Mammoth Is Fully Open For Summer, Let the Party Begin!
Market Summary – May 23 to June 20
This newsletter is for the past four weeks. This is the longest break I’ve taken since committing to a bi-weekly newsletter some 10 years ago. It was a mix of the calendar and a scheduled vacation. Despite the crazy real estate market of the past 12 months here in Mammoth, it is always great to come home. Of note; the past 10 years of newsletters and the original Broker’s Reports dating back to 2006 are now archived at the Mammoth Real Estate Blog website. For those who want to know some of the recent history of the market it is a great resource. If I only had so much clarity on where we are heading….
The Mammoth Lakes MLS is reporting 49 real estate closings for the period ranging from a low of $110,000 to a high of $2,100,000. Of the 49 closings, a total of 43 were financeable properties and 35 were financed closings. Clearly this was another active period for real estate closings and buyers are taking advantage of exceptionally low interest rates. The low sale of the period was one of those long-lingering “nearly-impossible-to-build-on” vacant lots. Sold by an out-of-town-agent. I’m sure the buyer thinks they got a bargain. And is convinced the property has great ski access. The high sale of the period was a “home” amidst a mixed-use fractional project. It amazes me to see buyers purchasing $2M properties that have inherent compromises. But so be it. I’m sure it will make a great STR. There were a total of four (4) vacant residential lots closed in the period. There were 18 condos closed under $600,000. The three (3) highest sales (above $1.8M ) were cash purchases. The same four week period a year ago there were only 10 closings.
The 10-year Treasury yield is down significantly to 1.45%. Still considerably higher than last year when market uncertainty was very high. This time last year the lending industry was discussing “time and stability”, which in retrospect is truly laughable. More like time and insanity. From what I can tell the lending professionals (like many on the brokerage side) are looking for some time off. There is a certain level of exhaustion in most of the real estate industry. But it is that time of year and there is pent-up demand for vacations. A handful of financed closings during the period at condo hotel properties including Grand Sierra Lodge, Westin Monache, and Juniper Springs Lodge tells me that there is still (somewhat) attractive condo hotel financing available. But buyers should expect 35% down and slightly higher rates.
At the period’s end the condominium inventory is up eight (8) to 48. There was a small surge of new listings in the last couple of days. But again, no massive increase in inventory which we would normally expect this time of year. But what is normal in 2021? There is actually some selection for buyers to look at. There were 38 new condo listings brought to the market during the period and 16 have already gone to escrow. Several of the condo closings during the period closed for more than the original asking price. This is telling. The current closing price disparity between different projects and floor plans compared to the peak 2006 values is becoming increasingly fascinating. Many older units are selling far beyond the 2006 values. They include older Snowcreek units, Chateau Road units and many of the ~1970s built projects. Others, including many built in the 2000s, are lagging from their 2006 highs. They would include the Westin and others. There is certainly no broad-brush pricing comparison to 2006 in the Mammoth market. How this washes-out in the future is yet to be seen. Many of the 2000s era units may be good values at this time. Especially with inflating construction costs. And their HOAs tend to be better funded. Taking a deeper look at this will for be the topic for future discussions. This time last years there were 109 condos on the market.
Single-Family Home Inventory
The inventory of single-family homes is up six (6) to 20. This includes eight new listings in the last five days. Local residents and second homeowners are both seeing the opportunity to liquidate, including some just “rolling the dice.” Some long-time local residents are clearly experiencing (or dreaming of) windfalls. There are now six (6) homes listed under $1,000,000 and some are priced within a more-than-reasonable price per square foot range. There are new luxury offerings too. I’m also seeing some new construction starts on various residential lots around town. This seems dicey, contractors are reporting fluctuating material costs on a weekly basis. And there are shortages of materials and products that are causing significant delays. This time last year there were 39 homes on the market.
The total number of properties in “pending” (under contract) in Mammoth Lakes is down three (3) to 90 at period’s end. The total number of pendings in the aggregate Mammoth MLS (which includes outlying areas) is down 16 to 136. The local market should move beyond the recent, brief “pause” as summer tourism launches and more sellers are enticed into the market. Property showings definitely ticked upward this weekend. One year ago I was discussing the unknowns about the supply and demand in the future market and pondered how it might affect values. We really didn’t know. Now we do. Demand has far outstripped supply, even with significantly rising prices. Current owners are pounded with solicitation by local brokers to sell at these rising prices. At some point many owners are becoming (or will become) sellers at these new price levels. So we are back to considering the current and future supply and demand characteristics. We should witness classic price elasticity. How high can local real estate prices go? We are about to find out. This time last year the numbers were 52 and 83 for pending sales respectively as the market was just beginning to heat up.
Market Updates and News
In the past week Mammoth has entered an almost bizarre sense of normalcy; like the past 17 months never happened. Outside of a few mask wearing individuals it looks and feels much like any other second half of June from the past 40 years. The motocross world is set to occupy the bulk of town for the next 10 days mixed with early summer visitors and a trickle of off-trail backpackers. And all with the anticipation of a big 4th of July weekend celebration. The legendary annual motocross crowd has never been so welcome. In all, the visitors all look like they are ready to have a really good time. The local residents are ready too.
Restaurants and bars are fully open including some of the additional outdoor seating, which as I suspected many months ago, may become a permanent and permitted feature in the summer months. It just feels right. Outside of a somewhat visible labor shortage, most Mammoth businesses are ready to serve the public at a high level. If the visitors come in the anticipated droves, they may have to be patient. But the high gasoline prices may keep the crowds from being excessive like last summer. It has happened in the past. We are hopeful.
The electronic signs at the entry to town that have broadcast mask requirements for the past year are now warning of fire restrictions and other critical visitor-related information. This is all part of the new visitor education campaign in an attempt to curb the mayhem of last summer. Small fires have already plagued the region to the north and south. No major fires yet but they are the potential harbinger of the coming months. The good news is the half-million acres of dry fuel that was to the west (and mostly upwind) of Mammoth Lakes is now gone.
While some major events like the Motocross, the 4th of July parade, Bluesapalooza, the Gran Fondo and more are on the schedule, it appears the new opening conditions will now spur many smaller impromptu events. This could be fun. I’m sure the bands, musicians, thespians, etc., are all ready to perform. The Village is working on filling in their popular events schedule. A relatively “normal” summer is looking quite possible.
For the local real estate industry there is also some normalcy too. We are back to showing property without the extra Covid restriction hassles. The invaluable weekly broker open houses (caravan) are back; previewing new listings and having real live conversations with the other active agents is an important part of the business. Video and FaceTime tours are great and will continue to be part of the industry, but there is no substitute for “standing in the property.”
The Town front is rather quiet but the ice rink construction at Mammoth Creek Park is well underway. When it all comes out of the ground it is going to be interesting to hear the public comments. So far it appears to have slightly enhanced real estate values within the close proximity of the Park. But only time will tell. Once the realization of the facility sets-in there should be got-to-have buyers for this location/area. Hockey enthusiasts are just that passionate.
The sale of a 2 bedroom / 2 bath unit at Solstice for $699,000. A similar unit closed recently for $775,000. There wasn’t too much difference in the properties. Did one buyer overpay or did one buyer get a good deal??
All of the units at Snowflower are 2 bedroom + loft / 3 bath. A decently remodeled unit just closed for $875,000. The peak sale in 2006 was $675,000.
A 3 bedroom / 2 bath, 2 car garage townhome in Creekhouse closed for $885,000. This is a brand new property and was put under contract last August. Looks like a great buy today.
A 3 bedroom + loft / 4 bath townhome at Juniper Crest closed for $1,770,000. The unit sold new in 2004 for $1,025,000.
The three 2 bedroom + loft / 4 bath units at The Lodges that all came to the market within days of each other all closed, ranging from $1,170,000 to $1,250,000.
A 2 bedroom townhome at Courchevel closed for $735,000. Peak sale in 2006 was $540,000.
Favorite New Listing for the Period
The first broker I worked for in the 1980s (he’s still around) loved selling Mountain Shadows condos. He called them his “bread and butter” properties of Mammoth. There is a variety of smaller unit floor plans in the project and they are all good and efficient. It has been a popular project for owners looking for affordable value. Over the years it has been a well maintained project and home to many local residents both as owners and renters. Today they typically make very good STR properties. So here is a 1 bedroom + loft / 2 full bath condo that has great solar exposure and easy access and parking near the entrance to the project. The property features an updated kitchen and bar, a pellet burning insert in the fireplace for cost effective heating and no additional fireplace expense to the buyer. Great windows in each room with lots of natural light. Sold unfurnished but absolutely ready to move in to. Check out the video tour.
Listed at $499,000
Other Real Estate News
Airbnb continues to have profound influence on the STR industry as a whole and in Mammoth Lakes. The now publicly held company recently released their 2021 first quarter (Q1) financial report and with it is some fascinating information. And one
AirDNA recently released an “Outlook Report” for the STR industry and it has some great information. The past two years have been a wild ride for the industry but all of the forward booking information from both Airbnb and VRBO helps provide data for an incredible recovery. Here are some of the highlights.
• 2019 was a record year for the STR industry. Then Covid hit. But 2021 will now exceed 2019. In the first quarter (Q1) of 2021 the U.S. bookings hit impressive new levels each month. The demand for nights in April of 2021 exceeded any level of 2019. AirDNA states that the April milestone “marks the end of the recovery and the beginning of the next phase of expansion for the U.S. STR industry.”
• Demand is surging in small-town and destination markets. In April 2021 the demand in rural markets is up 67% from 2019. There was 25% more demand in destination/resort markets including mountain/lake areas from 2019. But AirDNA expects that the demand in 2022 may shift back to urban areas and will return to 2019 levels by 2023.
• While historic trends show units typically become more available with demand, the destination/resort market recently bucked this trend. Availability actually declined as many owners preferred to use their properties themselves.
• In the past year, 24% of Airbnb bookings were longer term stays (more than 28 days). This was up from 14% in 2019. This was driven by the remote work opportunity (“digital nomads”). While the remote work opportunity may dissipate for many, AirDNA expect this lifestyle and longer term stay trend to continue.
• In the past year there was a clear trend in the destination markets for larger homes (boy, have we seen this in Mammoth!). This trend helped grow the average daily rate (ADR) for rentals across the industry. A shift back to urban (and smaller) rentals may decrease the ADR in the future. But total revenues are expected to increase by 42% in the next four years.
• Even though Airbnb and VRBO have added close to 52,000 new units to their platforms, the demand is exceeding the supply. Rentals in the summer of 2021 will be in short supply. Demand in mountain destination resorts is up 44% from 2019.
• A “new normal” of travel has been established. The STR industry has actually benefited from the pandemic –– consumer trust and sentiment has strengthened. The STR industry will continue to professionalize and expand its share of the total lodging spend. Airbnb and VRBO’s competition in the STR industry should intensify.
Thanks for reading! Please stay healthy.
** Closed sale data is compiled from in-house files and public records.