Market Summary: March 15 – March 29
The Mammoth MLS is reporting 16 closings in Mammoth Lakes for the two week period ranging from a low of $190,000 to a high of $1,000,000. That is up two (2) from the previous period. Of the 16 closings, 15 were financeable properties and seven (7) were in fact financed. So the ratio of cash buyers to financed buyers continues to bounce around with no clear trend. There was one (1) REO/bank owned property closing and no short sale closings reported.
At the period’s end the condominium inventory is up six (6) to 164. There were 12 brand new condo listings during the period and they are all through the spectrum of the market. While John Hooper is busy launching the Gray Bear residential subdivision fronting on the Sierra Star golf course, he was also in front of the Mammoth Planning Commission this past week proposing a new condominium development on the vacant lot at the top of Rainbow Lane across from the Canyon Lodge parking lot.
This property was owned by Intrawest for many years. This project will be 25-30 (depending on how nice the Town plays) large townhomes with private garages, much like the units he built across the street from the Westin Monache. They are likely to be priced in the ~$1M range. He wants to start construction (at least grading) in May.
Single Family Inventory
The inventory of single-family homes is up two (2) to 53. There are only three homes listed under $500,000 and they are either small or in poor condition. There are seven homes listed between $500K and 600K. Available inventory remains thin in this segment of the market. There are buyers looking but they are frustrated. Some will lose attention and likely miss out on the key buys of the summer.
The total number of properties in “pending” (under contract) in Mammoth Lakes is down five (5) again to 52 at period’s end. Of the 52 properties in “pending,” nine (9) are “contingent short sales” and 30 are in “back-up” status. The total number of pendings in the aggregate Mammoth MLS (which includes outlying areas) is down six (6) to 69. It looks like the poor snow conditions are hurting the annual spring break real estate sales push. This has become a solid selling period in the past as vacationing families are here for extended stays and take time to look at real estate. But the diminished visitation is quite apparent around town. The Canyon Lodge parking lot never filled this weekend.
Market Updates and News
The upper elevations of the Ski Area received a few inches of snow last weekend and the ski conditions were very fun this past week. But few people, visitors or locals, were there to enjoy it. The conditions went from almost winterlike to summerlike in a few days. The end of the week resembled mid-to-late spring conditions. This weekend’s temperatures were almost 70 degrees in town. Eagle Base and Eagle Express are closed for the lack of snow. The bottom areas at Canyon Lodge and Stump Alley Express (Chair 2) are almost all dirt.
The record warm temperatures have thwarted any snowmaking efforts so the crews are moving existing snowpack into thin areas. The man-made snow in the half pipe is being scrapped out to be used in other locations. The Ski Area is doing everything they can to keep the skiing in reasonably good condition. The primary runs around the Main Lodge are in pretty good condition with a few bare spots showing up. The Mountain is booked solid with race camps in May and those runs look like they will make it.
Once again Mammoth’s elevation is proving to be a valuable asset in the scope of the ski industry. Ski areas all through the west have been closing including several in the Lake Tahoe area. Squaw Valley just announced it will close on April 12.
Meanwhile, the warm weather has put most of Mammoth into summer mode. The aspens are just budding and the landscape crews are out in force and people are riding bikes and wearing shorts. If we can’t have winter then we sure like summer. But water is going to become a serious issue. Mammoth is already on Level II restrictions.
How the Mammoth real estate market will be effected by this prolonged drought is still unknown. The biggest driver of real estate is still skiing. After four poor winter seasons there could be reason to see the market sagging. But it isn’t. The residential market currently mirrors much of the coastal Southern California real estate market–strong activity in the high end. In the Mammoth $1M+ residential market, it may be the strongest it ever has been. Some properties that have languished on the market in the past have sold. There are over a dozen new home under construction in town. And John Hooper is having no trouble finding buyers for his new homes at Gray Bear.
The Snowcreek real estate market continues to show improvement both in sales and values. This may be more mirroring of the Southern California coastal markets. During the period there were three more solid sales in Phase 5 showing an upward trend in values. There are also impressive sales and new escrows in the older phases of Snowcreek. The lower end of the condo market continues to be strong. Clearly, there would be more sales if there was more quality inventory.
I was out looking at woodburning fireplace inserts and pellet stoves in the past weeks. New and existing owners are working to comply with the new Town requirements. An increasing number of owners are moving toward pellet stove installations in their fireplaces. The pellet supply is stable if not plentiful with competitive pricing. The nightly rental companies are increasingly in favor of owners going in this direction and the renters reportedly like them too (with thermostatically controlled pellet stoves the renters can arrive to a warm unit with the fire already burning).The fireplace contractors are also preparing for propane gas retrofits to begin at both the Summit and Mountainback. That will give owners a third choice for their fireplace retrofits.
From the lingering REO market, my complaints about working with Ocwen appear to be universal. Ocwen recently announced they were selling $9B worth of servicing rights to GreenTree, $45B to Chase, and $9B to Nationstar. That should basically put them out of business… and to think only a few months ago Wells Fargo was trying to sell their servicing rights to Ocwen.
After my comments about the law firm ads soliciting business from the Round Fire victims in the local papers, last week’s issue of The Sheet had one full page ad, one 2/3 page ad and two 1/2 page ads, all in a 20-page issue. Curiously though, the Mono County Health Department had a full age ad pertaining to HIV, obviously timed with Elevation week here in Mammoth.
The most noteworthy item of this period’s sales is that they were all condominiums. Eleven of the 16 sales were condos under $400,000. There were some high sales and some low sales and some in between. Snowcreek 5 continues to sell well–short market times and higher prices. Remodeled properties continue to fetch good prices.
Other Real Estate News
There is some very interesting news AND BIG CHANGES in the condo hotel world and it all went highly unnoticed. And how it will impact future development in Mammoth is still quite uncertain. I was doing some research for an upcoming Q & A column on timeshares in Mammoth and found this information on one of my favorite old websites. Last Fall the Securities and Exchange Commission adopted a new rule that radically changes condo hotel selling and ownership rules. I remember this being a huge controversy here nearly 20 years ago when Intrawest started their condo hotel development push. For a time we thought we were going to have to get securities licenses to sell the condo hotel units.
The changes are complex legal issues but what has essentially changed is now condo hotel units can be sold as a pure investment vehicle (by the developer) just like any security. This ends nearly two decades of “legal nonsense” between the old Department of Real Estate and the SEC, etc.. So here is what the new “Rule 506(c)” brings;
- Condo hotel units can now be solicited to investors as “investments” with full details of the rental program, rental contracts and terms as part of the marketing. But to do so the ultimate buyers must meet “accredited investor” status (meeting minimum net worth and income standards).
- Condo hotel units can be marketed with cash flow projections and the sale of units can be conditioned with mandatory rental requirements and other seller conditions to “create a harmonious condo hotel regime.” Buyers can simply be mandated to rent their condos when not in use.
- The developer/seller can also put use restrictions on the property–for instance, the owners might be prohibited from using their property during the holidays (so that premium rents can be generated). Or limited to so many days of usage. This new Rule would also allow the pooling of income and expenses for owners.
These new rules should make the whole condo hotel arrangement more attractive to developers and (front desk) operators because of increased revenue potential and (in theory) more reliable cash flows. And these new pro-rental developments should be more appealing to the big hotel brands.
All of this has been a strange evolution. Some 20 years ago the real estate industry was prohibited from even discussing rental revenue in these condo hotel projects. It became “back room” discussion. But buyers were buying expecting it and lenders were lending knowing what it was about. Today the lenders are shying away but the management is disclosing general and specific rental revenue numbers on condo hotel units as regular course of business. And yes, there are plenty of buyers purchasing for “pure investment.”
These new rules could certainly help get a substantial new project developed here in Mammoth. It may be the only way. But it could also be risky. Mammoth is a difficult place for pure investment–the expenses are high and the revenues are greatly impacted by the seasonality. It is the recreation and personal experiences that are the real return for most. If they try to limit those aspects, will buyers (investors) be interested? Time will tell, but these new rules could reduce the risk for developers, they might also increase them here in Mammoth. Stay tuned.
Thanks for reading!