Market Summary: August 2 – August 16
The Mammoth MLS is reporting 19 real estate closings in Mammoth Lakes for the two week period ranging from a low of $130,000 to a high of $1,250,000. That is up 11 closings from each of the previous two periods. Of the 19 closings, 18 were technically financeable properties and 13 were financed. There were no REO/bank owned property closings and one (1) short sale closings reported. Of the 19 closings, 10 were condos selling under $300,000. It is time to secure your Mammoth crashpad for the upcoming winter.
At the period’s end the condominium inventory is down four (4) to 201. There were 12 new condo listings in the period, and only one that we have seen in the recent past. The new listings varied from $125,000 to $1,400,000. There are currently 39 condos listed for sale in the entire Snowcreek development, and some very good ones to choose from. August is once again the best month of the year to shop for condos in the Mammoth market; peak inventory and the least pressure.
Single Family Inventory
The inventory of single-family homes is up two (2) to 70. There were some homes re-listed, some price reductions, and there are some that need price reductions.
The total number of properties in “pending” (under contract) in Mammoth Lakes is down six (6) to 63 at period’s end. Of the 63 properties in “pending,” four (4) are “contingent short sales” and 38 are in “back-up” status. The total number of pending in the aggregate Mammoth MLS (which includes outlying areas) is down four (4) for the period to 91.
Market Updates and News
Judging by the volume of people in town this past week the peak of summer tourism is over. It is still busy but I’m hearing “the kids are going back to school” on the lips of many. Labor Day falls late on the calendar. There are major cycling events, the Gran Fondo and the Kamikaze Bike Games, in September. And it will time for the “geo-tourists” and those anticipating the Fall colors.
And with the kids going back to school and football games showing up on TV, the annual Fall push to secure a property in Mammoth and have it ready the holidays will begin. The predictions of a wet El Nino winter could certainly make some antsy (don’t want to miss out on the those early season ski days). And of course some buyers will wait too long and want (expect) the opportunity to purchase a property that is on the market today at some point in October or November. And for those planning on financing a purchase, and that seems to be the current trend, waiting too long may create additional anxiety. Don’t blame me, you are warned.
The upcoming referendum on the nightly rentals/single family neighborhoods (the RSF zoning) is coming into focus. And as of this last week there may be a major twist coming. The vote will occur on October 6 and is known as Measure Z. It is NOT a definitive vote yes/no for allowing the transient rentals. The proponents of Measure Z are the anti-transient rental property owners and a “yes” vote on Measure Z would only establish that a change in the current ordinance would require voter approval. Measure Z will not stand as that voter approval. A “no” vote would essentially support a Town Council approved change in the ordinance.
So far the arguments yes/no have not crystalized to any great extent. The “no” camp appears to be a majority of the current Town Council members as well as some past Council members. Those members are now stating that by Labor Day they will have a comprehensive plan for regulating transient rentals in the single-family neighborhoods. That plan will purportedly be based on findings and proposals made from an extensive study from Colorado on the subject (you can go back to my last newsletter and reference the article from the Vail Daily that described the controversies in the Colorado resorts).
According to one Council member cities like Santa Barbara and Santa Monica are passing strict nightly rental regulations and prohibitions which include business licenses and the collection of bed tax. They are also hiring additional code compliance officers. These and other issues will likely be part of the “no” proposal. Part of the argument is that the rentals are already occurring so it is time to regulate them and collect bed tax.
If Measure Z fails the majority of the Town Council will likely support overturning the ordinance and implementing new, stricter nightly rental regulations throughout town. So let’s think about how the Measure stacks up. Voter turn-out is still likely to be low. Those in the “yes” camp will definitely turn-out. These are primarily the local residents who own and live in the single-family neighborhoods and are adamant about preserving the “peace and quiet.” But the “no” camp has its fanatics too which may include some locals who own and live in these neighborhoods that want the already existing activity regulated and taxed.
But where this campaign could get heated and ugly is trying to convince the balance of Mammoth voters to vote one way or the other. It is likely to only be a few hundred (if that) voters that will make the difference. Some will be easily convinced that the Town needs more revenue to protect their quality of life. Some will likely see some potential economic benefit for themselves, especially if they work in the hospitality or maintanance industries. Some don’t like the elitist attitude of the “yes” proponents and may be motivated to vote just on that basis. But there are plenty who just don’t care. Both sides will be working hard to simply get people to vote.
Meanwhile, I witnessed first hand how one of my clients is renting one of his small condos on Airbnb. This summer he has had numerous rentals during the mid-week for 2 or 3 nights. Many are inquiring for accommodations starting that exact day. Many are also foreigners that speak very little English. But the service verifies their booking, charges them, and gives them directions on how to get to and into the property. The owner can negotiate a price quickly from his phone or mobile device. He said most of his booking for summer have come via Airbnb. And he is solidly booking for September and October when the rest of Mammoth is dead.
This is the future of transient rentals, especially in resort areas. At least for now. Many (most?) of these Internet based operations are not collecting bed tax. Mammoth (like so many others) needs to decide how it is going to react to these new challenges brought on these new services. Measure Z is just the beginning. If the Town cannot collect adequate bed tax it will likely have to turn to more TBID type taxation. Or maybe even a toll gate at the bottom of Hyw. 203 where local residents and second homeowners get to pass for free.
And I’m seeing more and more private taxis/limousines around town that are black; they are clearly expecting Uber service in Mammoth in the future.
The big sellers this period were condos, but it is that time of year. With 10 of the 19 sales under $300,000 and all condos this is pedestrian activity in the Mammoth market. No doubt some of these buyers are eyeing the Airbnb/Internet models to supplement their own usage. The lower end of the condo market fits this usage model very well because the customers typically appear to be smaller groups (couples) looking for 2 or 3 nights of accommodation.
The 16 lowest priced sales in the period were all condominiums. No big upward or downward trend. Properties in well kept and remodeled condition continue to get very good selling prices.
The sale of a top floor oversized 1 bedroom Westin unit for $340,000 was a nice purchase. This was the original owner and he sold at 53% of his original purchase price in 2007.
Two sales at La Vista Blanc condos of the 3 bedrooms + loft / 2 baths floorplan, one at $298,000 and one at $339,000. These are not townhome style properties, they are stacked units with very little storage. They are bringing some handsome prices.
The only short sale was a very original 2 bedrooms + loft / 2 baths unit in Snowcreek V. This is a desirable end unit with extra windows. Sold cheap at $374,900.
And two more residential sales in the ~$1M range, one at $975,000 and one at $1,250,000.
Other Real Estate News
A recent article in the Wall Street Journal helped explain why Mammoth’s upper end residential market has been so strong the past two years. The article explains that banks are aggressively chasing the “jumbo” loan market and shying away from smaller mortgages. Jumbo loan are loans that exceed $417,000 in most markets and $625,500 in designated more expensive markets.
This is telling; from the article; “By dollar volume, jumbo mortgages given out by lenders last year accounted for 20% of all first lien mortgages….that is up from 5.5% in 2009…. The last time jumbo mortgages accounted for a larger share was in 2005.”
J.P. Morgan Chase implemented new jumbo loan qualifying standards this past week. “The bank’s decision was largely influenced by the strong performance of the jumbo loans it has given out in recent years.” The bank also lowered down-payment thresholds for jumbo mortgages for second home and vacation homes.
Chase and others have also lowered the interest rates on the their jumbo loans and Wells Fargo has reduced their minimum down payment for jumbo mortgages from 15% to 10.1%.
Sounds like the perfect time for all those recent high-end home buyers in Mammoth to place some financing on their properties.
Thanks for reading!