Mammoth Mountain Is In Full Operation — Five Weeks of Holiday Business Ahead!
Market Summary: December 1 — December 15
The Mammoth Lakes MLS is reporting 14 real estate closings for the period ranging from a low of $270,000 to a high of $825,000. Of the 14 escrow closings, 12 were financeable properties and nine (9) were conventionally financed. There were two (2) more vacant residential lot closings. Eight (8) of the 14 closings were condos selling under $500,000. The 10-year Treasury yield moved slightly upward to 1.819%. The yield has bounced around but has been relatively stable for the past few months.
Condominium Inventory
At the period’s end the condominium inventory is down one (1) to 64. One of the new townhomes at “The Villas at Obsidian” has already gone to contact. Two older but nicely remodeled 1-bedroom condos sold right at $325,000. That appears to be the new threshold for these units. Unimproved units of this size and age will typically sell under $300K. There were 10 new condo listings in the period and two (2) are already in escrow. There are still 25 condos listed under $400,000. This time last year there were 97 condos on the market (and that was no where near a historically high number).
Single Family Inventory
The inventory of single-family homes is even at 62. There were two (2) residential closings in the period. There were three (3) new listings in the period. One we’ve seen recently. This time last year there were only 33 homes on the market. The year-over-year numbers really show the disparity between homes and condos. Many home sellers on the market continue to (reluctantly) consider price reductions. At what point will buyers recognize that many home prices have drifted downward and recognize a good value? An excellent winter season could do that.
Pending Transactions
The total number of properties in “pending” (under contract) in Mammoth Lakes is even at 54 at period’s end. Of the 54 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 three (3) to 79. The end-of-the-year holiday period is historically a slow real estate period. But with so many new IKON Pass holders in Southern California combined with favorable conditions on the Mountain, the local market might be in for a surprise. Property showings have ticked upward in the past few days. Last year the pendings were 40 and 66 respectively.
Market Updates and News
Mammoth weather has been wet, windy, and showery the last few days. The Ski Area has added some wet snow to the overall coverage. The ski runs have acceptable coverage but more snow will be welcome. They are in full operation and that is a very good thing. Despite less than ideal weather conditions the skiers and snowboarders are already here in solid numbers. Today was an epic blue sky day with a BIG crowd. The Night of Lights last night really kicks off the holiday season. Mammoth should have a steady stream of holiday visitors for the next five weeks, right through Martin Luther King weekend. Under this new IKON Pass era this should become the norm. Ready or not, here they come. It is cash flow time for many.
The Canyon Lodge improvements are near completion. The Ski Area is now using the $30 million number for the amount invested over the past two summers. That is significant to say the least. The facility now features the Lincoln Bar and Canyon BBQ. There is plenty of new seating and new decor. I spoke with the flooring contractor last Friday and he told me he had just finished his work. Apparently there were many miscellaneous workers who couldn’t comprehend that they had to get out of his way. Laying different types of flooring will do that. I’m sure there are minor details to complete, but the facility is ready for the onslaught of skiers and snowboarders in the coming weeks. Now that the Canyon Lodge improvements are completed, it shall be interesting to see what Alterra wants to improve next summer. And with all of the improvements, maybe Canyon Lodge will now become the special events venue that has been discussed for years.
The very lengthy initial planning process for The Parcel appears to be completed. The 24 acres in the middle of town that is designated for workforce housing has now been broken into four separate planning areas with specific housing goals in each. For now the Town has satisfied the public process and can start entertaining discussions with potential developers. This is critical. But developers may have their own ideas as to how to make a project proposals viable. So the “plans” will likely change again. At least there is a baseline. My biggest concern is that some of the first developers showing interest may be the best we shall see. And they will want to make some changes to the plan. The Town fathers may choose to be inflexible and lose the best opportunities. This is like real estate listings; many times the first offer is the best offer, but the sellers refuse to acknowledge it and end up sitting on the market for many months following.
Speaking of workforce housing, the Town just closed escrow on two Meridian Court units. This was originally a deed restricted workforce housing project that did not completely sell out. These units ultimately became open market properties. Both units recently came to the resale market and the Town decided to purchase them and bring them back into the workforce housing pool. They paid cash for both units out of a fund for such acquisitions. But I asked the agent who represented the parties why the Town didn’t finance the purchases. She didn’t know. It sure would make sense. Interest rates are low and these are going to be revenue producing properties. Why not make the fund for such purchases go further by utilizing some financing?
This past week we got the chance to see what the Westin Monache remodeling will look like. They have a 1-bedroom unit remodeled to the specifications and a section of hallway completed too. The new decor is very modern and strong on gray tones (almost all gray tones). It is like Fifty Shades of Gray. The kitchens and baths remain very similar and the kitchen upper cabinets remain the same original natural color while the lower cabinets are painted-out in a darker gray. The hallways go to gray walls with grayish sculptured carpet but retain the natural wood trim and doors. The interior decorators must believe gray is the “in” color for the next decade — it sure is the dominant color in the remodel scheme.
Recent data released from the Census Bureau stated that Americans are moving at the lowest rate ever recorded. Apparently moving companies across the country are feeling it.
Noteworthy Sales
The vacant lot at 325 Fir Street closed for $270,000. This is a premier “rim” lot in The Bluffs; slightly downsloping but very buildable and tremendous views. Large custom homes all around. I had this lot listed for sale many years ago in the $500,000 range. We believed that was market value back then. And it has been on the market since then with another agent. This was the long-time legacy owner (family) of the property dating back to the 1920’s. Today, this is what the market will bear. This is another example of how the high cost of construction has diminished the value of vacant land in Mammoth.
The sale of a 2 bedroom / 1 bath unit at La Vista Blanc for $355,000. This was a true and rare “quick flip” in the Mammoth market. Let’s look at the math. This was an REO property closing just a few months ago; they paid $270,000 with a $13,500 buyers premium paid to the auction company. The contractor spent five weeks in the unit and painted the kitchen cabinets and installed solid wood countertops (real cheap) and new appliances. The bathroom got a new tiled surround and new vanity and toilet. Completely repainted unit and some new vinyl plank flooring. Some new furniture and some “garage sale finds” from around town and elsewhere. And a new flat panel TV. They did nothing to the old existing pellet burning fireplace insert. Closing costs were probably $15-20K.
Favorite New Listing for the Period
This Sunstone condo was on the market all last winter and I showed it several times. It is a top floor 2 bedroom / 2 bath condo hotel unit but it has some really unique features. It actually sold and closed escrow in May. But it just came back to the market. It doesn’t look like the new owner has made any changes. The second bedroom has its own balcony with a view of the spa. So the property has two balconies. The second bedroom also has an additional window. And because of the position in the building, there is an extra large entry area that has great utility. The location is very close to the elevator bays for access to the understructure parking, the pool and spa area, fitness room, and the incredible “great room” in the center of the project. This has some of the best ski run access in all of Mammoth. The views are southwest looking up into the Mammoth Pass.
Listed at $529,000. Listing courtesy Mammoth Village Properties
Other Real Estate News
Mammoth heads into the prime rental/revenue period right now. And it has proven to produce massive amounts of TOT (bed tax) for the Town. There are continuing changes in the short term rental (STR) business here locally. I often refer to it as the “wild west.” It has changed and will continue to evolve, or devolve. And I’m probably not even apprised of some of it. Airbnb and VRBO remain the key portals for marketing and booking. But owners and renters are beginning to move away from the expenses associated with Airbnb. Airbnb plans to go public in 2020 so they are trying to keep revenues strong.
Local owners are developing their own new strategies based on their experience. Some are trying to capture every booking they can off of Airbnb. That means discounting in non-demand periods and renting larger units to smaller groups of guests (and locking off portions of the their property). Other owners are taking a “quality not quantity” approach and utilizing VRBO with lesser fees. They are pricing higher and being more particular. These owners are trying to eke out the best return with the least hassle with the best clientele. And booking overall, except for high demand periods, remains a last minute activity for most.
The specific enterprises that are facilitating all of this are on the move too. Alterra and Mammoth Mountain are quietly getting aggressive. Their performance in the Village and at Eagle is proof. They now have the service levels, staff and revenue numbers to compete with any entity including many owners who wandered off into different rental scenarios over the past 15-20 years. They are trying to recoup these owners and units back to their programs. Bundling with lift tickets, air service, on-mountain services, etc., is a competitive advantage.
The Mountain enterprise is also the Westin front desk operator now and after all of the renovation work, they will certainly control the premier accommodations in Mammoth. And they are aggressively trying to keep the Westin units under their control. They also see the opportunities at Eagle Base. While they have lost the on-site HOA management at Sunstone and Eagle Run, they have taken over the management at Aspen Creek. Clearly they see the opportunity to capture rental units at that project. And they have critical manpower and machinery. At Eagle Base they want to recoup the loses there from the past 20 years. It was a clear mistake to lose control. It is a valuable revenue source.
The international and public company Vacasa continues to expand their footprint in Mammoth. They purchased the long-standing Mammoth Premier Reservations a few years ago so they have an already going concern. They constantly mail property owners in Mammoth. They even mail solicitations to owners of vacant lots. They have money behind them and some unique services to offer. But the local competition is stiff. The general impression is they need to perform better. Mammoth Reservations and Mammoth Sierra Reservations are essentially merging under the ownership of a second generation Mammoth rental business operator. They have local knowledge and experience and have a well established and broad variety of rental units. That may be their competitive advantage.
Other companies like Nomadness, Ready 4 Rent, and some other local mom-and pop rental agencies are being taken over by younger generation owners who are social media savvy and ready for the next phase of the wild west here in Mammoth.
And other smaller companies are emerging as part of the “boutique” rental industry. Their goal is to serve some segment of the industry, mostly managing the various, scattered properties for owners booking through Airbnb and VRBO. Companies like Rental By Owner supervise the turn-over of units. There are other emerging private property managers who quietly manage 20-30 properties, and some literally do their own housekeeping. And some of these smaller managers can offer uniques services for both owners and guests.
The good news is that both owners and guests should benefit from this competitive environment. And obviously the Town too. And owners will have a variety of rental options and services that can be customized or changed over time. And that is a good thing for Mammoth real estate.
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