Winter Returns With Fresh Snow On The Ski Area, Locals Ready For Summer!
Market Summary: May 12 — May 26
At the period’s end the condominium inventory is up five (5) to 99. There were 17 new condo listings in the period and two (2) are already in escrow. There are attractive properties in the mix. There is always a small rush/surge to get properties on the market prior to holiday periods. This time was no different but so far there is no massive build in inventory. The next five weeks will be telling. This time last year there were 74 condos on the market and 24 new listings.
Single Family Inventory
The inventory of single-family homes is up eight (8) to 41. There are now four (4) homes listed under $700,000. Some of the new listings have been on the market before, and some are brand new to the market. This time last year there were 33 homes on the market.
The total number of properties in “pending” (under contract) in Mammoth Lakes is down four (4)to 45 at period’s end. Of the 45 properties in “pending,” there are 17 in “Active Under Contract” status (formerly “back-up”). The total number of pendings in the aggregate Mammoth MLS (which includes outlying areas) is up eight (8) to 82. This time last year it was 60 and 111 respectively. So while the Mammoth closings have been consistent the last 60 days the actual “to escrow” market has slowed in the spring, especially compared to last year. Maybe people are just ready for some warm weather.
Market Updates and News
Mammoth turned chilly and while most of the snow accumulation has been on the upper elevations, there were several mornings during the period with 2-3 inches of fresh snow on the ground here at the town level. The ski patrol was blasting for avalanches and there were visible fracture lines and sloughs on the steeper runs of the Ski Area. This holiday weekend was cold and snowy. There was a crowd, so much so that the Ski Area opened Canyon Lodge and Chair 17 for access and opened Chair 9. The Canyon Lodge area was very busy, almost like a winter Saturday. But there was also plenty of evidence that many people were watching the weather and just stayed away. I’m sure that powder runs in late May graced plenty of Facebook and Instagram pages. The IKON Pass phenomenon continues to impress. And Mammoth Mountain just announced that it won’t close July 7 as scheduled. The lifts will turn daily until sometime in August.
The YotelPad condo hotel project received full approval from the Town of Mammoth Lakes during the period. There are no known appeals in the offing. I met with the development team last week and received some good information from them. These are very experienced condo hotel developers. They are currently constructing a YotelPad condo hotel project in Park City and they hinted that they were looking for a site in Squaw Valley and one in a Colorado ski resort.
At this point they don’t seem in a hurry to build the project. Their experience and especially here in Mammoth (they have developed allof the condo hotel properties in Mammoth) is evident. They “don’t want to build in the winter.” They’ve learned how costly that is. Clearing snow out of open construction is consuming. They intend to do some site prep this summer including dismantling the old Dempsey Construction offices that is the current presentation/sales office. Next summer they will focus on building the massive garage/foundation. They refer to this as the “podium.”
The following summer the building will be constructed. This will be “box” construction and they are fond of explaining why this is a great way to build this type of facility. The “boxes” are approximately 65 feet long and include two condo units with a hallway section in between. The boxes are built in a factory in Idaho. One key is that box construction mandates the use of kiln dried wood rather than unseasoned framing. The boxes are built complete down to all of the finish work, appliances and furniture. Because they are shipped, they are one complete engineered unit. These units are simply stacked with soundproofing in between and all of the utilities flowing through the hallway section. (It appears that the new Mono County building behind the new police station will be built in a similar fashion — this is the future.)
The developers are also impressed with the Yotel hotel company. They believe the company executes at a very high level and are advanced beyond any other operator here in Mammoth. We’ll see….I did get a look at their rental agreement. It is structured a little different than some of the other condo hotel facilities in Mammoth. The “front desk” management fee is 50%. There is a 5% premium to Yotel. There is a 4% of gross allocated to FF&E (furniture, fixtures, and equipment) replacement. The 4% FF&E reserve is probably good in light of the recent major refurbishment assessment proposed at the Westin Monache.
The developers were also excited that some of the major vacant land pieces within the North Village Specific Plan recently closed escrow or are in escrow. One mentioned is the “Hillside” parcel where the Ritz-Carlton was proposed back in the 2007 timeframe (it is next door to the Westin Monache). Apparently, the Aspen Ski Company is buying it and is proposing a Limelight Hotelfor the site. The Alterra association has obviously drawn them to Mammoth. But these major development pieces have been bought-and-sold repeatedly over the decades. This time around the developers have access to very favorable lending and “box” construction techniques. Maybe it can happen…..
The Town Council and Mammoth Lakes Tourism (MLT) continue to come under pressure; excessive marketing expenditures versus making workforce housing a reality. Mammoth has experienced a very busy and long winter season and many employers are simply drained from too much work and not enough (quality) employees. The business owners are speaking up. Spending more money to attract more visitors makes no sense when they can barely service the ones that are here.
And another big question by many of the younger community leaders is “Is Mammoth doing enough to be environmentally sound?” Property owners are concerned what that might mean to real estate value in Mammoth. Here’s a link to my Real Estate Q&A that appeared in this weekend’s issue of The Sheet titled Mammoth’s Green New Spiel. I’ve already been accused of “falling for the hubris that is pseudo-environmentalism.” But my readers always need to read between the lines.
I was in the Grocery Outlet on Sunday and the employees were quick to tell me that Saturday (Memorial weekend) was their highest grossing day so far. Quite frankly, they were brimming, and report that the customers are a good mix of both local residents and visitors. Every time I have shopped the store is well stocked and very clean. So far a great addition to Mammoth Lakes.
The sale of 2 bedroom / 2 bath units at Hidden Valley, The Bridges, Snowcreek 4, and Aspen Creek all show increased values of approximately $100,000 in the past 24 months.
A Studio unit at the Westin Monache closed for $275,000. That is down. Does this reflect the refurbishment assessment?? Approximately $30,000 for this unit. How the assessment will impact values is yet to be seen. This might be the first indicator. A year ago this property should have sold in the $300-305,000 range.
A 3 bedroom / 3 bath condo hotel unit in the Village closed at $1,050,000. These closings always astound me. When you compare what that amount will purchase in a single-family home in Mammoth. Of course, you’re not steps to the gondola and bars and can’t generate nightly rental revenue…..
One thing I have noticed in the past 12-18 months are properties coming to the market as new listings but they were purchased within the previous two years. They aren’t necessarily “flips” or priced for major profit, and sometimes they are priced for a loss when transactional costs are calculated. I suspect that this new Zillow and Airbnb age has buyers making quick and poor buying decisions. There is more to the buying decision than “projected” rental revenue. Caveat emptor.
Favorite New Listing For The Period!
Other Real Estate News
Bloomberg reported during the period that the Federal Department of Justice will be investigating the real estate industry over allegations that members of certain Realtor Associations and companies like Realogy and RE/MAX conspire to fix real estate commissions at a “traditional” 6%. In 2008 the DOJ reached a settlement with the National Association of Realtors (NAR) that was designed to lower commissions paid by consumers by opening the industry to internet-based brokers.
It will be interesting to see what they discover. I’ve never seen or heard of anything from either one of the Realtor Associations or from my franchisor about “colluding” to fix commission rates. Most of the listings that I take are at 5% and under special circumstances less than that. So they aren’t going to find anything in my office. I will admit that there is occasionally some peer pressure from local agents when commission rates appear to be “reduced.” Lately, some of the foreclosure/REO property listings have only been offering 1% to the buyer’s agent. I’ve heard agents say “I won’t work for that.” That is their decision.
The real estate industry historically sees discount commission business plans when the market is near a peak or very heated. Some of you might remember the House Real Estate kiosk in VONS here in Mammoth in the mid-2000’s. And recently Purplebricks has invaded California. But as markets find equilibrium these discounted programs find it difficult operate profitably. Purplebricks already appears to be finished; they can’t retain competent agents, etc.. The adage “when the going gets tough the tough get going” would apply. And those fancy auto leases can get burdensome.
Some of the agents that complain about lower commissions rates are those that are shelling out major monthly fees or referral fees to marketing entities like Zillow and Homelight. The consumer is beginning to figure this out. Being a premier agent is just like buying dozens of billboards. And trust me, not every agent deserves ALL five-star ratings.
And one other interesting thing about sellers asking for discounted commissions; sometimes they just want to see how the agent negotiates. The thinking is that if the agents can’t negotiate their own commission rate, how will they negotiate a good price for the seller when there is an offer on the table.
The DOJ is welcome to come and talk to me about this…..
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Thanks for reading!