Mammoth Has A Clear Message For Visitors And Second Homeowners; Don’t Come Here!!
Market Summary: March 15 — March 29
The Mammoth Lakes MLS is reporting 14 real estate closings for the period ranging from a low of $275,000 to a high of $1,335,000. Of the 14 escrow closings, 13 were financeable properties and 10 were conventionally financed. The 10-year Treasury yield ended the period down from .951% to .749%. But mortgage rates have dis-connected from the 10-year and are up significantly. The best summation of the situation is from Matthew Graham at the MortgageNewsDaily.com website.
His bottom line; “Any loan that’s not right down the middle of the conventional spectrum raises questions about how it will impact lenders as they navigate what is easily the largest and fastest surge of forbearances the mortgage market has ever seen. Every loan raises questions. Due to their servicing rules or risk profiles, some loans raise more questions than others. Those loans have been absolutely demolished by an absence of investor demand. To reiterate, lower demand among investors = higher rates. In essence, despite extraordinarily high prices on bonds that underlie the top tier mortgage debt, much of the mortgage market is broken by volatility and uncertainty surrounding COVID-19. Some parts will heal quickly as bondholders understand their forbearance protections. Other parts will face a tougher road to the impending recession (high LTVs especially). In all cases, TIME and STABILITY (in markets, the economy, and epidemiology) will be required before rates and product offerings return to where they were.”
TIME and STABILITY before we return to anything normal.
Condominium Inventory
At the period’s end the condominium inventory is up 10 to 94. That includes the eight (8) new units at Creekhouse and Obsidian Villas. There were seven (7) new condos brought to the market during the period and none have gone to escrow. Some of the new inventory is actually due to cancelled escrows.
Single Family Inventory
The inventory of single-family homes is down two (2) to 40. There were numerous home listings canceled or withdrawn during the period. And a few canceled escrows. There were three (3) new residential listings in the period.
Pending Transactions
The total number of properties in “pending” (under contract) in Mammoth Lakes is down 21 to 49 at period’s end. But that includes 16 Obsidian Villas townhomes under construction or to-be-built. The Obsidian Villas developer sent out notifications this week to all reservation holders that ALL 20 units had begun some level of construction. I’m sure he is hoping for time and stability to play their parts. Of the 49 properties in “pending,” there are 15 in “Active Under Contract” status (formerly “back-up”). The total number of pendings in the aggregate Mammoth MLS (which includes outlying areas) is down 26 to 64.
Market Update and News
The market activity the past two weeks included cancellations of both escrows and listings, buyers closing and backing away, etc., It reminded me of a phrase I use to describe the Mammoth real estate market; it is often a “don’t have to buy, don’t have to sell” marketplace. With tremendous government intervention in our immediate future, we’ll see how all of this plays out in the next year and beyond.
The weather in Mammoth has been cold and showery the past two weeks with some daily highs in the upper 20 degree range. The “much needed” snow arrived in marginal amounts. There were fresh ski and snowboard tracks on the Sherwins. And it was downright bizarre to see runs (like Stump Alley in the photo above) on Mammoth Mountain with fresh snow but remaining untracked and ungroomed.
The period devolved quickly after Alterra closed Mammoth Mountain two weeks ago. The concept of “saving” the community is a real one. Hopefully saving it doesn’t mean destroying it. Bars, restaurants and most businesses are now closed. Some restaurants remain open for take-out, but for how much longer? The shuttle system has been pared down to the Red Line running every half-hour. VONS and Grocery Outlet remain open and reasonably well stocked. As I sit here at my desk I see flatbed trucks full of construction materials still flowing into town.
On March 18 Mammoth Lakes Tourism (MLT) blasted an email to their entire list asking anyone who is not a primary resident or providing an essential service to NOT visit Mammoth Lakes. I saw an old friend (worked with him at the Charthouse in 1982) who is a long-time member of the MLT Board and he said “I never thought we would be telling people NOT to come to Mammoth.” Last weekend the County and Town ended nightly occupancies in all hotels, motels and STR condos. We can thank them for that. AirDNA reported last week that people were in fact fleeing cities and looking for rural areas to hang-out. One of their marketers commented “vacation rentals are providing safe havens for an entirely new demographic.”
I’ve cruised through most neighborhoods in the past two weeks and there are some second homeowners doing their isolation here, including a few of my neighbors. But it is being frowned upon. Mammoth Hospital is greatly concerned about the facility being overrun. They have 17 permanent beds and have stated they have another 23 “surge” beds if needed. They are using various prominent local residents to get the word out. A video by Wave Rave owner Steve Klassen advises people to “please take it down” –– avoid high risk activities that could end up putting you in the hospital. Mono County Search & Rescue even warned that “we might not be able to come get you.” The doctors have also expressed that at this altitude “people deteriorate more quickly” with the virus.
As of this writing (Sunday) the Mono County Health Dept. is reporting 11 cases of the virus including one who has left the County and one who has been life-flighted to Reno in critical condition. The 11 cases gives Mono County new notoriety; we are the most highly infected county (per capita) of any county in California. Great.
Meanwhile, MLT and US Foods (a major restaurant supplier in Mammoth) have begun offering a food bank on M/W/F on Main St. for those who have been laid off. There was quite the line on Friday. Thankfully, I didn’t need to be in it. And MLT has already recognized the reduced TOT (bed tax) for the late winter, spring and maybe even summer and are re-budgeting their ~$10M budget. This weekend The Sheet was asking if we needed that massive budget for them to run a local food bank? In the hindsight of the last two weeks we can thank Alterra for closing down Mammoth Mountain. Ski resorts have now proven to be significant vector locations for this virus. Hundreds (and maybe thousands) of cases are being traced back to the Austrian ski resort town of Ischgl (which isn’t very far from Northern Italy). Too much close contact in bars, restaurants, lift lines, etc. and then heading home to all parts of Europe has proven to be a disaster. Cases from Vail have been traced to a “cluster” in Mexico City. Cases in the front range of Colorado have been significant and one physician called it “widespread” this past week.
So far Inyo County has limited cases but the City of Bishop was dealing with an onslaught (literally hundreds) of rock climbers who were camping in various, popular climbing and bouldering locations and then invading the local markets, coffee shops, breweries, etc.. It has apparently been dealt with by federal and county officials. Bishop has a fine hospital but it too has limited space. And it does have an older population.
The federal emergency bill last week apparently has a bunch of pork for the FAA. Hopefully it trickles down to the Mammoth and Bishop airports.
And the newest marketing phrase in real estate is “Can you see yourself quarantined here?”
Noteworthy Sales
Two of the mid-range ($600-700K) home closings were for local families who needed new places to isolate. It worked out for them. They will have plenty of time to settle in.
Two large, high-end townhomes closed quickly and for cash. Maybe these buyers are thinking (or were “sold”) that Mammoth is a good place to isolate?
An apartment building closed for $1,150,000. And financed too. Looked like a good purchase 30 days ago…..
Favorite New Listing for the Period
The Mammoth real estate market is likely to be in a holding pattern in the next few months. But the Bishop area remains popular (not a second home market). So here is another reverse mortgage REO in west Bishop. This is a 3 bedroom / 2 bath home with an oversized 1-car garage. Extra large master bedroom with a sitting room. Large backyard with covered patio, mature trees and plantings and plenty of room for a vegetable garden or small greenhouse. Perfect for some light remodeling. Long-time residents on the street. Close to the popular Manor Market.
Listed at $315,000 to $350,000 (waiting on the asset manager for final pricing)
Other Real Estate News
The economic impacts for Mammoth will be all over the board including the real estate market, the STR/vacation rental business, tourism related businesses and proposed capital improvement projects, both public and private. Hopefully time and stability come quickly. The emergency bill should help many local workers who aren’t working. A “V” shape recovery into summer would be nice, but maybe not probable. But if Mammoth has to be shut down for 60-90 days this is a reasonable time of year for it. Easter falling late on the calendar this year should have been a nice bonus but the ski conditions would have deteriorated quickly and most of April would have been a bust. May and June aren’t big tourist months and many businesses actually close for a period. We’ll see if the Motocross (second half of June) happens.
Summer tourism could be okay. A Mammoth vacation can work for many people in distressed economic times. It can be relatively affordable and no airports or airplanes are necessary. It can be low-key and healthy and the crowded events can be easily avoided. It looks like gasoline will be cheap.
The local real estate market and owners that are likely to be most affected are in one of two categories; those impacted by stock market losses and the STR owners who are leveraged and can’t withstand the loss of revenue. The “wealth effect” of the stock market is a real driver of real estate in Mammoth. Some potential purchases will certainly be put off. Others may have to sell (margin calls?). The compromised STR owners should have opportunities for some sort of workouts or forbearance. And oddly, it looks like some could actually file for unemployment because vacation rentals are being lumped into the hotel and lodging sector bailouts. Owners of long-term rentals don’t appear to be so lucky.
The high rental demand for both residential and commercial properties in Mammoth could subside. Like many things, we’ll have to see. Ultimately, I expect transaction volume to decline significantly over the coming months. Too much uncertainty. But I’ve been wrong before. This is when the inventory numbers become telling.
On the macro scale, Zillow and all the other real estate platforms/cohorts who were accelerating their iBuying programs have already suspended this activity. Zillow alone has almost 2,000 properties in their inventory. Their CEO stated the suspension was for “safety concerns”. Or maybe flipping properties is precarious if market values are declining?? Will they actually decline? I’m betting they will be focusing on iSelling rather quickly. Zillow’s other profit center is the premier agent program. Some Mammoth agents (as well as thousands around the country) spend $10,000+ per month to promote on this program. How long can this last?
And how about Airbnb? They were hoping to go public this year. They are scrambling to raise capital and the majority of their hosts are on hold. Their regular net losses are sure to skyrocket. Their European market has been decimated. The corporate lending market and venture capital opportunities may go dark. Will they even survive?
Thanks for reading! Stay home and stay healthy!