Looks Like Mammoth STRs Have Green Light As Of June 19!
Market Summary: May 24 — June 7
The Mammoth Lakes MLS is reporting five (5) real estate closings for the period ranging from a low of $339,000 to a high of $1,450,000. Of the five (5) escrow closings, all were financeable properties and three (3) were conventionally financed. The high sale was a cash purchase. The 10-year Treasury yield rose significantly at the end of the period to .904%. After some stability in the previous period which included 30-year fixed mortgage rates in the very low 3% range, rates could be on the rise. The mortgage media pondered “Are all-time low rates behind us now?” Others pointed to encouraging economic news as a driver of higher bond yields. Regardless of the perceived volatility and uncertainty, rates are still very attractive for purchases and refinance. Jumbo loans are still dicey but with the rebound of the stock market indices, that problem may go away soon enough.
Condominium Inventory
At the period’s end the condominium inventory is up 12 to 99. More mix of new listings and cancellations. There were 23 new condo listings brought to the market during the period and two (2) have already gone to escrow. Some of the new listings we have seen before, and some are new to the inventory including a top-floor 1-bedroom at Grand Sierra Lodge. With Snowcreek properties popular in the recent sales activity, there were a handful of new Snowcreek condos listed and the prices are not going down.
Single Family Inventory
The inventory of single-family homes is up two (2) to 34. There are only five (5) homes listed under $690,000 and only 13 listed under $1M. A few of the lingering low-end listings have reduced prices. One on Sugar Pine made a large price reduction and the property is now in escrow.
Pending Transactions
The total number of properties in “pending” (under contract) in Mammoth Lakes is up three (3) to 39 at period’s end. That still includes the 16 Obsidian Villas units. The first four of the Villas are nearing completion with estimated closings of 6-30-2020. Of the 36 properties in “pending,” there are 18 in “Active Under Contract” status (formerly “back-up”). The total number of pendings in the aggregate Mammoth MLS (which includes outlying areas) is up 14 to 72. Mammoth properties have been shown in the past week and most local agents are expecting a significant uptick in showings once the STR ban is lifted and people can come and hang out and recreate.
Market Updates and News
Blustery and cool weather this weekend dampened what may have been a significant step in opening more Mammoth businesses. Many restaurants/bars are moving into outdoor dining mode and it appears to be very successful so far, wind and weather permitting. Retailers are opening as well as salons. Some businesses are moving aggressively while others are pacing themselves knowing that significant demand won’t occur until the STR ban is removed. Local lodging agents report that July is “booked solid.”
The Mono County Supervisors and the Health Department continue to move in a cautious but aggressive manner in getting the eastern high Sierra back to business. Fishing was quietly opened just before last weekend. Last Thursday they petitioned the State to open lodging (STR) in the unincorporated parts of the County on June 12 and Mammoth Lakes on June 19. It was approved on Friday but it is still unclear as to the exact terms and conditions for STR. Some local reservation companies are already publishing their “best practices” guidelines for both owners and guests. They include new disinfecting protocols and the handling of linens. It looks like the classic “back-to-back” rentals that Mammoth is so famous for will now have at least a 24-hour turnover time. But again, the precise upcoming regulations don’t appear to be published yet, at least not what I’ve seen. Mammoth is methodically heading towards Stage 3.
Mammoth has also moved into major testing for the virus. A drive-up testing station was established adjacent to the food bank on Main St.. They have been processing ~50 tests per day. With all of the testing during the period, the positive cases in Mammoth only rose by one with another additional case in the north County. It has been suggested that the drive-up testing station should be moved to the bottom of Highway 203 at the entrance to town. That would be interesting.
All-in-all, I would say that Mammoth businesses are gearing up to be very busy starting in the next 2-3 weeks. Most visitor-oriented businesses in Mammoth know how to handle major ebbs-and-flows of traffic. But there will be new rules in place for the businesses and customers.
The local Chamber of Commerce is spearheading 4th of July events to replace the annual parade. There will be a Mammoth Lakes Business Treasure Hunt occurring between 10am and 2pm on the 4th with the attempt to spur spending at local businesses. And for everybody to have good time. Participating businesses will be handing out “coins” to purchasing customers that will be redeemable for prizes at various booths in town. And in lieu of the parade, there will also be a Static Float and Business Decorating competition that will run most of the weekend. These events and plenty of outdoor restaurant and bar seating should be a hit. And based what I’ve seen the past two weeks, it will be a big summer for electric bikes.
The Ice Rink/MUF now re-branded as the CRC (Community Recreation Center) was back on the Council’s agenda this past week. The staff report included four bids from contractors. The total project expenditure is now in the neighborhood of $16.9 million with a “drop dead” budget of $13 million. Three Councilmembers remain hellbent on getting this project in the ground. Staff recommended rejecting the bids and ask for a new bidding process. The new process will include the Town purchasing major components directly from the manufacturers to avoid contractor mark-up. They will also strip out major components of the project to make it bare bones. The staff feels confident they can remove enough components of the project to bring it in line with the $13 million budget.
One of the new selling features of the project is now as an “economic stimulus” for the Mammoth Lakes community. Local subcontractors are estimated to be in line for about $3-4 million of the construction work. But at last Wednesday’s presentation nobody mentioned that the local contractors are not the economic group in Mammoth that need stimulation. Far from it. Most worked right through the lockdowns and have plenty of work. Even more bizarrely, I met with two out-of-town contractors this past week (they are looking for long-term rentals) who “won” bids for all of the new work about to start at the local schools (they need to spend that $65M bond). They both said they were “shocked” that their bids were accepted because they bid them so high. So anecdotally it would appear the local contractors hardly need stimulus. But it certainly sounds like another reason to validate the project.
Meanwhile, the Town’s finances will be stressed over the next few years because of the estimated $9 million in tax shortfall in 2020. And if the winter of 20-21 is marginalized it will be far more than that. To make the CRC more fiscally palatable for the public, some of the proponents are emphasizing that it will be paid for mostly with Measure R and Measure U dollars (check your local Southern California Edison bill and see some of what you pay in). But this is disingenuous. The financing includes a $5 million bond that the Town is on the hook for. There are other funds being displaced. And God only knows the millions more that will be needed to pay for the components that will be stripped out and/or added on (including the expanded parking lot). And ice rinks are notorious known as maintenance black holes.
There is also “hinting” from Councilmembers and staff that the CRC may actually morph into a winter ice rink and the events center that has been on the community wish list. But were noisy events like Bluesapalozza part of the environmental review? Oh, silly me. The Town believes CEQA applies to everyone else but not to them. And now one of the new cost cutting measures (from the staff report) includes “cost-effective alternatives for storm water retention.” Does that mean letting all of the parking lot run-off just flow right into Mammoth Creek unabated? That’s what the Department of Fish and Wildlife was concerned about in the EIR. Their concern was simply dismissed by the public officials and consultants. Let’s just pollute the downstream fishery which is considered one of the best in the State……. At least one sane Councilmember said “Mammoth has a great future, but this (the CRC tent) isn’t it.”
Yesterday there were a couple of hundred attendees for a protest walk down Main St. that culminated at Mammoth Creek Park. They didn’t stick around for very long. I watched from my desk. The new brewery across the street (Distant Brewing) benefitted, by mid-afternoon the place was full (including lots of “protesters”). Apparently for some here in Mammoth, drinking beer is preferable to protesting.
Noteworthy Sales
The high sale for the period at $1,450,000 is a large log home in Old Mammoth. Great property. The seller’s had lived in Mammoth for many years but re-located. The property had been on the market the past two years at a higher asking price, originally starting at $1,950,000. The buyers I showed it to in the past didn’t like the intrusion of the adjacent, planned subdivision.
The recently “priced-to-sell” 2 bedroom / 2 bath at Sunstone sold for the asking price; $479,000.
Favorite New Listing for the Period
The Snowcreek Phase 5 (aka Fairway Homes) 3 bedroom / 3 bath townhomes are a very popular floorplan. They include a 1-car garage but they are all end units with a bank of windows on the outside wall that allows for great light and views. Unit #959 has a unique, private location notched along a hillside with all-day sun and main views up to Mammoth Pass and Mammoth Mountain. The property has three decks; two upper decks and one lower deck. It is also adjacent to the common area spa making it appealing to guests and occupants. The seller is a very experienced Airbnb super host so there must be a solid clientele for the property. I know this location well, I listed and sold this condo about 15 years ago for people who built (and still own) a large home in town.
Listed at $775,000
Listing courtesy of Mammoth Realty Group
Other Real Estate News
I sat through another REO industry webinar and there was timely information on the topic of forbearance. The statistics from Fannie, Freddie and Ginnie (the Maes) all show a sharp decline in requests for mortgage forbearance. They grew the last week of March and peaked the first week of April. They have fallen off to a fraction of 1% of existing loans. They are now referring to it as a “payment deferral” program. The old concept of forbearance was to hold off payments for a few months and then make all of the payments due (like a balloon payment). The new program is “generous and forgiving” according to one expert. Typically the payments are going to be added on to the end of the loan. But some will be offered some sort of loan modifications or re-amortizations of their loans.
Ultimately, the group feels there will be no foreclosure tsunami like 10-12 years ago, “the government is way-out ahead of it right now.” The owners of residential real estate in the USA have approximately $6 trillion in equity.
There are no local MLS statistics for long term rentals. But it is something I causally watch and have been involved with on various levels. In the past 75 days there has been significant turnover. But the demand remains high. The best properties are immediately re-rented. Lesser quality properties take a bit more time. But turnover this time of year is natural. The construction at the schools, expansion at the geothermal plant, and those looking to escape the cities are all putting demand on the long term rental market.
Vacasa is a publicly held STR company that has a strong foothold in Mammoth. They purchased an existing and well respected STR company a few years ago. They announced last week that they had secured another $108 million in funding to make it past the pandemic hiccup. It sounds like they will move even more aggressively in the Mammoth market. Locally, they just moved their offices into the same building with my office. They are the only non-owner occupant. Now I’m surrounded by STR companies; Grand Welcome, Nomadness and Vacasa, all within a couple hundred feet.
I asked some of these STR operators if the algorithms were calculating summer and fall demand and pushing nightly rental rates up. The answer was a resounding yes. So maybe there is some relief for STR owners in the second half of the year.
Thanks for reading! Stay healthy!