Mammoth Real Estate Sales, July 29, 2018

Rain and Smoke Dominate But The Crowds Are Here To Beat The Heat!!

Market Summary:   July 15 – July 29

  The  Mammoth Lakes MLS is reporting 14 real estate closings for the period ranging from a low of $255,000 to a high of $4,725,000. Of the 14 escrow closings, all 14 were financeable properties and nine (9) were conventionally financed. Seven (7) of the 14 closings were condos selling under $500,000. And again there were no condo hotel units closed during the period. The high sale of the period was one of the highest residential sales in Mammoth’s history. The 10-year Treasury rates moved strongly during the period and settled at 2.96% and conventional mortgage rates will move in the same direction. This period last year there were 16 closings, two years ago, 13 closings.

Condominium Inventory

At the period’s end the condominium inventory is up one (1) to 104. There were 11 new condo listings in the period and only one (1) is already under contract and in escrow. Of the 11 new condo listings, three (3) are new under-construction Creekhouse units. They are projected to be completed in spring of 2019. We are a month away from Labor Day weekend and that normally marks the peak of the inventory in the Mammoth real estate selling cycle. The statistics would indicate we appear to be near the peak of inventory for 2018. This time last year there were 83 condos on the market, two years ago, 171. 

Single Family Inventory

The inventory of single-family homes is down two (2) to 53. The peak of inventory for homes may also have been reached. But I can tell you first hand that there were almost NO showings of single family homes in the past 30 days. The electronic lockboxes do not lie. The lack of showings is almost bizarre. But we are in the “Dog Days of Summer” and we’ve been here before. Prior to Memorial Day weekend the local market had been very active straight through the end-of-the-year holidays and into spring. This time last year there was the exact same number of homes on the market (53), two years ago there were 76.

Probably the most interesting thing that happened in local real estate market during the period was the listing of two large and high-end Graystone homes, and both have already gone pending. Graystone is the old Solstice II property adjacent to the clubhouse and future hotel site in the middle of the Sierra Star golf course. These are lovely homes but the real key is that their zoning allows for nightly rentals. So it would appear that there is an appetite for ~$1.8 million homes that can be rented nightly. We’ll see how that works out.
Potential buyers often ask “When is the best time to look at properties?” The logical answer is August; the inventory is usually close to being at the peak and the post Labor Day pre-winter buying push (our busiest selling season) hasn’t started. So don’t blame me if you come in late October and the inventory is cleaned-out. 

Pending Transactions

The total number of properties in “pending” (under contract) in Mammoth Lakes is up six (6) to 64 at period’s end. So the market isn’t completely dead. Of the 64 properties in “pending,” there are 44 in “Active Under Contract” status (formerly “back-up”). The total number of pendings in the aggregate Mammoth MLS (which includes outlying areas) is up three (3) at 87. Ironically, there was the exact same number of properties in pending status this time last year, and two years ago there were 66. So again, the data would show we have settled into a rather normal pattern. But some agents and sellers were expecting the pace of the first half to continue through the summer. It didn’t.

Market Updates and News

Mammoth Lakes now settles into classic summer weather and activities. Most weekends the major event is based on music and alcoholic beverages. It has proven to be a successful formula…. The on-and-off smoke

Mammoth had fabulous rain and even a deluge last week but in-and-out smoke has spoiled the party the last few days. The Ferguson fire on the west side of Yosemite is due west of Mammoth and smoke has moved into the area based on the wind patterns. The fire has burned 50,000 acres and the Valley floor has been closed and isn’t scheduled to reopen until next Friday. The fire and the extreme heat in the southwest has pushed crowds into Mammoth. We’ve seen worse air quality but the conditions aren’t optimal for outdoor activities. We like our clean air and blue skies. Hopefully it doesn’t’ get any worse.
This weekend’s issue of The Sheet covered some of the official Ski Area specifics about the coming improvements. Local Realtors cheered because the hype has been almost non-existent. Buried press releases and old elevations and plans aren’t enough to move the market. People start believing when they see photos of progress and quotes from the bosses. But there is conjecture that the insiders are trying to buy properties up before the real hype happens. 
The good news is that Alterra appears to be poised to spend some money. The “$100 million in capital improvements” may come to fruition. Maybe the third time will be the charm. Hopefully the money is budgeted and not “economy” dependent. The Ski Area needs the improvements and it is long overdue. And it will certainly be needed if they hope to attract Ikon pass holders who are regulars at resorts like Aspen, Deer Valley, etc.
Strategically, the Main Lodge land exchange should be completed in the next year. That is a longer term plan. We don’t even know what the market will want (or can be viable) on some of that developable real estate. For now, Alterra appears to want to make the east side of the Mountain more user friendly and profitable. Hopefully that means upgraded chairs and gondola extensions and “beaches.” The goal is to always “raise the revenue per skier day.” That means capturing more food and beverage revenue, more lessons, demos, instruction, retail, etc. That will be a big part of the planning.
Local propane supplier Amerigas is controversial for sure. Their rates are notoriously arbitrary and they are involved in disputes large and small all over town. (Watch your bills!) But the recently released Mono County Grand Jury report exposed just how pathetic the Town management is. The Grand Jury report found that the Town’s propane rates varied from $1.94 to $5.02 per gallon. And there were no available complete records of billing, no evidence the Town attempted to negotiate rates, and no basic auditing of the rates or service. Great.
So here we have Town management that can secure multi-million dollar bonds for projects that aren’t even approved but they can’t even adequately manage basic utility costs at Town facilities. Nobody seems to understand math or accounting or internal control. No wonder the public works director looked so worried when I asked him if they had expense projections (including utilities) for the proposed ice rink. Of course, it isn’t their money. Boy, the new Council has their work cut out.
And speaking of the new Council, as one of their first tasks they appointed new planning and parks and recreation commissioners. Incumbents were re-appointed but the owner of Mammoth Rock-n-Bowl was a new appointee to the parks and rec position. He immediately started championing for the ice rink project at Mammoth Creek Park. Maybe the Council or staff needs to refer him to the California Fair Political Practices Commission rules on conflict of interest; his property/business is within 500 feet of the park and clearly falls under regulation 18702.1…..     
And the last week, I’ve actually seen an Uber driver in town….If real estate doesn’t go so well maybe I can do that. Seriously, I think Uber can proliferate in Mammoth. We’ll see. 

Noteworthy Sales

More condo sales during the period but a couple standout; the sale of a Courchevel back row unit for $339,000. This is a 2 bedroom / 2 bath townhome with a private 1-car garage. This is a pretty easy walk to

The sale at 54 Bridges Lane for $4,725,00 is certainly noteworthy because of the price tag. There has been solid business in the high end of the residential market but most of it ends up in custom home construction. But now resales are more frequent. It can be seen as a strong vote of confidence in where the community is going or what Alterra will do.
Two stories about this property; I had this lot listed years ago with one of the original investors in the subdivision. The owner had never seen the lot and was bit of an eccentric. He flew his helicopter up to Mammoth to check it out. Before he left he asked me if I wanted a ride. We went out over Mono Lake and back around through Mammoth Pass. That was memorable. And a few years ago I helped deliver pizzas for a couple of nights during the holidays for my friends who own Z Pizza. My best tip was at this house. I carried $150 worth of pizzas right into the kitchen where a bunch of hungry kids were waiting.
Two funky houses closed on Hidden Valley Road and Kelley Road for $625,000 and $631,500 respectively. The bottom of the home market remains tough, but there are better homes in the $800-900,000 range.Canyon Lodge and the unit was not in bad condition with some modernization. Seems like a good buy, but these are typically winter sales.

Favorite New Listing For The Period!

The Mammoth Green project has plenty to like. The location is right on the Sierra Star golf course and yet it is a reasonable walk to Eagle Express. The Green Line shuttle can take you right downtown. And this 3 bedroom / 2 bath unit overlooks the 3rd golf hole and has a great view to the Sherwins. And there is understructure parking. The HOA fee is on the high side but that includes hot water and propane gas. The fairly fixed utilities can be good in rental scenarios. And the project is one of the few, newer projects that has pool in addition to the spa (a really nice pool overlooking another golf hole).
    Even though this project is almost 20 years old, the project has been completely re-sided because of the litigation settlement with the original developer. So the project looks great. This is an excellent summer and winter location, and if the Eagle Base improvements happen …..   
 
Listed at $645,000
Listing courtesy Mammoth Realty Group

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Other Real Estate News

Airbnb is back in the news as they are now backing litigation against New York City. A couple of weeks ago NYC passed an ordinance forcing Airbnb to disclose all of their host information for hosts in The City (there are approximately 40,000). The move was clearly the next step in attempting to ban short term rentals. The hotel industry has apparently been lobbying the city council to shut down all of the competing activity. Other council members are claiming that the Airbnb activity is seriously impacting rents and affordable housing (sounds familiar).

 

And now Airbnb is financing one of their hosts as plaintiff against NYC. Apparently the host who has lived in the same house for 56 years spoke at a council meeting in support of short term rentals and Airbnb. A week later he was served with summonses and tens of thousands of dollars in fines. The result is a perfect opportunity for Airbnb to take on the City because this is an owner who is is “just trying to make ends meet” by renting out a room or two.

 

Meanwhile, one of the reoccurring questions I get from potential buyers of condominiums is “Will the Town of Mammoth Lakes ever try to shut down nightly rentals in the local condominiums?” (like in the single-family neighborhoods). The answer is clearly no; the majority of condo properties are zoned for nightly rentals and the existing CCR’s allow for nightly rentals. But most importantly the majority of the Town’s operating budget is derived from bed tax generated in local condominiums. And most of the “hotels” are actually condominium projects, so there isn’t likely to be sufficient hotel industry lobbying.

 

In fact, one of the misunderstood reasons the Town bed tax receipts have been so strong in the past two to three years is the influence of dynamic pricing in the market. Dynamic pricing is something Airbnb helped bring to the forefront because of their vast data and sophisticated software. Hosts and rental companies have been able to tap into the data and raise or lower prices based on demand. It has been very effective. That creates more overall revenues and obviously more bed tax revenue for the Town. It has also upwardly influenced condominium values in Mammoth Lakes.

 

And recently some local public officials have pushed the idea that one way to solve the workforce housing crises is to rent properties (at great cost) that are currently in the nightly rental pool and turn them into long term rentals. Basically, compete with the nightly rentals. One of the glaring problems is that most of the owners of these short term rental properties actually want to come and use their property on occasion (like to go skiing with their Ikon Pass). The other glaring problem is the long term rents would have to be massively subsidized by the Town (my estimate is by 2 to 3 times the “affordable market rent”) ANDthe properties would also not be generating the thousands of dollars in bed tax every year. Maybe the Town should just be buying used motor homes for the workers.

 

Sometimes, math is hard.

 

Thanks for reading!

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