Authorities Pull The Plug On Mammoth, And The Lessons Learned.
Market Summary: September 15 — September 29
The Mammoth Lakes MLS is reporting 20 real estate closings ranging from a low of $242,000 to a high of $1,750,000. Of the 20 escrow closings, 18 were financeable properties and 12 were conventionally financed. There were two (2) vacant residential lot sales. Thirteen of the 20 sales were condos selling for less than $530,000. The 10-year Treasury yield bounced around but settled lower by a little more than .2% at 1.675%. That may be important for the real estate and mortgage industry. Another major increase or “snap back” could have stifled business. But for now mortgage rates remain very attractive.
At the period’s end the condominium inventory is down another eight (8) to 111. There were seven (7) new condo listings in the period and none are in escrow. The condo market is acting rather normal for this time of year; declining inventory and fewer new listings. The anticipation of ski season does that.
Single Family Inventory
The inventory of single-family homes is even at 66. And more price reductions. Unlike the condo segment of the market, the sales of single-family homes are flat in the Mammoth market. But aggressive pricing and serious price reductions can make sales (I can tell you first hand). But many of these lingering listings are likely to become seasonal rentals in the coming months.
The total number of properties in “pending” (under contract) in Mammoth Lakes is down nine (9) to 61 at period’s end. Of the 61 properties in “pending,” there are 20 in “Active Under Contract” status (formerly “back-up”). The total number of pendings in the aggregate Mammoth MLS (which includes outlying areas) is down 11 to 78. The numbers would indicate the sales activity has lulled for now. We may actually be praying for snow soon enough but the 15-day forecast is for nothing but sunshine..
Market Updates and News
Mammoth has moved into classic early autumn weather with warm days and cold days, and wind. We had a dusting of snow on the ground this morning. The fall colors are just starting to happen but if the weather stays on the warmer and drier side (as forecasted) they could become spectacular. The big wet winter and moist spring and summer certainly made everything grow. The shoulder season tourism appears relatively strong. Last weekend’s Octoberfest was well attended. It is nice to see that event rekindled. It was a crazy event in the 1980s.
The big “news” from the period was the county-wide power outage on Sept. 16. Very strong winds and a high fire danger caused Southern California Edison to shut the power off for many hours. My local power was off from 1:30 in the afternoon until 2:45 am. Others were off for longer. And based on “alerts” since then they may turn the power off at any time they deem necessary. All of this new protocol follows last year’s devastating Paradise (Camp) fire. The power outage caught many by surprise. Some have absolutely no level of preparedness. And there were varied responses. Some people were downright mad. Others took the opportunity to go home and read a book by candlelight. I drove through town in the early evening and it was empty. Some wondered what it would be like if the town was packed with visitors and they did this.
This may have become a “time-of-year” event. The “fire danger” sign at the entry to town has always been a good indicator. This time of year the fire danger can be very high because everything is dry. But any level of snow cover can virtually drop the fire danger to a minimum. So this happening during the winter months of heavy tourism is unlikely. At least that would be the logic. In the past few summers a very professional out-of-town crew has been clearing the branches and trees in the above-ground utility corridors all around town. But if these outages continue the community may demand that more of the utility lines should be buried. One thing for certain, the volume of SCE vehicles, both large and small, has been impressive in town the past two weeks. Almost like an invasion.
For individual property owners, preparedness for this type of event has come to the forefront (at least for now). And one thing that became rather apparent; the STR properties are definitely not prepared for such an outage. This may become a new requirement under the Town’s Quality of Life ordinance that regulates STR properties. Many guests that were in town simply left because units were dark and cold and it was uncertain as to when it would change. We’ll have to see how the local government responds….Luckily I was prepared, but now I want to become even more prepared. Battery operated LED lighting is a cost effective solution. Those without generators are contemplating a purchase. Wood burning appliances may experience a renaissance.
The other “big” news of the period was that it was officially announced that Aspen Ski Co.’s hotel group purchased the 7-acre Hillside property next door to the Westin Monache. The announcement really came as an article in The Aspen Times on September 20. Most of the local real estate community already knew this had happened. But these purchases are always good for some hyperbole. I still have the development poster for the Ritz-Carlton that was proposed on this site back in 2007. Only time will tell if the Aspen folks have the mojo to make a new hotel project happen on this site. Rumor is that they are also purchasing other North Village properties.
The Town Council approved $710,000 for plans and engineering for the proposed “sprung” ice rink/recreation center to be located at Mammoth Creek Park West. The Town has now spent (on soft costs) the equivalent of ~50 years of lease payments on the existing ice rink location in order to “save money” by relocating the facility to Town owned property. Meanwhile, the Parks & Rec Commission was given a presentation about how wonderful sprung structures are for a variety of uses including recreational facilities and other cultural/entertainment/community facilities. Most of the photos had the sprung structures in remote, treeless frostbitten looking tundra locations. I guess that is fitting.
I’ve mulled over the recent announcement that Mammoth Lakes hit the $20 million mark in TOT generation last fiscal year with a marketing budget of $10 million. These financial numbers apparently rank the Town’s marketing arm known as Mammoth Lakes Tourism in the “genius” classification. If they are that brilliant I would love to see them take on a couple of our most challenging marketing/revenue quandaries — help raising funds for both the Mammoth Lakes Foundation’s Cultural Center and the Wounded Warrior Center. Both projects are stymied by high construction costs and insufficient fund raising. Both projects would reap endless amounts of marketing and goodwill for the community. And while they are at it, maybe they can help the Town come up with enough money so they can build a real recreation facility, not a major compromise. Do all of that and maybe their salaries and budget can be justified.
Two more vacant single-family lots closed during the period (and yes, this is an unusual amount of action in this segment of the market — it is about the scarcity of remaining lots and comparing the total cost of new construction versus buying an existing home). A lot on Holiday Vista Drive by Eagle Base closed for $242,000. Interestingly, I had this lot listed back in 2013 and it sold for $265,000. That is telling…. A very nice lot in the Bluffs closed for $315,000. There is another premier lot in the Bluffs in escrow for under $300,000. Amazing. Land values in this high-end neighborhood should be higher. Now if they can just afford to build.
Two condo sales in Crestview and Chateau D’Oex at $575,000 and $520,000 respectively show that remodeled condos are a segment heading in an entirely different direction from lots and homes. IKON and Airbnb (STR) are the only reasonable explanation.
Favorite New Listing for the Period
Bank owned properties are rare these days but here is a new REO in the Village and it is in “turn-key” condition, so ready to use and rent. This 2 bedroom / 2 bath unit is located on the 3rd floor of Grand Sierra Lodge. This has great access from the Village front desk and to the main pool and spa in the Village. Admittedly, this is a “people watching” spot with views down the central corridor of the plaza and opposite the Lakanuki bar and Starbucks. But some people (guests) like to watch the action. Great morning sun in the winter but not too hot in the summer. This is priced competitively in the market and there are no online auction hassles or additional fees.
Listed at $599,000. Listing courtesy of Bishop Real Estate.
Other Real Estate News
I often mention new condo listings that were on the market (and sold) in the recent past, mainly one to three years prior. Looking at the underlying situation, these are often units that were sold in turn-key or close to turn key condition with projections for excellent rental (STR) revenue. But why do they come back to the market?? A recent email from LearnAirbnb.com points out that not everyone is cut out to be a host or own an Airbnb/STR property. Here are some of these personality types that the email points out;
• They can’t stand having strangers in their home. This should be obvious but many Mammoth condo owners discover the conflict between generating solid revenues and dealing with the consequences of their property not being dealt with in a perfect manner. Things happen and paying guests are on vacation. Serious analytical types or micro-managers find it very difficult. You can’t sweat the small stuff.
• They hold discriminatory views. The world is a mixed bag, and the guests coming to Mammoth are a broad variety of ages, nationalities, religions and personality types too. Some people can’t even deal with “snowboarders.”
• They hate human communication. Having an Airbnb property means you have to communicate with your guests — or you will have to communicate with the people you are paying to communicate with your guests. Guests feel entitled to communicate, especially if everything is not clear or perfect. The Airbnb host/guest environment has become like a large social club. It isn’t for everybody.
• They don’t have time to host. Many new Airbnb entrepreneurs underestimate the time involved. In Mammoth, the good news is that there are many old school-type reservation companies who can help solve that problem. But there go the profits!
• They are hoarders. This one makes me laugh. So many of Mammoth’s STRs from the past have so much junk in them it is laughable; oversized mis-matched furniture and massive TVs, knick-knacks of all sorts, kitchens stocked like a thrift store and lots more. Today’s guest expect a nice, clean and not overly done property.
• They are liars. Well, let’s just say that exaggeration doesn’t work. Hosts shouldn’t be promising something that doesn’t exist. It doesn’t make for repeat guests, which is certainly a goal here in Mammoth.
• They are jerks. This reminds me of the line from Danny Myers great book on hospitality Setting The Table. Service and hospitality “is about doing something for people, not doing it to people.” Hosts need to understand that basic premise. Airbnb has created a competitive world for nightly paying guests. Owning an STR is not for everyone.
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