Mammoth Real Estate Sales, January 6, 2019

Blackouts to Whiteouts, A Very Successful Holiday Period For Mammoth!! 

Market Summary:   December 16 — January 6

The following report is for the past three weeks, the end-of-the year holiday period. The Mammoth Lakes MLS is reporting 18 real estate closings for the period ranging from a low of $215,000 to a high of $1,203,000. Of the 18 escrow closings, 16 were financeable properties and 12 were conventionally financed. There was a broad mix of closings but most notably is four (4) high end Snowcreek units including three closings in Creekhouse (Snowcreek VII). There were two (2) Westin Monache closings. 
The 10-year Treasury yield fluctuated wildly (like the stock market) during the period. It settled down more than 2/10th of a percent (20 basis points) at 2.659%. But it was lower than that during the period. At the end of 2017 the yield was 2.409%. The Wall St. Journal surmised that many investors were putting money into the bond market as they take losses (or gains??) in other assets like stocks for tax purposes or to avoid the current volatile market conditions. Many lenders are now quoting the 30-year fixed rate mortgages in the low 4% range. Only time will tell if these attractive rates jump start the real estate market.

Condominium Inventory

At the period’s end the condominium inventory is down four (4) to 93. But that is a mix of listings expiring (falling off the market) and new listings. There were numerous expired listings at the beginning of the month. There were nine (9) new condo listings in the period, and none to contract. Again, this is an unusual time of year to see new condo listings. But if these units are truly “vacant” and showable by local agents, they definitely get shown. The holiday period always brings some looky-loos.

Single Family Inventory

The inventory of single-family homes is up one (1) to 34. Again, some expired listings but seven (7) new homes brought to the market during the period. And again, an odd time of year to bring a home to the market. But this is truly fresh inventory and potential buyers like to see new offerings.

Pending Transactions

The total number of properties in “pending” (under contract) in Mammoth Lakes is down one (1) to 39 at period’s end. Of the 39 properties in “pending,” there are 12 in “Active Under Contract” status (formerly “back-up”). The total number of pendings in the aggregate Mammoth MLS (which includes outlying areas) is down one (1) to 65. With new snow, high levels of tourism, and attractive interest rates the local real estate market could be poised to become more active. Time will tell.

Market Updates and News

Today marks the end of the holiday period. Maybe. The week before Christmas was rather sedate. I skied the Thursday before Christmas in wonderful sunny conditions and brisk temperatures but the runs were surprisingly empty. The traditional week between Christmas and New Years was very busy but certainly not overwhelming. The last few days have been increasingly packed. This weekend may have been the peak of tourism for the entire period. With new snow and continued snowy periods between now and Martin Luther King Weekend (Jan. 19-21), I would expect Mammoth to stay busy. For the local business community it is “time to make hay.” And the last 24 hours proved once again that it is fun to have a good snow dump while there is a big crowd in town.

This weekend’s issue of The Sheet featured a front page article about the effect of the Ikon Base Pass blackout dates. This was certainly on my mind. Sharing a building with two popular restaurants and a busy reservation/cleaning company, I can keep tabs on a variety of tourist traffic. The Sheet article queried several prominent businesses and the overwhelming response was that the blackout period (Dec 26-31) brought a more “destination”-type visitor, a different higher-end customer.

The response from my business neighbors was that business during this period was very strong but “less hectic”, less “crushing” in nature. But the following week, a non-blackout period moved into that pace. The Sheet article quoted the manager at Wave Rave noting a “flattening of the bell curve.” So if business continues to be strong through the next holiday weekend, then the IKON Pass structure may be a real winner for Mammoth tourism. And if anybody paid the $179 per day walk-up lift ticket price of the blackout period, then a full IKON Pass at $899 has to be a consideration for next year.

The impacts of a big holiday period are doubly significant for Mammoth; first, guests are paying maximum rental amounts thus generating large volumes of TOT (bed tax). And local sales taxes and TBID taxes from rentals, sales, food and beverage, etc., sky rocket. Secondly, a long standing economic tradition in Mammoth is that many overdue accounts payable are settled by the boon of the holiday period. Lots of outstanding bills get paid in January. It has always been this way. It is part of the crap-shoot. Drought and “busted” holiday periods notoriously drive businesses and local residents into hardship. 

This weekend’s snow and the snow forecasted in the next two weeks is a godsend. The Ski Area did everything possible to keep conditions at their best, including making and moving plenty of snow. In the last few days some of the main runs were getting thin, and there were too many skiers and snowboarders on too few runs. I’m sure the hospital was busy….

The new YotelPad exhibition and sales office has been in full operation through the holiday period. I’m sure they are exhausted like the rest of the community. My Real Estate Q&A that appeared in the New Year’s issueof The Sheet covered the prospects for 2019 and two new words in our vocabulary will be prominent; IKON and YotelPad. The good news is IKON appears to be here to stay. We’ll see where the pricing goes next year and beyond. YotelPad will depend on the excitement of the market participants in the present and upcoming months. But there is no doubt that the YotelPad facility built and operating on that Village location would be transformative for the community in many ways.

The Mammoth real estate market continues to be driven by nightly rental income production in the local condos. Many of the sales in the past year have been based on “projections” of nightly rental income. Realistic rental numbers are far easier to “project” in the condo hotel properties where the front desk operators are freely giving up spreadsheets of annual rental incomes, and the flow of rental income appears to more consistent. And the commercial concept of “cap rates” has never been so applied to Mammoth condos (everyone beware).

But now the typical high vacancy of the fall period, the peak rental income of the holidays (including the effect of dynamic pricing), and annualized profit & loss statements can be calculated and scrutinized. We’ll see how it all works out. Some properties are bound to perform better than others. The results may spurn new listings or increase new sales. And we may have to wait until the winter season is over or tax returns are filed.

The Town administration goes into a minor hiatus through the holidays but 2019 may prove to be a challenging year. Hopefully tax dollars and drought will be the least of their concerns.

Speaking of the Town, in my Dec. 2 newsletter I stated “The Town’s public works division is too busy trying to develop Taj Mahals and can’t be concerned with things like road crack sealing (Meridian Blvd. is a mess and it is only a few years old).” So low-and-behold on Dec. 20 (the last day of fall) the Town crews were out crack sealing Meridian Blvd. I stopped and asked the crew what was going on. They just shrugged.

Now I’m sure the public works department has some sort of excuse; the “schedule” or availability of materials or something. But just to make sure I’m not losing it, I consulted the AsphaltPro website. It states that sealing cracks in a timely manner “is one of the most effective ways to maintain the quality of your pavement.” According to the site, it is especially important when freeze-thaw damage can occur (like here in Mammoth). And the best time to crack seal is in spring and fall when the cracks are “in average position — not completely open and not completely closed.” And “most sealant manufacturers require a pavement surface temperature of 40 degrees and rising.” (Dec. 20 probably didn’t qualify since we already had weeks of sub freezing temperatures.)

For Mammoth property owners the concept of crack sealing may seem like a waste.  But it is proven to extend the life of asphalt parking lots and driveways. It is a big business here in Mammoth and for good reason. But I’m sure they don’t advise to wait until the day before winter (and big crowds) to complete the task.

Noteworthy Sales

Three units at Mountain Shadows/La Res closed. These are classic “crash pad” units (no relation to YotelPad units). When I started in the real estate business some 33 years ago my the supervising broker referred to these units as “bread and butter” sales. Back then they were selling in the $30-45,000 range. These closings of similar units were $215-270,000.

The sale of Westin Monache #441 at $430,000. This is the “41” stack which is an unusual 1-bedroom + den / 1 bath floorpan. It is spacious and has a nice view overlooking the pool and up to the Ski Area. But two sleeping areas and the lack of a second bathroom is a major objection for most buyers. But this buyer is buying for more personal usage and any “extra” rental income the property can generate. So now Westin units are becoming personal crash pads.

The continuing sales of Creekhouse (Snowcreek VII) units is a great sign. It all but ensures construction will be strong out there next summer. The entire project could conceivably see completion in the next 3-4 years. That would be a change!! And that could ultimately lead to new units in the Meadow — Phase VIII.


Favorite New Listing For The Period

This is Snowcreek V aka The Fairway Homes. This isn’t on the fairway but backs to the Forest Service boundary for immediate access to open space for walking the dogs, snowplay, etc.. The orientation allows for panoramic views both down valley and to the Sherwins and Mammoth Mountain. This is the very popular Ridgeview floorplan (1674 square feet) that is 3 bedrooms / 3 baths and a 1-car garage. Lots of natural light with the whole side-wall of windows. 
 
One of the nice features of this property is that it was one of the last units developed in Phase V (a total of 297 units) and the construction quality and finish is some of the best in the entire project. It has forced air heating and a gas fireplace. An excellent second home with strong rental potential too! 
Listed at $799,000
Courtesy Broker In Trust

Other Real Estate News

Obviously the start of the year always brings the questions about what to expect in the new year. And for real estate there are potential moves by the government that will or may affect owners of real estate. I expect gridlock at the Federal government level so there shouldn’t be anything new. But the tax changes of a year ago may very well alter some ownership and usage here in Mammoth. I have previously discussed the potential for condo owners to convert their properties from true second homes into income producing (“held for investment”) properties. And I’m already seeing it. Some of it could be tax considerations, or some of it could just be a logical progression to produce some revenue from otherwise vacant property. 

And again, I see many of these owners not seeking maximum rental usage/income, but instead cherry picking the prime rental dates for top income and minimal traffic. And keeping time for themselves. They would be instructing their rental agencies not to discount their premium pricing or not accepting low-priced rentals  (via dynamic pricing) from the likes of Airbnb.

The filing of 2018 tax returns may also alter some real estate ownership in Mammoth. But we’ll have to wait and see. 

On the State level anything could happen. I expect pushes on the legislature and for potential 2020 ballot measures to begin dismantling Prop. 13. Long-held commercial properties with dubious changes of ownership are certainly going to come under attack. Many are sitting with radically low assessments. Commercial properties large and small may come under attack, or maybe just really large commercial properties. A “split roll” seems inevitable; not all properties will eventually fall under the current Prop. 13 laws. But beyond 2019 any change in Prop. 13 could cascade to other types of properties; residential income properties, vacation homes and even primary residences. We’ll have to see. But any changes to Prop. 13 could certainly affect real estate ownership and usage….And a rent control initiative is bound to be back in 2020.

Locally, the Town will continue discussion of impact fees but that really only applies to new development. The 2022 deadline to retrofit fireplaces and woodstoves looms. I can see many procrastinating owners looking for more time, especially as more and more condo projects bring a propane gas alternative as an option (but that takes time). The Town itself needs to remind owners of the deadline. The retrofits will only become more expensive as time goes on.

And of course the usual disclaimer applies; For legal, accounting, or construction advice, please seek out the appropriate professional. 

 

Happy 2019 to everyone!

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Thanks for reading!

 

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