Market Summary: April 24 – May 8

The Mammoth MLS is reporting 13 real estate closings in Mammoth Lakes for the two week period ranging from a low of $139,000 to a high of $1,000,000. Of the 13 closings, nine (9) were financeable properties and eight (8) of the nine were financed (is there a trend here?). Surprisingly, there were two vacant lot sales. One will be a “spec” home built this summer. Four of the 13 sales were condos under $215,000.

Condominium Inventory

At the period’s end the condominium inventory is down nine (9) to 157. There were only six (6) new condo listings for the period and they are all truly new to the market. There are only six (6) condos listed for sale under $200,000. But there are 20 listed between $200,000 and $250,000. Normally the Mammoth market should see a rise in condo inventory this time of year. But instead it has gone the other way. But some listings did expire at the 1st of the month. They will come back.

Single Family Inventory

The inventory of single-family homes is down another two (2) to 44. But again some listings expired on May 1. The average days-on-market is 203.

Pending Transactions

The total number of properties in “pending” (under contract) in Mammoth Lakes is down four (4) to 49 at period’s end. Of the 49 properties in “pending,” there are no “contingent short sale” and 29 are in “back-up” status. The total number of pendings in the aggregate Mammoth MLS (which includes outlying areas) is down 11 for the period to 71. The Mammoth market might appear to be stalling but there are at least a dozen Gray Bear homes in escrow and under construction that are not being reported in the MLS. The average purchase price is ~$1,200,000.

Market Updates and News

April showers have turned into May showers and that is positive for the water situation in multiple ways. At least the Sierra isn’t experiencing scorching weather and watching the snowpack rapidly melt away. The snowpack hasn’t gone anywhere in the past month. The shower activity and subsequent runoff has to be slowly improving the water table and downstream reservoirs. The local landscape (both natural and man-made) is greening without tapping into the water reserves.

Lovely Spring Showers and Mammoth Bureaucrats Out of Control?!

…..And BOTH golf courses are scheduled to open May 27. Yes Sierra Star is in fact opening this summer. The fairways on both courses have benefited from the weather and a couple weeks of warmer and sunny weather are forecasted, so they should be in great shape for Memorial Day weekend and beyond.

Speaking of Sierra Star, Rusty Gregory was in the press this week for more “what the community wants?” rhetoric. Nobody has figured out what his angle is in discussing the changing of the land use at the Sierra Star course. But some pretty reliable sources have expressed that he is having advanced discussions about selling the Ski Area and all of “Mammoth Resorts.”

The rumors this time are that the sale is somehow part of the Marriott merger/acquisition of Starwood Hotels (although Wall St. appears to be balking at the valuation of that transaction). The other rumor is that he is negotiating with the Chinese. Gotta love rumors, but most local residents are praying for something. The Ski Area and Town have had a productive past 12 months. Bed tax revenues are way over budget estimates. It would be good time to pull-the-plug.

The local Realtors met with the new Town building inspector and the ML Fire Dept. chief last week for some clarification of the “loft” situation here in Mammoth. As part of the new Quality of Life Ordinance passed last fall, every condo unit applying for a transient occupancy permit now has to be inspected, primarily for health and safety issues. Part of the inspection applies to lofts and the head clearances, stair access and the presence of a “rescue window” (in case of fire). Mammoth is full of condos built in the 1960’s through 80’s that don’t meet some of these requirements. The have always been considered “legal non- conforming” uses or “grandfathered.” But the new local bureaucrats have different ideas. All in the name of “public safety.”

For now the unknown is what will be the fate of lofts without “rescue” windows but that have open access to living rooms, etc. There are hundreds of these type units in Mammoth. Many of the early phase Snowcreek units are this configuration. Many of the lofted units at Mountain Shadows where many local residents live are like this. At this point the bureaucrats say these units comply but they need more to assess the situation. They may impose new requirements (like fire ladders) or they may attempt to shut them down as legal sleeping areas. No one knows.

When some Realtors questioned “What do we tell our buyers?” (and some of our owners who own these types of units?) the bureaucrats didn’t really have any answers. I guess we’ll have to wait for some arbitrary decision on their part.

But what was even more disturbing is when the new fire chief held up a copy of the “loft summary sheet” and Transient Rental Inspection Form and called them “The Rules of Engagement.” The Rules of Engagement? That is a military term describing how you react to the enemy. So now every second homeowner with a legal non-conforming loft is an enemy?? And these owners are paying property tax and generating bed tax?

Even worse was the Town’s new building inspector who has been on the job for four weeks. His absurd quote was “Grandfathered items don’t have immunity if they didn’t conform back then.” And he worked for the County at one time. The problem is that building records/permits in Mammoth Lakes prior to 1984 (Mammoth Lakes’ incorporation) simply don’t exist. Mono County was a very small county with limited resources and was admittedly a little backward and definitely “good ‘ol boy.” What he was implying is that the legal non-conforming status of many properties might not be honored in the future.

But the big problem with that is he is taking a “guilty before proven innocent” position. There are no records! These properties have implied certificates of completion. They have been repeatedly scrutinized by lenders and subsequently financed. They have title insurance. Mammoth’s guests have been staying in them for decades. Most of the original developers are dead. So are most the county employees. So now this new building inspector thinks he will decide what is right and what is wrong.

This could get ugly but it is already on the California Association of Realtors “Legislative Watch” list. They love challenging nonsense like this. I will certainly be covering this in the future.

Noteworthy Sales

A pretty ho-hum array of sales in the period. An older but very clean triplex on Mono St. closed for a substantial number, and all cash. The mal-investment era continues. Income properties in Mammoth are returning to the peak multiples of the mid-2000’s. We know how that ended. Except that the buyers today are mostly cash buyers, so they aren’t likely to end up as foreclosures. Unless they refinance.

The high sale of the period was a home in the Knolls at $1,000,000. It had been on-and-off the market for years at substantially higher prices. The market has spoken.

Some ski-in ski-out lots at Altis came back to the market. Why weren’t they on the market during the ski season?

My new listing at Snowcreek #71 has revealed an even more interesting history. The property has never been on the open market (in 37 years). The family that owned the property for more than 30 years was the same family that owned the Lodestar/Sierra Star property. The patriarch of the family played a fascinating role in Mammoth’s history during the 1970’s and 80’s. Some of the recollections from Mammoth old-timers have been like being in a Mammoth time machine.

Other Real Estate News

Some interesting real estate bullet points from the past weeks:

• Zillow made their 1st quarter financial reporting and the company had an income/expense deficit of $48 million. BUT more interesting is their overall market strategy of “moving away from part timers” and focusing on their “super agents.” Their super agents are ones that are heavy spenders–many times spending more than $60,000 per year in Zillow advertising. That is $5,000 per month or more. I would think as Zillow continues to lose money that those advertising fees will only rise. And if those super agents are addicted to the Zillow pipeline of leads?….Buyers should be aware that those showcase agents on Zillow have some serious advertising expenses to cover. Caveat emptor.
• The recent acquisition of VRBO by Expedia has brought grief to many vacation property owners. Owners are claiming that new service fees are cutting into demand and revenue. VRBO had apparently promised never to charge these fees but the new owner sees the opportunity. Now a Southern California lawyer is representing a plaintiff over the matter and is hoping to build it into a large class action lawsuit. That could be tricky if you are hoping to maximize their website for your income…..More corporate take-overs that screw-up a good thing. As the vacation rental-by-owner business becomes more competitive it will be increasingly important to have unique properties with personality and independent and broad-based marketing.
• The California Supreme Court should soon be ruling on the “Horiike” case. This case challenges the validity of dual agency in real estate transactions. I personally have never seen how one agent could reasonably represent the buyer and the seller. It just doesn’t work unless it is a very simple transaction with no potential pitfalls.

When I was supervising 20+ agents I was often the broker in dual agency transactions but the buyer and seller had their own agents representing themselves. It still made me uneasy. I always recognized it as a serious liability. It is one reason having a small company today is so much more pleasurable.

But there are agents across the nation that are famous for being dual agents. They argue their position and don’t see any conflict in the arrangement. I say otherwise. I had one such agent. And she couldn’t see the conflict with her husband/contractor performing the physical inspections for her dual agency transactions. I guess my 20+ years as a public official I have had conflict of interest problem beaten into my head.

I can’t wait for the ruling on the Horiike case. I’m hoping it will change the real estate business in California. And for the better.

Thanks for reading!