Kamikaze, And Some Clarity From MMSA And Alterra On Their Future Plans

Market Summary:   September 9 – September 23

The  Mammoth Lakes MLS is reporting 18 real estate closings for the period ranging from a low of $228,000 to a high of $1,325,000.  Of the 18 escrow closings, 16 were financeable properties and 12 were conventionally financed. Thirteen of the 18 closings were condos selling under $500,000. The 10-year Treasury was up over 3% and mortgage rates followed. Most borrowers are now looking at 5% to 5.25% for 30-year conventional financing. With the Federal Reserve promising to continue rate hikes, many industry pundits are predicting mortgage rates will be at 6% and beyond this time next year. This period last year there were 20 closings in the Mammoth market

Condominium Inventory

At the period’s end the condominium inventory is down another five (5) to 99. There were seven (7) new condo listings in the period and none have gone to contract so far. The best condo listings are selling without price reductions. Interestingly, five (5) of the six most expensive condominiums on the Mammoth market are condo hotel units. This time last year there were 65 condos on the market. Two years ago there were 145.

Single Family Inventory

The inventory of single-family homes is even at 59. More price reductions throughout the inventory. There are now three (3) homes listed for sale under $500,000. The true “price discovery”phase that I anticipated back in May has been realized in most segments of the market, but they don’t all appear to be going in the same direction. This time last year there were 48 homes on the market. Two years ago; 73.

Pending Transactions

The total number of properties in “pending” (under contract) in Mammoth Lakes is up one (1) to 63 at period’s end. Of the 63 properties in “pending,” there are 37 in “Active Under Contract” status (formerly “back-up”). The total number of pendings in the aggregate Mammoth MLS (which includes outlying areas) is up four (4) at 116. This time last year there were 80 properties in Mammoth in pending status.

Market Updates and News

Mammoth has settled into exceptionally beautiful weather. And we’ve been basically smoke-free for almost a month. The Fall colors are appearing and during the next couple of weeks the eastern Sierra should become quite scenic. The Kamikaze mountain bike event was held this weekend at the Main Lodge. This is a rather large event but the presence didn’t seem to be that overwhelming in town. There was Oktoberfest in the Village and it was busy. You can’t really go wrong with mountainbiking and beer drinking. These events close out the summer. We’ll be praying for snow soon enough.

Last week the Mammoth Lakes Board of Realtors® had their annual general membership meeting. The Ski Area’s long time VP of Development Tom Hodges  gave a comprehensive overview of Alterra’s plans for Mammoth. He also gave us some insight into what the future may hold for the recently closed Dempsey parcel in the Village (that discussion is down below in Other RE). The overall direction is encouraging especially in light of the money currently being spent at Canyon Lodge. According to Hodges, Alterra’s view of Mammoth is “World Class, Not First Class” and they intend to address that.

First he announced that Alterra has sold 245,000 Ikon Passes so far with 75% of those sales being the Base Ikon Pass and the other 25% being the Full Ikon Pass (do the math!). They have sold 55,000 Ikon Passes to California residents alone. He also reminded everybody that the Base Pass was priced at $699 until October 10. He also emphasized that the Ikon Pass and the wide mix of Alterra resort locations brings “broader economic stability” to the company. And that should help even out the capital investment and in Mammoth specifically. The plan is to make $188 million in a variety of capital expenditures in the next five years here at Mammoth.

The first major improvements are underway at Canyon Lodge. The new escalators are already installed and the renovated entry area is a very large ongoing construction project. The complete project is a two year project with the Lodge being in full operation for this winter. The major renovations to the internal service areas, food and beverage, etc., will not happen until next summer (“unfortunately” said Hodges, but that is logistics). They are spending $10 million this year and $20 million next year. I’m thinking $20 million on the interior of Canyon Lodge should make it pretty nice, maybe even first class.

Along with the next summer’s Canyon Lodge improvements, Chair 16 will be replaced as a 6 or 8-pack chairlift and realigned to make the lift more weather friendly and safe. I would imagine the unloading area will be vastly improved.

There is also an emphasis on summer based improvements including this summer’s completion of the Via Ferrata climbing course built on Roger’s Ridge (I think they need a web cam there). There are new ropes courses, etc. at the Main Lodge. The new zip line is still under construction. But Hodges said there will be a complete renovation and added improvements at Woolly’s Tube Park on the way up to the Main Lodge. The tubing routes will be realigned out of the intense solar exposure and lengthened. But there will be new summer attractions built there including zip lines and coasters.

The Eagle Base improvements will be “phased” beginning in 2021. The initial projects intend to be a new beginner chairlift, the first “amenities” and the replacement and realignment of Chair 25 (its base will be adjacent to the base of Chair 9). Hodges said to expect to start seeing the planning process for the Eagle Base improvements.

Other notable proposed improvements; drilling for water at June Mountain with the intent of creating an extensive snowmaking system (maybe the existing Chair 16 could be moved over there?). Also, plans for a new ~400 space parking lot at the base of Chair 4 and a Mill-like facility there. The Mountain also has an acre of land adjacent to The Parcel in town where they intend to build more employee housing.

Alterra is also working to renew the Westin franchise at the Westin Monache and they are currently working with the HOA to make significant improvements to the physical plant and operation. Clearly, they recognize it is their most “first class” hotel facility. But the Village/Eagle gondola improvements are conditioned by more bed base development in the Village (again, see below). And no word on any hotel improvements in Sierra Star (like Hart Howerton pushed).

One local real estate agent and long time MMSA employee looked at me at the end of the presentation and said “sounds like deja vu.” But this fourth phase of Mammoth Mtn. ownership is quite different. It is the “broader base for economic stability” for one. They can probably get the Ikon Pass numbers up to ~550,000 like the Vail Epic Pass. And Alterra (finally) is an organization that understands borrowing money and making capital expenditures (the Vail Resorts business model). All of this could certainly lead to the much needed improvements. And to finally move Mammoth towards being a first class resort.

Meanwhile, construction crews have started working on two new sections of the Main St. sidewalk and parking improvements. The newly completed upper section of Main St. is a radical improvement both aesthetically and from a public safety stand point. The new bike path linking Mammoth Creek Park and Snowcreek is already being paved. That has been a decade in the making. And despite the warm weather, snow stakes will be going in the ground soon enough.

We had a property tax appeal hearing this past week for one of the largest single family homes ever constructed here in Mammoth. The Assessor and the tax payer settled on a new assessment of $5,781,329. That is certainly a first class home.

Noteworthy Sales

The sales during the period were pretty ho-hum, mostly condos and another luxury home. There weretwo more commercial sales and that is impressive. One was in the Old Mammoth corridor and one was in the Industrial Park

Even more impressive was the press release announcing the sale of the Village commercial property. It was a non-MLS reported sale. This is all of the restaurants and shops (excluding The Smokeyard) in the Village. A total of 57,925 square feet. The sale price is purported to be $28 million. It was reported as the highest commercial sale in Mammoth Lakes ever but there were some land sales in the mid-2000s that exceeded that number. The buyer is also reported to be a private investor who is an avid skier with an affinity for Mammoth. That sounds better than some nebulous REIT based in Texas or wherever. That should be a good thing.

Favorite New Listing For The Period!

Units at the St. Anton condominium complex don’t come up very often (there are plenty of legacy owners). But with all of the improvements going into Canyon Lodge this makes for a good opportunity to own an affordable 1-bedroom unit that is “right there.” 
The unit is spacious and clean and ready to rent. It has a gas fireplace so there is no wood or pellets to deal with and no retrofit hassles. The project has understructure parking which is ideal at the Canyon Lodge altitude and the project has its own loader for snow removal. The project also has a nice pool and spa area and an onsite rental office/management if an owner wants a very “hands off” nightly rental. Very reasonable HOA fee and solid Association.    
Listed at $350,000
Listing courtesy Mammoth Realty Group


Other Real Estate News

The recent Tom Hodges presentation also brought to light what is likely to happen on the old Dempsey parcel on the corner of Main St. and Minaret. The piece recently closed escrow for just under $6 million. The Yotel hotel concept is the latest “hip” hotel concept and is proving to be very successful especially around international airports and major metropolitan cities. It is Millennial/minimalist focused with small functional guest rooms and larger “congregating” spaces. 

But a new/old developer is now condominium-izing the concept in Park City under the new brand YotelPad (I’m thinking it should have been YotelCrashPad). The Park City YotelPad is already under construction with what appears to be about 80% of the units already reserved. The Park City property is 144 units. The Mammoth parcel is zoned for 175. And a YotelPad is apparently what is going to be proposed here in Mammoth.

The units are smaller, scaled down versions of the Westin Studio units without a heavenly bed. The couch converts to a bed. The “kitchen” is even smaller but there is the obligatory desk top for “devices.” The hotel design features more common spaces for hanging-out and hooking-up (I’m thinking this might be a fun spot for my post-retirement job). The pricing in Park City seems to be on par or slightly higher than Studio units at the Westin Monache.

What makes all of this even more fascinating is the developer in Park City who now owns the Mammoth parcel. The developer is interestingly named Replay. The name Replay is a classic play-on-words, like right out of the old Intrawest marketing playbook. And for good reason; the principals are the old, original founders of Intrawest. They are aligned with a variety of old and new partners and are developing and marketing resort real estate all around the world.

It is certainly a Real Estate Playbut also their second foray into the resort real estate business. Their first play was very successful and they exited the market with brilliance. They know Mammoth and I’m surprised they are back. They know the cost of building here and how the Town works. And in the current economic environment I doubt if they are using any of their own money; they are likely aligned with a variety of hedge funds and investment bankers. But it makes me recall what a famous Whistler resident once said, “What Mammoth has Whistler will never have; the sun.”

Now while the younger and Millennial crowd seem to be the target end-user for this YotelPad product, who is the target investor? Park City and Mammoth have a different investor pool. Is it the younger generation themselves or simply more investor types?? One of the marketing pitches for the YotelPad brand is “affordability.” That certainly isn’t a Westin-type branding strategy. If this is going to be “affordable” resort accommodations, how does it make economic sense (and investor ROI) in Mammoth? And especially in light of the high cost of construction?

But does this make sense?? Well maybe. I recently saw an article titled “The Hottest Neighborhoods For Millennial Transplants” and they charted the top 20 zip codes; Los Angeles had #’s 1, 2 and 7. These Replay guys understand demographics. It was their major underlying strategy the last time out. This will be interesting to watch play-out, or replay-out. 

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Thanks for reading!

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