Second Homeowners Come And Go, The STR Opening Is Still Questionable.
Market Summary: April 26 — May 10
The Mammoth Lakes MLS is reporting five (5) real estate closings for the period ranging from a low of $67,000 to a high of $695,000. Of the five (5) escrow closings, three (3) were financeable properties and all three were conventionally financed. The sales included two of the private garages in Snowcreek Phase II, a Canyon Lodge condo, and two (2) low-end homes. The 10-year Treasury yield ended the period slightly up at .682%. The mortgage market is almost chaotic but there are loans being made and plenty of re-finance applications in process. Forget jumbo loans or cash-out refinances, for now. We need more time and more stability.
Condominium Inventory
At the period’s end the condominium inventory is up two (2) to 80. But that includes expired listings at month-end, canceled listings, and the withdrawal of the last four unsold Obsidian Villas units. There were 12 new condo listings brought to the market during the period. With the exception of one new and very aggressively priced top floor 2 bedroom / 2 bath at Sunstone ($479,000), the pricing is all similar to the pre-virus market.
Single Family Inventory
The inventory of single-family homes is down another three (3) to 27. That includes one (1) new re-list in the Bluffs. There are only four (4) homes listed under $749,000. Certainly not a good time to be looking in the low-end of the residential market. Bishop and Big Pine are even tighter.
Pending Transactions
The total number of properties in “pending” (under contract) in Mammoth Lakes is down two (2) to 28 at period’s end. But that still includes 16 Obsidian Villas units. Of the 30 properties in “pending,” there are really only three (3) in “Active Under Contract” status (formerly “back-up”). The total number of pendings in the aggregate Mammoth MLS (which includes outlying areas) is even at 47.
Market Updates and News
Despite beautiful weather the past week, Mammoth remains relatively quiet. But this is normally a quiet time of year. With fishing season pushed to June 1 or beyond, there is not even the smattering of fisherman around. It appears that visitors are simply staying away for the most part, unless they find a place to stay. Some second homeowners have come to hunker down, others are carrying on as if nothing is different. A couple of my neighbors that were here from the beginning of the lockdown have now gone home. There are RVs traveling through town but they are likely to be hanging out in the forest.
Mammoth Lakes moved to an “early Stage 2” status on Friday. This allows “lower-risk retail workplaces” to offer outdoor pick-up from retailers and other businesses to begin low level activity. As of today some operations are showing light activities. Numerous restaurants are offering to-go food. Overall, the Mammoth community has cooperated with the “stay at home” order on an impressive level. On Friday, the Mono County Public Health Officer Dr. Tom Boo stated “Our curve is about as flat as it can be.”
After being stuck at 26 positive cases for most of the period, Mono County is currently at 29 positive cases, and not all of them are in Mammoth. There is solid testing occurring with about an average of 10 tests per day at Mammoth Hospital. Interestingly, 54% of the positive cases are between the ages of 18 to 49 and 22% between the ages of 50 to 64. The male/female ratio is almost even at 51-49%.
The Town Council and other community leaders met frequently during the period. The most enlightening meeting was Friday where Boo addressed many of the concerns of the lodging community. The lodging community and STR owners want to get back to business. But with infection rates still significant in some areas of SoCal, the State and County are going to be cautious — that is where our visitors come from. Boo said he is in constant contact with the State officials and that he can make requests/applications for increased Stage 2 activities and even Stage 3 activities within the County. STR is considered a Stage 3 activity under the State’s protocol. Boo said he is “representing the County at the front of the line.” He said the County’s public health department and the local politicians are ones pushing the County’s interests. The local business owners need to focus on re-opening, and doing so under the guidelines (and the guidelines aren’t exactly clear).
Boo did state that second homeowners coming to the area are under the State’s “unessential travel restrictions” but that no one is prohibiting them from coming or going to prohibit them. He also said that many of the restrictions are going to become recommendations. Many of the community leaders are taking a “influencers NOT enforcers” attitude.
But the opening of STR is still vague. The May 31 deadline still stands but that is subject to infection rates both locally and in SoCal. One of the undecided operational issues is the appropriate (recommended) turnover time between guests and even the time between guests leaving and the housekeepers arriving to work. Right now that period is being suggested at 24-48 hours. There is also concern about bedding like comforters and blankets needing to be laundered between each guest. The local lodging industry is proposing the practice of “triple sheeting” where blankets and comforters are all lined with regularly laundered sheets. Some are even suggesting visitors should bring their own sheets.
It is also being recommended that STR operators and owners remove certain items from properties that get “handled” like magazines and promotional brochures, etc.. TV remotes are certainly going to need certain protocols. And pools and spas won’t be allowed to open until well into Stage 3 and there will be strong recommendation that they not be opened at all. Each HOA is going to weigh the liability of this.
The Town Council met twice during the period. The 4th of July parade has been canceled but the Council is looking for community wide input on smallish events or gatherings that could take place while social distancing is respected. My gut is telling me that people may flock to the normal parade route the morning of the 4th and a large assemblage may be inevitable. Individual business owners may be looking for any opportunity to generate some revenue and the day itself puts people in a festive mood.
As I noted in my Broker’s Report posted last weekend, “pop up” events large and small are already becoming popular with the local residents in Mammoth. Can’t do happy hour? We’ll do something else. Some may be impromptu, some may just happen prompted on social media, or?? Some will be in the parking lots associated with a restaurant or bar, some may be in more remote locations. Restaurant tables are going to be dragged outside. In the last three days I’ve watched people eat their to-go meals on the curb across the street — the sun and view are spectacular, so why not? The Council’s attitude as of last Wednesday is to help local businesses any way they can and that includes financially or by any other means. We’ll find out to what extent, but they seem sincere. The parade will not happen, but I have a feeling there is going to be a big celebration. And maybe a little glimpse of our future gatherings.
Meanwhile the Town’s finance department is estimating that the Town’s TOT (bed tax) and other tourism related taxes will be around $11.2 million for 2020. That is a reduction of nearly $9 million. The Council completed an initial yet comprehensive analysis of the capital improvement projects both approved and in the near and midterm future. Lots of projects are being put on hold. A few major maintenance projects at the Mammoth Airport will be completed, but they are being paid 100% by the FAA. The new sidewalk in front of Mammoth Brewing will be completed.
Dr. Boo had some good news. The golf courses will be allowed to open for Memorial Day weekend. It is their choice to open or not. Some of Sierra Star’s fairways were freshly mowed in the last couple of days and looks great. The aspens around town are leafing-out. It is starting to look like summer.
Noteworthy Sales
The two garage sales in Snowcreek II at $67,000 each are somewhat interesting. The private garages in the first two phases of Snowcreek are rare; there just aren’t too many of them, and they are all in detached buildings. To buy one you have to be an owner in the specific phase. And in the recent past the sales have been in the $50-60K range. Garages are highly desirable in Mammoth, especially for more permanent living. This demand could be a sign of the predicted de-urbanization trend.
I don’t normally report fractional sales in these reports. I’ve never sold one. But a 1 bedroom / 1 bath fractional share in the Village 80/50 project closed for $25,000. These shares just keep dropping in value. This is too bad, it is a beautiful facility. This was “going to be the future” in 2005, or so I was told. For years I counseled people who inquired about these fractions “It is a luxury, you have to be able to afford to lose the money.” Today, I would say that was accurate…And about three years ago they appealed the property tax assessment for the entire project. We agreed to reduce it from $14 million to $4 million. The property should be sold in its entirety to a boutique hotel operator, and let it generate TOT.
Favorite New Listing for the Period
If you love the sound of a flowing creek, then this unit is for you. Here’s a single level, downstairs 2 bedroom / 2 bath unit in Snowcreek Phase IV. A tributary of Mammoth Creek wraps around the building and is right behind the back bedroom windows. There is rock and simulated wood flooring throughout, forced air gas heating and a real wood burning fireplace, side-by-side washer dryer, and newer kitchen appliances. Upgraded recessed lighting. Views of Mammoth Mountain out the front and the creek and mountains in the rear. Check out the video tour.
Listed at $445,000
Other Real Estate News
I’ve been covering Airbnb’s move towards longer term stays. They might be on to something. In the past two weeks I’ve had numerous requests from people who want to rent a property in Mammoth for 2-3 months this summer. I am referring them to Airbnb and VRBO. This should also be good for STR owners because it gets them stable income and gets past the issues mentioned above; turnover times and the potential for extra laundering of bedding, etc.. In fact, I’d recommend the owners try to rent their properties without bedding at all. Seems like that should just reduce any hassles and liability. Mammoth summers and sleeping bags go together just fine.
Zillow released their Q1 financial numbers and their revenue was up to $1.1 billion. They posted a net loss of $163 million and that was almost $100 million more than a year ago. After the release the stock soared (of course). And they are now even more transparent in breaking these numbers (losses) down. The “agent” side of the business lost $41 million. The home buying and selling side lost $98 million (they are losing an average of $4,500 on each one of their home flips). The balance of the loss was their mortgage business that is suppose to “save” them. I can’t imagine Q2 is going to be much better. Many (most) agents have backed-off their premier agent advertising and if they haven’t, they will be very fortunate to be able to pay the $10’s of thousands per month for the service. And they have approx. 1800 homes currently in their iBuying inventory. A few weeks ago they announced they were putting that program on hold, but this last week they announced they are back in the business. They are clearly bullish on the real estate market nationwide.
I sat through a webinar with many leaders in the default and REO industry. Lots of mixed signals. Forbearances are going to be a wild card. The government is destined to meddle in all of it. But how patient can the lenders be(including the Federal Reserve with MBS holdings)? Too early to tell… An increasing number of future foreclosures may end up on auction sites like Auction.com and Hubzu. But potential buyers/bidders have grown skeptical of these auction sites because in the initial auction rounds they have figured out that they are bidding against the institutional seller. Basically, they are looking for suckers. The “deals” are only made in the later rounds when price discovery is exhausted. And many times the untrusting buyers have moved on. We’ll just have to wait and see.
Thanks for reading! Stay healthy!