taxes. Or alternatively, a new owner could make some minor improvements and have a cool cabin with plenty of surrounding open space and serenity. 
    
Listed at $669,000

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Other Real Estate News

Going on vacation after a long winter is always welcome. But I always say it is nice to go but it is always nice to come back. Especially when Mammoth is beautifully green and warm. But something a little different happened while out at sea that was enlightening about where Mammoth has gone/come in the past 30 years.

Due to a medical emergency (thankfully not me) we ended up in Cabo San Lucas. We had to travel 62 hours to get there but it was the closest medical services available. We didn’t step foot in town but pulled into the marina and made a drop-off. But we got a really good look at all of the new development. I really haven’t been there in years although I’ve spent plenty of time there. The place has gone nuts. There is development everywhere. The marina and promenade are incredibly developed (although that one abandoned hotel construction is still sitting there!). And going up the Pacific side the beach development was even more impressive/depressing. There is a ridiculous new golf course carved right into the hillsides.

The really sad thing is that travelers are warned about the criminal activity in Cabo and the balance of “the Tip.” Most of it is drug cartel related. It used to feel quite safe, even at night and into the early morning hours. And I’m sure the level of people trying to “sell” you something (everything) is near obnoxious.

Now 30 years ago Cabo San Lucas wasn’t much more developed than Mammoth Lakes. Mammoth advanced plans in the early 1990’s for similar levels of development (I know, I was on the Planning Commission). At the time I thought all of that development would be pretty cool. We could become the fabled “destination resort.” Today, I know that it would have ruined Mammoth (and where would the water have come from?). I can’t imagine the Village area being developed like Cabo’s marina. Yes, it could rival Whistler’s Village, or Park City (that was the plan). But there is my “capacity” argument again. 

It is interesting to think about Mammoth’s next potential development cycle. There is a hint right now. With real estate values rising, projects are looking more viable. But the cost to develop is only increasing. And new Council members are already talking about reinstituting impact fees. And local contractors are complaining about simply getting a set of house plans pushed through the Town. And there needs to be good financing alternatives for condo hotel units for that development to make sense (maybe Aterra’s relationship with Goldman Sachs can help make that happen). 

But ultimately, Mammoth’s rawness, and uncontrivedness, and isolation may become the appeal. And of course the Ski Area and the climate. It isunique in the Alterra portfolio. Maybe that will become the competitive advantage. Maybe crazy development shouldn’t be part of the Mammoth business plan. 

Meanwhile, one more tidbit of insight from the past three weeks; if you are traveling to foreign countries, especially to remote areas, seriously consider travel insurance.

Thanks for reading!

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