Beautiful Summer-Like Weather and Thankfully a Week of Clean Air!
Market Summary: October 18 to November 1
The Mammoth Lakes MLS is reporting 36 real estate closings for the period ranging from a low of $212,500 to a high of $2,800,000. Of the 36 closings, 35 were financeable properties and 26 were conventionally financed. Interestingly, there were 13 condo closings under $400,000. All but one were financeable (a Westin Studio) and ALL 12 of the sales were financed. The low end of the condo market is finally getting bought-up. There were eight (8) closings above $1M including three (3) condos. Snowcreek continues to be popular with seven (7) closings in the period. The 10-year Treasury yield ended the period up at .86%. Some are predicting it may go over 1% in the coming months. And like the last period, transaction volume has slowed but there is still demand. There simply isn’t enough interesting inventory. One new condo listing in the period had six (6) offers. The low inventory in Mammoth is not unique, it appears to be a problem in most real estate markets across the country. But the slower pace here in Mammoth is allowing the escrow and title companies, inspectors, etc. to catch up. They were overwhelmed this summer.
Condominium Inventory
At the period’s end the condominium inventory is down six (6) to 37. Again, more historic low inventory. There were 13 new condo listings brought to the market during the period and three (3) have already gone to escrow. I personally know that at least two others have pending offers. There are now nine (9) Westin Monache units on the market. It is hard to believe that there are only 28 condos on the market outside of the Westin.
Single Family Inventory
The inventory of single-family homes is down three (3) to 24. There were three (3) new residential listings in the period. There are only six (6) homes listed under $1,050,000. There are currently 36 vacant residential lots listed in Mammoth and many good lots at reasonable prices. Residential lot values have been suppressed by the high cost of construction here in Mammoth. And these construction costs are not going down any time soon. With the limited supply of residential properties these lots may soon look like an attractive alternative. And I’m thinking that there will be at least a handful of new residential owners here in Mammoth that may look to building their own custom home in the future. It is a natural transition for some.
Pending Transactions
The total number of properties in “pending” (under contract) in Mammoth Lakes is down 16 to 104 at period’s end. The total number of pendings in the aggregate Mammoth MLS (which includes outlying areas) is down 16 to 140.
Market Updates and News
The air in Mammoth cleared this past week and a smattering of visitors and second homeowners came this weekend to enjoy the wonderful weather. This is normally a fairly dead time of year. The Creek Fire is 70% contained and is still burning in an area south of Mammoth. Conjecture is they are just letting it burn back to a previously burned area. The good news at this point is there is now close to a half million acres of dead trees to the west and south of Mammoth that have burned in the last two years. The imminent threat of that massive fuel load is gone.
Local crews are busy placing snow stakes all around town and blowing out landscape irrigation. The Ski Area is trying to make snow on Broadway but the weather looks to remain warm for a few more days. The new permanently installed snowmaking system on these runs will be put to good use as soon as the temperatures drop, and this is forecasted for next weekend. The opener may be delayed. Covid, smoke, the elections and more all seem to have the anticipation for skiing and snowboarding somewhat muted at this point. Mammoth needs a big snowstorm or two.
On Friday, the Mono County Health Department issued new orders for short term rentals in Mammoth Lakes starting tomorrow (Nov. 2). Unlike some areas in the country that appear to tightening restrictions, these new orders appear to be loosening the local restrictions. There are still restrictions on cleaning and occupancy including “all reservations and stays shall include only members of a single household/living unit.” And “The requirements in the Order are implemented both to reduce overall visitation to Mammoth Lakes and to achieve a vacancy period between occupancies, that allows for housekeeping staff to thoroughly and safely clean rooms between guests.”
Of note to most STR owners, the Order states that hot tubs, saunas and the like may reopen subject to State guidelines. It is unclear what the State is mandating but I know spas are open in various locations in SoCal so maybe the local condo spas will be allowed to reopen – just in time for ski season. All told, the Covid cases here in Mammoth remain very manageable. Outbreaks in two popular Mammoth restaurants at the beginning of summer accounted for a substantial number of positive cases. The Mammoth community gets high grades for handling the virus, so far. Inyo County (Bishop) to the south has not been as fortunate.
Ted from The Sheet called me this past week and wanted my input. I think it was a slow news week and he was looking at an issue dating back to October 2005 when the real estate market had heated up in reaction to Starwood Capital purchasing Mammoth Mountain. The 15 year perspective is interesting, he pulled some of the highlights in his editorial this week.
But I was really able to best him. I recently had nearly 50 boxes of old escrow files professionally shredded. I found in the stash about a dozen copies of the Mammoth Times that were from the 1989-90 period. This was pre-Internet and the paper was clearly a massive real estate advertising tool. I pulled some interesting articles out. From October 1990, “Shady Rest Affordable Housing Stalls Again.” And “Nobody’s Home” about the lack of day care in Mammoth. Or how about “The New Marketing Plan” where the Town’s marketing budget was less than $1,000,000 per year. And how about the Town cancelling The Grateful Dead weekend of concerts on fears of “overcrowding.” After this past summer’s overcrowding, all I can say is that at least you know what to expect with Deadheads.
But the real standout of articles is from October of 1990; “Sherwin Ski Area Approved” and “Skiing Could Begin By Winter of ’92.” I remember this time as a young Planning Commissioner. It was very exciting for the community. The article is full of some amazing quotes from the leaders of the town. Of course, the decision was appealed and it all went downhill (pun intended) from there. We’ll never know how having a second ski area would have impacted this community, maybe for better or maybe for worse. Solitude Canyon would have had chairlifts instead of a proposed bike path. And the backcountry ski scene would be very different.
The real estate-related California propositions on Tuesday’s ballot have been buried in all of the other commotion. Prop. 15 is the split-roll initiative. While I agree that some large commercial and industrial properties that have escaped re-assessment because of ownership structure need to be reassessed, it could spell disaster for many. The local Assessors and their offices will be inundated with appraisals and appeals. Commercial tenants who have triple-net type leases could get crushed, and on-and-on. I’m voting no. There is a clear problem that needs to be solved and this isn’t the way to do it. And the inevitable consequence of a split-roll is the eventual elimination of all Prop. 13 property tax rules altogether. I don’t know many property owners who want this.
Prop. 19 would allow the “portability” of a low property tax basis for senior citizens to all counties in California. Many large counties (like LA and Orange) already are “reciprocal” counties and allow this. Mono County does not. There are all sorts of arguments about who benefits and who doesn’t. Some of it is compelling enough to vote one way or another. But it might not matter, seniors on the move are likely to be moving out-of-state at this point.
One of the professional liability companies I deal with sent out an alert this past week about the latest real estate scam. Apparently there is a pattern appearing on residential properties valued around $2-3M. The deals start as cash and quick close and then during the escrow the buyer needs a ~50% seller carry back (short term). The red flags are small initial deposits and buyers as LLCs. The scam comes when the “cash” going into the transaction comes from a hard money lender who somehow is inserted into the first position loan with the seller taking second position. The buyers apparently make it all complicated and confusing and try to disguise the switch. The closing documents don’t make it clear. In some cases the buyer receives cash back from the hard money loan. Once the transaction closes the LLC stops making payments and the hard money lender forecloses leaving the seller in a disastrous position. So special attention is needed for any seller carry back scenarios, even more so when hard money is brought in near the closing date. And something they didn’t mention; utilizing a reputable escrow company. It would take some complicit parties to execute this scam. But certainly not difficult in a crazy real estate market like we have.
Noteworthy Sales
Three Snowcreek sales clearly show the recent step-up in values. A Phase V 2 bedroom + loft/ 3 bath condo (no garage) closed for $677,000. That is a good $100,000 more than early summer values. Another Phase V 3 bedroom/ 3 bath end unit townhome (one-car garage) that backs to the Forest Service land closed for $879,000. Again, an easy $100,000 more than just a few months ago. And a Plan 6 (nearly 3500 square feet) in The Lodges closed for $1,565,000. A very comparable property closed in July for $1,375,000.
A Village 3 bedroom / 3 bath in a first floor and “noisy” location closed for $1,045,000. I hope the rental revenue is good.
Two Chateau Road closings at Chateau de Montagne and Chateau Sans Nom show little appreciation in the past three months.
The fourth Obsidian Villas unit closed for $1,275,000. I saw a large load of construction lumber heading into the project this past week.
A fourth floor Studio at the Westin Monache closed for $290,000, less than a decent 1 bedroom in most older projects in town.
Favorite New Listing For The Period!
Canyon Lodge location and great utility for the price. Here’s a 4 bedroom / 3 bath townhome that sleeps 10 in bedrooms and could potentially sleep more. There are no fireplace hassles, the unit has a modern freestanding wood burning fireplace AND forced air gas heating. Located right at the top of Canyon Blvd. just below the Austria Hof. This is an easy, flat walk to Chair 17 which gets you right into the Mountain. Located in project next to the pool and spa. Well maintained and sold fully furnished and in “turn-key” condition. Excellent rental potential or the perfect ski/snowboard crash pad for a large group. Check out the video virtual tour. Listed at only $649,000
Other Real Estate News
Buyers looking in the Mammoth market often come across the “fireplace” discussion (see above) in the listing remarks and even while out in the field looking at properties. The fireplace snafus started 30 years ago when the original EPA ordinance was passed. Five years ago the Town passed a new ordinance requiring even further retrofits, mainly to the wood structures behind and above the actual steel fireplace inserts. It was at the strong recommendation of the Mammoth Lakes Fire Department after lengthy investigations into some structure fires here.
One of the provisions in the new ordinance is that ALL non-conforming fireplaces need to be retrofitted in the next two years (by October 2022). Even with three very active fireplace contractors working in Mammoth, that is simply unrealistic. But there are new issues that have arisen. First, the Town is simply not enforcing the ordinance. It has become crystal clear. There are properties currently being resold that the sellers bought less than five years ago. No retrofitting has been done. There are no recorded violations or apparent monitoring. And the new buyers are confused on their obligations. Some just spend the money and plan to enjoy the upgrades. Other new owners are delaying retrofitting waiting for some sort of notification (which most likely won’t come). And I’m sure there is some Mammoth property owner/attorney who is thinking that if the ordinance has not been enforced, then is it enforceable in the future? And there doesn’t appear to be a new rash of structure fires in un-retrofitted properties.
And now, recently, the MLFD is deferring the responsibility of inspecting the random, existing questionable fireplaces for compliance. Former fire marshal Thom Heller was readily available in the past for Realtors to come out and inspect questionable installations There are some). Now the policy appears to have switched. They want the local fireplace contractors to inspect the installations for them and decide. I guess the fox/hen house concept passed them by. And the local contractors are too busy for cursory inspections. And do they want the liability?
We now have a situation where the two entities that created the ordinance are neither enforcing the ordinance or willing to serve the public good in helping to inspect properties for compliance (but they sure as hell will be here in my office for their annual fire extinguisher inspection). Maybe the ordinance needs to rescinded, or ignored.
Meanwhile, the local real estate industry can only inform the buyers (and existing non-compliant owners) about what is going on. The new retrofits can be fantastic and really add benefit and value to the property. But they can also be costly, and trigger other remodeling. Not everybody has or wants to spend the money.
Oh, and all you property owners be sure to pay your property taxes on time (Dec. 10) and make your TOT remittances promptly. The Town and Fire Department are counting on you.
Thanks for reading! Stay healthy and sane!
** Closed sales data is compiled from in-house files and public records.