Labor Day Weekend Comes And Goes, Now For The Sweet Spot Of The Summer!!
Market Summary: August 18 — September 1
The Mammoth Lakes MLS is reporting 19 real estate closings ranging from a low of $225,000 to a high of $925,000. Of the 19 escrow closings, all 19 were financeable properties and 15 were conventionally financed (that seems to be the trend). There were eight (8) condo sales under $600,000. Seven (7) of the eight (8) most expensive sales (all above $750,000) were financed purchases including four (4) sales in Snowcreek and two (2) in The Trails. The 10-year Treasury yield moved around but ended up slightly down at 1.506%. The mortgage industry was talking about higher rates during one point of the period but rates remain very attractive for both purchase and re-finance.
The FHA condo loan limit under the new “spot approval” for condos in Mammoth will be $529,000. So that opens the door for many local residents to take advantage of the 3.5% down program for purchasing. There are currently 94 condos on the Mammoth market that will fit into this price threshold. Some might not meet the “spot approval” criteria or someone’s true housing needs, but the $529K loan limit is great for local buyers.
At the period’s end the condominium inventory is up one (1) to 130. There were 21 new condo listings in the period and six (6) are already in escrow. We’ll see if Labor Day is indeed the peak of the market inventory. A few of the new listings are 1960’s built condos with BIG asking prices. The price discovery between now and the end of the year is going to be fascinating. Low rates can drive it. Early snow can too. There are some minor concentrations of listings within specific projects; eight (8) in Aspen Creek and 10 in the Westin Monache. Otherwise, they are quite evenly spread out. The first Mountainside (at Canyon Lodge) resale has come to the. It is priced at $1,395,000. It closed just three months ago for $1,192,000. It is being offered unfurnished.
Single Family Inventory
The inventory of single-family homes is even at 67. There were numerous price reductions in the < $1M range this past week in preparation for Labor Day Weekend. But for buyers wanting to look at homes through most price ranges, right now is an excellent time. And again, the price discovery between now and the end of the year will be worth watching.
The total number of properties in “pending” (under contract) in Mammoth Lakes is down three (3) to 61 at period’s end. Of the 61 properties in “pending,” there are 22 in “Active Under Contract” status (formerly “back-up”). The total number of pendings in the aggregate Mammoth MLS (which includes outlying areas) is down nine (9) to 89. The decline is not surprising, it has been relatively slow the past four weeks here in Mammoth. But this holiday weekend will produce some sales and now we are moving towards the snow season. A classic Mammoth four-plex came to the market during the period and it is already in escrow. It was priced at $1,099,000 and in good condition. These four unit (2 bedroom / 1 bath with garages) buildings were developed predominately in the late 1980s and early 1990s by John Hooper Construction. Most are located in the Sierra Valley Sites (aka The Ghetto). Many of these properties came before the ML Planning Commission for some sort of variance. Looking back, some of the variances worked and some didn’t. Today, they provide valuable housing for the workforce. But based on the rents and expenses (I have clients with similar buildings) the capitalization rate (aka cap rate) is in the high 2’s. Amazing.
Market Updates and News
Labor Day Weekend was very busy. The past two weeks have been the warmest of the entire summer. It was one of the coolest summers in my recollection. Some light smoke settled into the area on a few the recent mornings but was normally blown out by late morning. Now we move into the less crowded and beautiful late summer and early fall period. One of the best times of the year to be in Mammoth.
The Town held workshops on the The Parcel workforce housing project during the period with decent attendance from members of the public, especially considering that many local school-aged kids were heading back to school and keeping mom and dad busy. I don’t think there are any big revelations yet except one we already know; it is very expensive to build in Mammoth. And even more so when government or quasi-government entities are involved. Otherwise, the Town’s agenda has been on the light side. There has been little mention of the Ice Rink/MUF/Recreation Center sprung structure (tent) proposal. The only real mention has been an almost odd bashing of the proposed project by the editorial staff of the Mammoth Times. Maybe they are trying to be relevant again.
My Mammoth Real Estate Q&A that appeared in this weekend’s issue of The Sheet has already received some interesting comments. Mammoth is producing massive amounts of tourism related taxes at this time, most of it is pure bed tax (TOT). And Mammoth Lakes Tourism is taking all the credit (and spending an exorbitant amount doing it.) But the Mammoth condo owners who have paid the bills and upgraded their properties and marketed through all the various means are the ones really generating these taxes. These owners have created the supply. Without them the marketing would be futile. The public officials need to be reminded of this dynamic.
And speaking of nightly rentals, a recent article at Inman.com described the chaotic events happening in the resort town of Sedona, Arizona. In 2017 the State of Arizona passed a very lenient short-term rental law. It stripped local cities, towns, and counties of imposing short term rental regulations within their jurisdictions. The new law also allows developers to build housing tracts specifically for short term rental. Arizona is the only state in the country that has ruled this way. In Sedona, the effect is that over 20% of the city’s housing inventory has converted to short term rental. It has “turned neighborhoods into mini-hotel conclaves that are driving up home prices.” And the developers are buying up all of the vacant land. The median home price has gone up $50,000 in the last year. And the workforce is being displaced.
Looking at the Sedona experience (and others), Mammoth Lakes is fortunate to have sorted through the zoning and short term rental governance long before the likes of Airbnb pushed their way into prominence. The bulk of Mammoth’s condos have been in legally permissible zoning since they were originally developed. I cannot recall any discussion of ever changing that. And today it would certainly be a “bite the hand that feeds” situation for the Town. The single-family zoning has never allowed for nightly rental. That was carried over from Mono County jurisdiction when the Town incorporated in 1984. This prohibition was again reaffirmed in 2015 with the Measure Z referendum that passed with 70% of the vote….
And as the market is seeing strong activity in the condo market, there is an increasingly obvious (but often missed) “buyer beware” when looking at 40+ year old remodeled condos. I’m increasingly coming across this situation. Many of these older units have attractive floorpans in excellent locations in low-density projects. Owners have completed all sorts of remodeling. But a red flag is the plumbing. These ~50 year old condos were built with galvanized plumbing. There is bound to be serious corrosion and clogging by now. Simply, it has met its useful life. I’m seeing units (selling) with “cheap” remodels without plumbing replacement. These new owners are in for a rude awakening. These units can be effectively re-plumbed (with copper and PEX) but it should happen during a remodel, not after. And it isn’t cheap. Buyer beware.
A 3 bedroom / 2 bath unit at Mammoth Green sold for $632,000. Another 2 bedroom /2 bath unit in the project is about to close in the mid-$500K range. This is good news for Mammoth Green owners. This is a great project located on the Sierra Star golf course and really convenient to Eagle Base — so the best of both worlds. It also has a lovely pool and spa area. But this beleaguered project was subject to construction defect litigation. It was the classic example of the early failures of cement fiber siding. Following settlement of the litigation and a small ongoing special assessment, the project has been fully resided and other issues addressed. The project is now in great shape and values are clearly returning. This is one of the Intrawest built projects that has deceptively high HOA fees but the fees include propane gas for the fireplace and endless hot water.
A bare bones 1 bedroom / 1 bath at Horizons Four closed for $225,000 — more evidence the smaller condos in town may have hit a ceiling in selling prices.
With six (6) closings in the period being Snowcreek units, more evidence of the overall popularity of the Snowcreek properties in all phases.
Favorite New Listing for the Period
This home has been on the market the past two summers with other agents. At much higher prices (if a home sits on the market one summer why would you raise the price the next summer?) But the owner contacted me last week and said he needed to sell it and the sooner-the-better. I advised a price that was aggressive and could even create a bidding war (we’ll see). It is called true price discovery. So this is 3 bedrooms / 3.5 baths with an “almost” 2-car garage (depending on what you are driving; Suburbans or Subarus?). This is located in the Mammoth Slopes neighborhood between the Village and Canyon Lodge on a quieter residential street but is really an easy walk to the Village. The home is in very good condition, forced air gas heat, freestanding wood burner in the living room, full sized water heater and on-demand hot water heater, private spa on rear deck, and sold fully furnished. Here’s the video tour.
Currently listed at $699,000
Other Real Estate News
I’ve had plenty of discussions with Mammoth property owners in the past four weeks. Many have been quizzing me about a variety of Mammoth real estate related topics. Many are observing shifting real estate markets in California and nationwide. Others are concerned about potential recessionary factors, or potential inflationary factors. Obviously, all of these things are out of our control but it is prudent to be prepared for any potential changes. But through these discussions there is one thing that I mention that surprises them, and it really isn’t common knowledge in the Mammoth Lakes community and with local property owners.
I have the knowledge because I sit in an oddly privileged seat on the Mono County Assessment Appeals Board. I have occupied the seat for the last 15 years though five VERY different Assessors and through the mid-2000s peak values, the steep declines (and Prop. 8 reductions) from 2009 and beyond, and the current rise in values. It has been a fascinating period to be immersed in all of this. Through the period I have also been involved with appeals on the assessed values of Mammoth Mountain Ski Area and a variety of their ancillary assets. This past spring we spent many days in hearings including the analysis of massive amounts of financial data. While the information is provided during a “public hearing” and can be considered public information, the information isn’t necessarily something that warrants wide distribution. Just because it can be, doesn’t mean it should be.
The most recent information shows, and this is what I have explained to people, is that MMSA’s revenues and profitability have been outstanding the past few years. Snow makes a big difference, but so does operations and management. I have the exact numbers from 2016 and 2017. There is a strong trend line. I can only imagine 2018 and 2019 will follow the trend. The Board will be hearing new appeals in the next year so we will find out. The revenue numbers far exceed the mid-2000s when the snow was outstanding and there was tons of dollars floating around, even adjusted for inflation.
But the local property owners who are substantially invested in the community like to hear this. It isn’t hyperbole, just facts. They have lived through economic stagnation and drought. Some of their wagons are hitched to the success and failure of the Ski Area. It is comforting to know the enterprise has outstanding revenues and profitability. It is why I have referred to MMSA as the gem of the Alterra conglomeration.
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Thanks for reading!