Summer Crowds Dissipate and Mammoth Enjoys Cool and Clear Weather.
Market Summary: August 12 – August 26
At the period’s end the condominium inventory is up six (6) to 115. There were 15 new condo listings in the period and NONE are already under contract and in escrow. I was out showing condos this past week and there are some good properties to look at in the various segments of the condo market. Just like it should be in late August. But sellers appear to be getting nervous because numerous price reductions are already happening. Property showings have picked up but not substantially, yet. Continued cooler temperatures are in the forecast and I see aspens already turning.
Single Family Inventory
The total number of properties in “pending” (under contract) in Mammoth Lakes is down two (2) to 57 at period’s end. Of the 57 properties in “pending,” there are 36 in “Active Under Contract” status (formerly “back-up”). The total number of pendings in the aggregate Mammoth MLS (which includes outlying areas) is up nine (9) at 103. Clearly, the higher selling prices and brisk activity of the first half of 2018 is not translating to the second half of 2018. At least not yet. But looking at real estate market activity in southern California and other areas across the country, there appears to be a slowdown of transactions and price reductions are becoming more commonplace. Even Zillow extensively noted the number of price reductions across the country in June (their stock is down ~25% since June too). Most of Mammoth’s valuations are still in the 75-80% range of the 2006 peak. Higher-end residential activity continues to remain the bright spot in the Mammoth market, but those buyers are looking for reduced prices. The Mammoth market has become very price sensitive. Rusty needs to make some big announcements to juice the markets.
Market Updates and News
With many school kids going back to classes the summer crowd has thinned out a bit but tourism remains healthy. The nearby Lions Fire burning on the other side of the Minarets and the Ritter/Banner peaks remains burning but the smoke has been moving north and sparing Mammoth Lakes proper. Helicopters are still buzzing overhead as they shuttle between Mammoth Airport and the fire location. Two weeks ago in The Sheet, longtime Red’s Meadow pack station operator Bobby Tanner made an argument to let the fire burn. His sound argument is that the area has been over protected for so long that it has accumulated vast amounts of dead trees and brush. The incident commander calls the burning area “some of the most unforgiving terrain in the nation.” The fire is currently 80% contained but they may just let it burn until the snow flies. The cooler temperatures certainly help the fire crews.
California’s “Super Volcano” was back in the news during the period. Now there is “240 cubic miles of magma hiding.” But there seemed to be some confusion as to where all of the magma is hiding. The San Francisco Gate article featured a caldera diagram and a photo. The article specifically referred to the Long Valley Caldera (Mammoth). But the caldera diagram was of the Medicine Lake volcano, an area in the Shasta-Trinity National Forest and the photo was of Mt. Lassen. That gives the writer and the article poor credibility.
The article refers to our local caldera that blew 760,000 years ago (part of the local knowledge). Gladly, the “scientists do not believe that an eruption of that scale will occur anytime in the near future.”….A couple of years ago I had the privilege of sitting in on a private presentation by the famed Dr. David Hill who was in charge of the USGS monitoring in the Mammoth region for many years including the early 1980’s when Mammoth was “going to blow.” I remember him saying that the main problem was the the USGS had “no protocols” how to handle the public safety aspect of the local geologic activity. I’m betting they still don’t. The recent volcanic activity on the Big Island of Hawaii is likely to prove they still don’t have real protocols in place. So meanwhile, dimwit newspaper writers can continue to produce hysteria headlines….But one of the first rules of living in Mammoth (from the 80’s and 90’s) is; don’t let your gas tank go below half full.
Last Thursday night there was a presentation by the owner of the Sierra Nevada Resort at Mammoth Brewing. Mr. Jim Demetriades is arguably one the smartest guys in the room, at least around Mammoth. And certainly one of the wealthiest. He has been pushing a major redevelopment of his Old Mammoth Road property since he purchased it in 2005. Based on the presentation I would say he is bored (and frustrated) with real estate development, especially since he has many new entrepreneurial enterprises with major universities and young intellectuals.
But the focus of the presentation had to do with the Mammoth Airport / Bishop Airport situation. His contention is that the Bishop Airport improvements will take at least 10 years, and maybe longer if there is environmental based litigation (and the local Sierra Club nazi wasin the room). At the same time the FAA is basically ready to fund the $40 million for the Mammoth Airport terminal improvements. Demetriades recommended we should be moving forward with these improvements immediately. He also impressed upon the crowd that the newer jets that United is bringing (and will bring) to the local air service are far better for handling the altitude and winds. And there are far more pilots available for those aircraft than the Alaska 400 turbo props.
Apparently Demetriades had some of his “think tank” partners do an independent analysis of the whole situation, and moving forward with the Mammoth Airport improvements is the highly recommended course. Even if Bishop falls into the picture later on. He said he has discussed this with Rusty Gregory, but Gregory believes the Mammoth improvements should be much smaller and still believes Bishop is the ultimate location for major air service. Demetirades also implied that there have been 500,000 Ikon Passes sold already. I haven’t seen that number announced anywhere, but if it is true then the Ikon Pass is clearly competing with Vail’s Epic Pass.
The post presentation discussions around the room were enlightening. Maybe it was because Demetriades paid for all of the beer, wine and pupus that were served throughout the evening. Long time former Town Councilmember John Eastman agreed with Demetriades that the FAA money should be spent ASAP. Town Manager Dan Holler looked at him like he was crazy. A local airport official who had recently toured the Bishop Airport facility said that the landlord, LADWP, wasn’t going to allow any increased water usage and that there were wetlands issues with the main runway. And a longtime (and native) Bishop resident said that while the Bishop business community is presently in favor of major airport expansion, there would eventually be opposition.
A few months ago when I was down at Mammoth Airport renewing my TSA pass, the airport manager told me clearly; “we can’t subsidize two airports.” So with everything else that this Council is contending with, the airport controversy looks to be heating up. We’ll see if Rusty has his way with the group, or if they can think for themselves.
And from the hypocrisy department, Councilman Bill Sauser was quoted in this week’s issue of The Sheet complaining about an additional layer of asphalt as part of the new Main St. sidewalk projects. He apparently wanted to see something more aesthetic in the design. There’s already seven lanes of traffic and parking on both sides, so there’s already plenty of asphalt. But Sauser is the first and biggest champion of paving over everything possible at Mammoth Creek Park West. Hypocrisy is clearly in vogue.
A 3 bedroom / 3 bath townhome at MeadowRidge sold for $449,000. It sold after the listing had expired. This unit had been on the market for quite some time. Not only good space but plenty of nice upgrades and a great project. I bet I showed it at least a dozen times over several months. No takers. So now smaller and lesser quality units are selling in the same price range.
A 2 bedroom /2 bath condo hotel unit sold on the 4th floor of Grand Sierra Lodge in the Village for $652,000. Another impressive sale. Village values have increased significantly. But why are the 2 bedroom units at The Westin Monache not selling?? They are priced lower than the Village. I know what I would rather have…
The two high sales for the period were a home on Holiday Vista and a Juniper Crest Condo ($999,000). Both were cash purchases and both within short walking distance to Eagle Express. They must believe the Eagle Base improvements are on the near horizon.
And I have two 1-bedroom condos currently in escrow. Both appraised at significantly higher than the actual sale prices. Hmmmm….
Favorite New Listing For The Period!
Other Real Estate News
The nightly rental business continues to change and create more competition. Both locally and amongst the big boys. Increasingly, my clients are spending more time talking to local rental agents and doing online research than they are with me. That’s okay. It is their money and I want them to be educated. And they are learning plenty. But the industry is in constant change right now. The competitive environment is flattening the management margins and increasing services to the owners. Even the Alterra condo hotel front desks have to consider lower fees to remain competitive. And they have their own massive database from resorts all over the country.
A recent article from Business Insider pointed out the macro market trends, especially between Airbnb and Booking.com. One of the key takeaways was that more and more rental listings can be found on multiple sites and there can be “wildly divergent pricing due to different fee structures and pricing algorithms.” For instance, Bookings.com charges based on how many people will be staying in the property. Airbnb charges for the property itself. So traveling with larger groups favors Airbnb. And Airbnb’s dynamic pricing is known as “Smart Pricing” and Booking.com’s is known as “RateIntelligence.” Each has their own algorithms with different goals, and that creates pricing discrepancies. Guests need to look around and find the best price.
Currently, Bookings.com has 5 million non-hotel properties on their platform. That is a 27% jump in the past year. They have a total of 27 million listings including many hotels. Airbnb has 4.85 million non-hotel listings and is now moving aggressively into the hotel listing business.
Meanwhile, insurance is becoming a more important issue in the nightly rental business. Airbnb offers two programs; the Host Guarantee program provides protection specifically for damage to the Host’s property. In essence it isn’t insurance but a reimbursement from Airbnb. Their Host Protection Insurance provides $1M of insurance coverage for bodily injury or property damage claims from guests.
But the attorneys watching this industry are making specific recommendations to property owners running a nightly rental business;
1.) Speak to your insurance broker about any gaps in coverage.
2.) Have well defined (and posted) rules and regulations pertaining to the use of the property and any amenities.
3.) Require significant security deposits; the best deterrent for bad behavior.
4.) Keep excellent records; all receipts, inventory and especially detailed photographs of the property.
5.) Seriously consider owning the property under an LLC.
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Thanks for reading!