Mammoth remains locked down amidst summer-like weather.
Market Summary – January 3 to January 17
The Mammoth Lakes MLS is reporting 31 real estate closings for the period ranging from a low of $239,000 to a high of $3,100,000. Of the 31 closings, 27 were financeable properties and 23 were financed closings. There were 12 condo closings under $500,000. There were another four (4) vacant residential lot closings (interesting for sure). There were only three (3) Snowcreek closings. There were five (5) closings over $1M and two (2) over $2M, both homes in the Bluffs.
The 10-year Treasury yield ended the period up significantly to 1.097%. We’ll just have to see where it goes from here and how it impacts mortgage rates. There were news reports that Fannie Mae and Freddie Mac updated lending rules on December 7 for vacation condos especially ones that are STR oriented and especially condo hotel properties. The news reports that I could find were rather vague. Fannie and Freddie basically redlined condo hotel financing 10 years ago after many of these properties ended up in default following 2008. Many random Mammoth condo projects fell into the description of “condo hotel” because of the “front desk” rental operations on their premises. This is why many of the onsite rental operations have gone away or gone offsite in the past 10 years. These were HOA Board decisions made to preserve the conventional financing availability within the project. Some of these lending prohibitions have been loosened in the past few years allowing lending in projects like the Westin Monache, the Village, etc.. It appears they might be tightening the lending standards again. I spoke with two very experienced Mammoth lenders in the past few days and they didn’t see any problems with their new guidelines. It is a wait and see on this topic. The lack of financing can certainly impact values in these projects.
Condominium Inventory
At the period’s end the condominium inventory was even at 25 including the six (6) Westin Monache listings. There were 10 new condo listings brought to the market during the period and seven (7) have already gone to escrow including a $1.5M townhome at The Timbers. Some of the new condo listings appear to be nicely appointed properties that are already set-up for STR. This is the big question in the local condo market at this time; will the local STR prohibition that has now been in effect for over a month, and during the most lucrative (holiday) period for STR owners, motivate owners to become sellers? Some may need to. The losses are real. Several potential buyers that I have spoken to in the past two weeks certainly believe so. Much of it may depend on how much longer the prohibition lasts and what the snow conditions will be like in the coming months. Time will tell.
Single Family Inventory
The inventory of single-family homes is up two (2) to 18. There were six (6) new listings brought to the market in the period. There are now three (3) homes listed under $1M, but not by much. The strong demand and low inventory in this segment of the market is obviously motivating some owners to test the market. The single-family side is not affected by the STR prohibitions except that it makes it difficult for buyers to come and take a look.
Pending Transactions
The inventory of single-family homes is up two (2) to 18. There were six (6) new listings brought to the market in the period. There are now three (3) homes listed under $1M, but not by much. The strong demand and low inventory in this segment of the market is obviously motivating some owners to test the market. The single-family side is not affected by the STR prohibitions except that it makes it difficult for buyers to come and take a look.
Market Updates and News
Mammoth has experienced spectacular warm weather the last week-plus. It is too bad there isn’t great snowpack and visitors here to enjoy it. In the past, great skiing, warm weather and a winter holiday weekend would result in a massive crowd in town. There was a modest crowd in town this weekend. With the IKON black-out there was a light crowd at the Ski Area. Plenty of people have been out on their bikes including second homeowners. Many restaurants pulled tables outside for their customers to eat their to-go food.
The lodging and dining prohibitions are creating increased friction in Mammoth Lakes. The people invested in both are begging the local officials to do something – “we just want to get back to work.” One expressed incongruity is that in March the Ski Area was closed right along with lodging and dining. But not this time. This alone is creating bitterness, and rightfully so. Because the Ski Area is open there is demand. All of this would be far worse if the ski conditions were excellent. The Town Council is between the proverbial “rock and hard place” because the Health and Emergency officials feel compelled to follow the State guidelines and they personally feel opening up could lead to a more serious problem. The organized “Mammoth Group” is presenting legals claims why this lockdown of lodging and dining is illegal. They make sound arguments. Business owners are reporting that many key employees are fleeing Mammoth or planning to leave soon. Replacing them in the coming months will be very difficult.
The Town did relax lodging prohibitions for “essential” travelers which brought about another round of calamity as to who is essential. Some prospective real estate buyers immediately considered themselves essential because they had to come look at real estate. The problem is the lodging people have to make a report to the Town as to why they are renting to an essential traveler. Coming to look at real estate isn’t considered essential, at least not yet. What we are experiencing is the concept of needing “essential spenders” in town.
Meanwhile the Town and County have pledged and are processing claims for local business assistance. The Town has already committed nearly $500,000. And $500 per month in residential rental assistance for affected workers. And the food bank is back open. The Town Council is being generous today but will inevitably be dealing with a massive financial problem. December and January’s TOT runs about $6M in collections. That is gone. If they lose February and March, another $5M. This is ~60% of the annual Town budget. And now they are spending significant money to “save” many local businesses. And like 10 years ago, the local government employees may be forced to flee also. Maybe they could start at the top.
Mammoth Hospital remains in “green” status. There is extensive testing going on and plenty of positive cases. Purportedly, the local school-aged kids are the bulk of the positive cases – they aren’t in school and they are partying and socializing together and with other kids of second homeowners who are here in town. And quarantining doesn’t appear to be part of the program either. So much for stop the spread. The Parcel affordable housing project continues to get hammered out by the Town. Development of units on this 24-acre parcel is a priority for the Council and a large faction of the community. The Council has now streamlined the environmental process and may very well be moving towards approving the first phase of the project next month. This initial phase would include 81 workforce housing units and based on the success or failure of this phase, will set the way forward for the balance of the project. The contentious issues are density and parking. The plan does include running public transportation through the entire project. The Town captured a $20M grant last year for the infrastructure of the project. Obviously they would like to get “in the ground” this summer.
Looking at snow totals at other ski resorts, the Colorado and Utah resorts may be in worse shape than Mammoth. The best ski conditions are anywhere near the U.S. and Canadian border, like Revelstoke (IKON) and Whistler. The Alterra and Vail Resorts business plan of “drought proofing” the ski industry is being challenged. Vail Resorts stock remains very high but they have plenty of cash on hand. But the cash could be burned through quickly with these conditions. I hope Alterra can survive this broad-brushed destruction of business and revenue. And I can’t imagine they will try to go public at any time in the near future.
The Homelight Top Agents Insight Q4 Report is out and part of the spotlight is the significant increase in demand for second and vacation homes since the beginning of the pandemic. Being able to work remotely is the top motivator (and as I have posited, working remotely may be different from work-from-home – there may eventually be new demand for office space here in Mammoth as new homeowners figure out they can work remotely but NOT work from home, all with a minimal commute). The Report states that there is almost almost equal demand for second homes for two other reasons; having a vacation home while travel is limited, and to also take advantage of low interest rates. Another attractive feature of second homes for many buyers is the ability to produce revenue when not using the property. It sounds exactly like what we have been experiencing here in Mammoth.
Some other interesting points from the Report; the WFH trend is the strongest on the West Coast. Also, there are noted delays in the delivery of labor, lumber, doors, windows and appliances. Many manufacturers are understaffed and/or understocked. There are also delays in permit processing due to many government staffs also working from home. All of this while there has been a mini-boom of remodeling as a result of the pandemic fall out. Interestingly, the most noted mistake of remodeling, as reported, is the over-personalizing of material selections. This may be true now but it has always been true. And it is always proven out at resale. Properties that have been over-personalized with colors and styes, etc. are often the most difficult to sell. I see it all the time.
Noteworthy Sales
Another four (4) vacant residential lots continues this recent trend. There are now 26 residential lots remaining on the market and a good half-dozen of them aren’t worth building on, or way too costly to develop.
Conversely, the two most expensive closings in the period were homes in The Bluffs at $2.4 and $3.1M. There are currently three (3) lots listed in The Bluffs for under $420,000.
As the stats show, low-end condos are selling and there is now a little appreciation showing. Sales at Chamonix, La Vista Blanc, Summit, Aspen Creek, and Sierra Park Villas prove it.
Favorite New Listing from the Period
Homes in the Mammoth Slopes neighborhood (between the Village and Canyon Lodge) have been hot sellers during the winter the past few years. It is the “winter orientation.” Here is a 4 bedroom + den / 3 bath home that was beautifully remodeled on the interior in 2019. The fourth bedroom and/or den would make great office/work space. This is a corner lot of a cup-de-sac with total solar exposure with parking out front for several cars. There are three kinds of heat; dual zoned forced air heating, modern wood burning stove in the great room, and a modern pellet stove in the lower floor for core heat. Great utility and efficiency! See the video tour here.
Listed at $1,330,000
Other Real Estate News
Between the holidays and all the other craziness going on in the world, the word “drought” hasn’t been used much but there is no doubt we are in the pattern. The winters of 2017 and 2019 were massive. The snow piled up so fast two years ago that Mammoth was truly in a state of emergency. How things can change. The current high pressure is forecasted to break down and there is snow in the forecast for the end of the month. Hopefully we get some major dumps the rest of the year. We like water sitting on the mountain tops all summer.
But I recently was asked about the impact of drought on Mammoth real estate and values. It is an interesting topic. This is my 40th winter living in Mammoth and I have experienced two true drought periods. The winters are always different but when ~200-inch winters come in succession it is labeled drought. When they come four or more years in a row it is a real drought. This happened in 1987-1991 and 2012-2016. Both periods saw good appreciation in real estate values here in Mammoth. But both periods started at real low points for Mammoth real estate values. So it is really difficult to place any causation or correlation.
Oddly, drought periods can keep expenses down for many homeowners including HOAs. Snow removal bills can be ungodly in big winters. Especially if it entails extensive roof shoveling (like two years ago). And landscape expenses are usually trimmed due to minimal enhancement, expansion and irrigation.
But droughts don’t necessarily keep visitors away. People still come to ski and they certainly come in the summer and shoulder seasons. The big winters can actually inhibit tourism in many ways; it can be overwhelming in winter months and prolonged snowpack can keep people from accessing the higher elevations in the warmer months.
Here’s a couple of interesting tidbits about drought and Mammoth Mountain. The drought period from 2012-2016 motivated the Ski Area to appeal its property tax assessment through those years. The drought caused a significant reduction in net income and they argued for a “Prop. 8” reduction (loss of value) for those years. They ultimately were granted the reduction. Which makes me wonder how many Prop. 8 reductions are going to be requested due to the pandemic. It may create another major loss of tax revenue for the counties.
The other interesting item about droughts and Mammoth Mountain is how Rusty Gregory ultimately took control of the Ski Area and eventually became the head of Alterra. It is a lengthy explanation, but the two major moves were made as a result of droughts and the financial pressure put upon the owners at the time. It is called opportunity and being prepared. Both events happened near the end of the two prolonged drought periods. Maybe that is a detailed story for another day. Just like the months ahead, periods of stress in the Mammoth community have damaged many business people. I’ve seen it over and over again. And likewise, these periods can also create fantastic opportunities. I’ve seen it over and over again. Hopefully everyone is getting prepared.
Thanks for reading! Please stay healthy.