Fall Colors, And Fall Rush To Get Projects Completed.
Market Summary: September 29 — October 20
This report is for the past three weeks. The Mammoth Lakes MLS is reporting 28 real estate closings ranging from a low of $300,000 to a high of $3,025,000. Of the 28 escrow closings, all 28 were financeable properties and 16 were conventionally financed. There were four (4) residential property sales between $1M and $2M. There were only six (6) condo closings under $500,000. The high sale for the period was a commercial property within the North Village Specific Plan. The 10-year Treasury yield moved slightly higher to 1.747%, purportedly buoyed by bond purchases by the Federal Reserve. This time last year the 10-year yield was almost 3.2%.
Condominium Inventory
At the period’s end the condominium inventory is down 20 to 91. There were 18 new condo listings in the period and five (5) are in escrow. One new listing just closed escrow back in January (always a curiosity). Buyers looking to secure properties before winter are clearly seeing a declining selection. But there are 14 condos listed under $300,000 and 35 listed under $400,000. The time last year the condo inventory was at 97.
Single Family Inventory
The inventory of single-family homes is down two (2) to 64. There were six (6) new homes brought to the market during the period. There are 10 homes listed under $700,000. Some of the lingering listings of the recent past have now sold. This time last year there were 54 homes on the market. More disparity between the condo and home market.
Pending Transactions
The total number of properties in “pending” (under contract) in Mammoth Lakes is up 11 to 72 at period’s end. Of the 72 properties in “pending,” there are 35 in “Active Under Contract” status (formerly “back-up”). The total number of pendings in the aggregate Mammoth MLS (which includes outlying areas) is up 19 to 97. Clearly, there has been a small pre-winter selling surge the past three weeks. And this time last year there were 44 and 86 pendings respectively.
Market Updates and News
It is always nice to go on a short vacation and come back to the spectacular fall colors of the eastern high sierra. Like winter, the autumn period and the subsequent “turning” can be quite different year-to-year. I would give the fall of 2019 a 4 on a scale of 10. Early cold temperatures, and wind and rain events in the late summer like we had this year can spoil the intensity of the colors and the duration of leaves on the trees. So be it. Now we just want it to snow in the next 30 days.
But after so many years of living through the seasons in Mammoth, the enjoyable fall colors also mean something else; winter is coming and it is time to get ready. Getting basic outside things accomplished during blizzards or under snowpack is no fun. It is time to get things done around Mammoth. While some of us go on vacations this time of year, Mammoth is full of people with a sense of urgency. Those that have paid the price in the past are especially motivated. The good news for them is that there is sunny weather in the 15-day forecast.
The back-end of Canyon Lodge is a major (unfinished) construction project. These crews certainly have an imposed deadline and it is now less than two months away. Several local contractors were pushed on last year’s Canyon Lodge deadline and most declined to be involved in this year’s project. While most of Mammoth will be praying for snow soon enough, these contractors are looking for a break. The new bar and “beach” concept is an important part of the Alterra business plan. Here is a prime example. An estimated 60% of Mammoth Mountain’s skiers and snowboarders access the runs through Canyon Lodge. This is destined to be a hot spot.
The new configuration of the south side of Main St. from A-Frame liquor to Footloose is proceeding nicely. These contractors are also looking for good weather. There is still plenty of concrete to pour and finish work to complete. The project includes two new transit huts and a few, yet unforeseen surprises. Next summer the final (minimal) landscaping should be completed and the Town is promising to complete the renovations and landscape within the Old Mammoth Road assessment district (that many of us have been paying into for years). Hopefully, Mammoth’s downtown commercial districts (and entry to town) will once again look representative of a resort community.
After a couple of months of people asking what all the “OPEN HOLE” covers around town were about, the Town has begun placing new (and substantial) directional signage all around the community. This new signage is all part of the Town “wayfinding” program which is part of the whole master trails program. These new signs are large and somewhat impressive. Many of the new signs are on beefy I-beam posts. They rise significantly above street level which is imperative in winter. Additional signage will be added in pedestrian areas and the bike paths. It is a comprehensive program. But in this day and age how do we get our visitors to stop staring at their phones (for directions) so they will actually see the new signage??
There is plenty of other work going all around town. The Mammoth Creek Inn addition of nine condo-hotel units doesn’t seem to be moving quickly. Maybe they just plan to let all of the new steel sit there all winter. John Hooper has started foundations on the property next to the Sierra Center on Old Mammoth Road. He’ll show them how to get things built even in the harshest of winters. The new Black Dought brewery in the old police station looks close to opening. That should be great people watching from my desk. Utility company trucks seem to be everywhere working in the ground and in the air. There is last minute painting and paving going on and it will likely continue until it really dumps. The roofers and glazers are seriously backlogged (it looks like they may actually get the new roof on Mammoth Brewing!). And remodel contractors are hustling to get their projects “buttoned-up.” The long winter of 2019 didn’t help any of them.
Mammoth experienced another power outage while I was gone. And SCE was threatening again in the past few days. That’s a good reason to want snow on the ground. But more and more of Mammoth’s citizens are thinking about making contingency plans. Generator sales must be good. I’m thinking of a second one. Emergency lighting and food preparations are being thought about. Second homeowners should take note. At least we have a second grocery store…..
As we head towards the beginning of winter weather and the end-of-the-year holidays, the biggest obstacle for closing local real estate transactions are appraisals. The local appraisers are seriously backlogged. The new Dodd-Frank regulations of the past few years have only exacerbated the process. And one of the areas long standing (and second generation) appraisers has recently gone to work for the Mono County Assessor’s office. So there is a shortage. Financed buyers beware; you may have difficulty closing for Christmas if you wait too long. It is becoming that time of year. Maybe they’ll have to pay cash.
Noteworthy Sales
A 2 bedroom/ 2 bath unit at the Westin Monache closed for $555,000. This is the first 2 bedroom unit to close since the announcement and specifics of the renovation “refresh” and assessments. This is not a premier location unit and is relatively close to the most recent sales of 2 bedroom units in the most recent years. The buyer was represented by an out-of-the-area broker. There are currently seven (7) Westin units on the market.
Three (3) Creekhouse units sold during the period and a total of seven (7) Snowcreek properties sold including two (2) in The Lodges.
The second Graybear residential property closed escrow including $200,000 in furnishings. The first resale at the Altis condo property along Eagle Express closed for $1,925,000.
The high sale of the period was the “Berner property” in the North Village Specific Plan. This property has the lingering commercial/industrial “eyesore” remaining from the past history of the area. It would be nice to see some changes. But where will Skadi restaurant go? Based on history, it will be a long time before anything happens. The property generates $10,000 a month in rents.
And a little 1 bedroom condo at San Sierra finally closed. This very stylish and “flashy” condo remodel was right out of Manhattan or Hollywood. It was on the market for 217 days. It was really out of place in the Mammoth market.
Favorite New Listing for the Period
Luxury homes have sold well the past 30 months. Here is one that is approx. 10 years old (it was a complete, “down to one wall” remodel) and is basically in new condition and is being sold fully furnished. The home was built by Presson Construction of Mammoth Lakes. It is almost 4,000 square feet of living including 5 bedrooms and 4.5 baths and two living rooms, one with a wet bar. Beautiful, rich wood interior finishes. The sunny lot backs to Forest Service land and is located between Canyon Lodge and the Village. Perfect for winter enthusiasts. Big enough for multiple families or a corporate retreat.
Listed at $1,899,000
Other Real Estate News
The real estate world is becoming dominated by two relatively new companies, Zillow and Airbnb. They have profound roles in the Mammoth real estate market. But both struggle for profitability and the “right” business model. Zillow is a publicly held company so their financial reporting is regularly reported in the business headlines. Reading beyond the headlines brings a very interesting reality. Airbnb on the other hand would like to go public in 2020 and reading beyond their headlines can be quite interesting too. Zillow announced their 2nd quarter earnings back in August. The headline stated that their revenues soared by 84%. But they had a net loss of almost $72 million.
The explanation is simple. Zillow is moving from a major marketing platform for real estate agents (“premier agents’) to being a house flipping company — the iBuyer program. The premier agent program yields the company almost $1billion dollars a year in revenue. But that revenue has not made the company profitable. For example, there are agents in Mammoth who pay $5-10,000 or more per month for premier agent status on the Zillow website. Now they are exploring a move to charge the agents a straight 35% referral fee for all leads generated off of the Zillow site. This is how the Homelight and other sites/programs operate (I’m thinking buyers and sellers should be looking for a kick-back from these companies also). Many real estate consumers (buyers and sellers) don’t understand how these programs work. They think they are getting something for nothing.
But profitability for these companies is difficult. Zillow’s stock valuation has basically gone from $50/share to $30/share since the August announcement of their soaring revenues. Because the premier agents program hasn’t proven profitable, they have devised the iBuyer program; they offer to buy homes based on all of their Zestimate algorithms. Then they turn around and sell them after some minor repairs, etc.. So far they are losing ~$3,000 per home they flip. They believe that can make up for the losses in ancillary services like mortgage fees, title and escrow. But the buying and selling of homes is what increased Zillow revenue by so much. Selling real estate can seriously inflate revenue numbers. All of this becomes increasingly challenging in a flat or declining real estate market. We’ll see how it goes.
Airbnb is in a different place. As we know they are wildly successful. They can be less candid about their financial reporting for now, but sooner than later they will have to come clean. Last week they exposed some information as they prepare for going public next year (the IPO market has been tarnished lately). The company had a $306 million loss for their first fiscal quarter. That was double the loss from the previous year. The “reason” for the loss was due to major new expenditures in marketing (58% increase) and increases in product development (51%) and customer service (30%). Their press release stated they are working hard for “repeat customers” and on customer service.
Airbnb is also aggressively acquiring upstart competitors. All of this to prepare for the upcoming IPO. They raised $31billion in capital in 2016 and have $3.5billion in cash.
Meanwhile in Mammoth, I am hearing more and more owners complaining about the (increasing) fees Airbnb is charging. And the guests are figuring out how much Airbnb is charging them too. The repeat guests in Mammoth are looking to book directly with owners or at some other discount. Simply, an increasing number of owners and guests are looking for alternative programs. But Airbnb isn’t going anywhere. Other international companies like Vacasa are in the mix competing too. It continues to be the wild west in the short term rental business.
Property owners have lots of choices, but like Zillow and Airbnb, finding the right formula for profitability remains the challenge.
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