Spring Breakers Keep Mammoth Busy On All Fronts, Even Real Estate!
Market Summary – March 28 to April 11
The Mammoth Lakes MLS is reporting 28 real estate closings for the period ranging from a low of $365,000 to a high of $3,850,000. Of the 28 closings, all 28 were financeable properties and 16 were financed closings. There were nine (9) condo closings under $500,000 (any property under $500K seems “cheap” today). There were nine (9) closings over $1 million including five (5) condos. Condo sales over $1M were rather uncommon in the past, not now. The high sale of the period was a cash purchase.
The 10-year Treasury yield remained flat at 1.666%. Mortgage rates dropped slightly during the period. There were mixed messages from loan officers about the availability of financing for now deemed to be “condo hotel” properties under the new Fannie Mae guidelines. There appears to be 25% down programs, but at what rates? Some are quoting only 5/1 and 7/1 ARM loans at higher rates and others are quoting very competitive rates, especially on 15-year fixed loans. Meanwhile, the Consumer Financial Protection Bureau is now pushing for a moratorium on any foreclosure activity through the end of 2021. The Mortgage Bankers Association is now reporting that loans in forbearance are now less than 5% nationally. But I don’t think any foreclosure or forbearance talk applies to the Mammoth market.
But now there are new government imposed lending requirements that have the second home markets like Mammoth in a completely jumbled state. Just as the New York Times reports that there is currently more demand for second homes than primary homes, Fannie Mae is now restricting the volume of loans they purchase for second homes and non-owner occupied properties from their lenders. Last month’s volume of second home and investment loans purchased was in the 15% range. As of June 1 they will be limited to a mere 7%. Mortgage lender Better.com has already announced they will be adding a 1% price increase to their second home and non-owner occupied loans, effective immediately. Other lenders will likely follow suit or add even heavier premiums. Or higher interest rates. Other lenders are likely to move these loans to private portfolios which could give lenders like Quicken, Chase, Wells Fargo, etc., a competitive advantage. But all at a cost to the borrower. All told, mortgage lending may be a little dicey in the second home market for the coming months. Buyers and sellers beware.
At the period’s end the condominium inventory is up five (5) to 33. This includes three (3) new 2 bedroom + loft / 3.5 units (Plan 4) at The Lodges in the last few days. I showed two of them and there are already multiple offers. There were 22 new condo listings brought to the market during the period and four (4) have already gone to escrow. And I’m sure offers are being negotiated on others. Closings during the period continue an upward trend in values. Some new listings get snapped up quickly and others are sitting around. Prospective buyers are questioning some of the new pricing levels. Today they have a multitude of online resources to access price histories and comparable sales. Some sellers believe they can put any (ridiculous) price on their property and it will sell. Reasonable pricing is critical for sales, especially for lackluster properties.
Single-Family Home Inventory
The inventory of single-family homes is up four (4) to 16. There were five (5) new listings brought to the market including two small homes listed under $700,000. There are currently no homes listed between $1,165,000 and $1,945,000. This is a big gap in this segment of the market. There was a new listing in the Starwood subdivision at $3,700,000. The Seller purchased the home last August for $2,650,000. I guess it is just too tempting to try. For some sellers the market has become a casino.
Three of the four (4) residential income properties (apartment buildings) that were brought to the market the last period had price reductions on Friday. All three have the same owner. In the morning the prices were dropped by $100,000 each. In the afternoon they dropped another $100,000. Weird for sure but it would indicate some seller motivation. As a listing broker I think I would have spaced these price reductions apart by a few days to get maximum effect in the market. But what do I know? The properties are now priced very close to the most recent sales. And those past sales occurred pre-Covid before rents started to escalate.
The total number of properties in “pending” (under contract) in Mammoth Lakes is down (8) to 96 at period’s end. The total number of pendings in the aggregate Mammoth MLS (which includes outlying areas) is down one (1) to 145. There continues to be strong interest for all sorts of real estate in the Mammoth region. But available inventory remains low. Spring and early summer are when this market typically sees a rise in inventory with a peak around Labor Day. Historically this is when buyers should anticipate an increase in inventory. We’ll see if there is any normality in the coming months. And clearly, as the dollar is increasingly devalued, people are scrambling to purchase real estate. And financing properties at low interest rates may make even more sense.
Market Updates and News
The spring break crowds have been solid the last two weeks and there is apparently another week ahead of us. The different school breaks and schedules have spread-out the crowds during this period in the past few years. With the Covid related restrictions in place it is certainly welcome this year. Mammoth, like the rest of the State, continues to open. Local restaurants and their accompanying bars have seen decent-to-good business. As I sit at my desk in the late afternoon and early evening I’ve watched dozens of groups turned away from the popular Mammoth Tavern. It certainly appears the guests (and local residents) are ready to get out and be social.
The lead story from The Sheet this week is highlighting the proposed redevelopment of the Main Lodge area. It is almost laughable. While I support the project 100%, it is so reminiscent of similar hyperbole about the Village (North Village), Eagle Base, Main St. redevelopment, the Sherwin Bowl Ski Area, the east side gondola completion or even going back to the early 1980s and the Lodestar (Sierra Star) development including the narrow-gauge railroad that would quaintly service the entire area. The Village is about 25% of the original plan. The rest never happened. They like to talk about how much money will be “invested” but this number is in reality how much real estate they hope to sell. Maybe Alterra will have the mojo to make it all happen. We’ll see how quickly they start spending money on environmental review. And how soon the Main Lodge actually comes down.
The land exchange to privatize the ~30 acres at the Main Lodge has been in process for the past 15 years. There is no official announcement that it has been completed but it must be getting close. My tax roll data base still shows the properties as “possessory interests” which would indicate that it hasn’t, but the information is about two months behind. The 100 hundred acres on the western shore of Mono Lake that the Ski Area acquired back in 2006 now shows ownership as the “United States of America”. It was the primary piece of the land exchange. I was up there last Sunday and shot this video. The property is now accessible to the public. The upper bench makes a nice spot for a picnic lunch, or…? Just be careful on the road. And now that this land is back under public ownership the environmentalists should be agreeable to any development at the Main Lodge site (wink, wink).
As winter has quickly moved to a warm and beautiful spring, summer is on everybody’s mind. How crazy will it get here in Mammoth? The lodging industry says it plans to keep STR rates high through the fall. Will Airbnb owners who control their own pricing do the same? Or do they feel they need to recoup revenue from the lockdown? And the Town plans to be far more proactive in “educating” our guests about respect, behavior, etc.. And as the balance of the State opens up there will be more recreational (and relaxation) opportunities for the public. All of this may take some of the pressure and mayhem out of Mammoth this summer. And now one more thing; rising gas prices. The low gas prices of last summer made it even more affordable for the masses to come here. This summer many may decide to stay closer to home.
The Town Council will be formally working on the budget next week. So far the Finance Dept. seems rather nonchalant about the current state of affairs. They forecast that the 2021-22 revenue and budget will return close to normal (Town’s fiscal year (FY) starts July 1). We better hope so. The revenue analysis (does anybody read this stuff?) would have me tightening my belt and then some. Transient Occupancy Tax (TOT) represents 60% of the Town’s revenue. The FY 20-21 (right now) TOT will be $5 million less than FY19-20. It will be $10 million less than FY18-19 (a peak year at $31M). It will be $8 million less than FY17-18 and FY16-17. Thankfully the Town has been under budgeting – revenues have been exceeding projections. But they also overspend the budget. The property tax increment from the County represents 16% of the Town’s revenue. This shouldn’t change – it may go up. Sales tax is slightly more than 10% of the Town’s revenue. This is likely to be down proportionate to TOT. And how much over budget do we think the ice rink/CRC will go? Maybe somebody should start a pool.
Speaking of the coming ice rink/CRC, the Parks and Recreation Department has started a private fundraising campaign to help pay for items like a score board and sound system. Apparently the project plans got so pared-down that they couldn’t keep items like this in the construction/development budget. Can’t wait to see what else got cut out. Good thing there are already operating restrooms at the Park.
And I had a Real Estate Q&A run in last weekend’s issse of The Sheet; Are They Really Going To Move Here. It produced some interesting text messages from long time local residents.
The sale of Lodges #1125 did close for $880,000. These 2 bedroom / 2.5 bath “flat” condos in the Lodges have become increasingly popular. They have a private 1-car garage, a large service porch/mudroom, and a spacious great room. Perfect floor plan for somebody who doesn’t want stairs but want room to entertain. The seller paid $699,000 in December of 2019.
The sale of Juniper Springs Lodge #304 for $435,000. The 1 bedroom / 1 bath units at JSL are approaching the values of similar units in The Village. The 2 bedroom units are getting there too.
A 3 bedroom / 3 bath penthouse unit in Lincoln House (The Village) closed for $1,330,000. These would be similar in size to the proposed “for sale” condo hotel units in the Limelight Hotel.
Snowcreek #754 closed for $1,520,000. One of my favorite locations in all of Snowcreek on the back Forest Service property line in Phase 5. Dramatic looking up views of the Sherwins. Fully remodeled 3 bedroom + den / 3.,5 bath townhome. Closed for $749 psf.
Favorite New Listing for the Period
Great sun, light and views are some of the most desirable attributes of a Mammoth property. And the windows to make it all work. Here is a prime example of it all coming together. This is Mountainback #70, a 2 bedroom / 2 bath condo with understructure parking. Large great room with plenty of living room, bar and dining seating. The bedrooms split away from the great room for extra privacy. Located between Canyon Lodge and The Village and steps to the Blue Line shuttle for easy access to both. This is sold furnished but it has not been a rental. One of the project’s satellite spas is just outside the building. Popular common area pool is close by. There is a full sized washer/dryer in the unit. Plenty of closet space including lockable closets. Plenty of parking in the garage. Here’s the video tour of the property.
Listed at $649,000
Other Real Estate News
I’m increasingly talking about the “movement” of people spurred by the pandemic. Their real estate transactions and potential transactions are a big part of it. It is the topic of many discussions. A recent Zillow survey found that 1 in 7 people are planning to move in the near future. I believe many more are “planning” some sort of alternate move other than moving their primary residence. Sitting in this resort marketplace I definitely see it.
I am coming across more and more people (and many baby boomers) who are thinking their retirement years or semi-retirement years will include owning two or more homes that will have a short term rental component and be located in some sort of resort or remote location. The Airbnb/VRBO phenomenon has certainly fostered some of this thinking. It has made the marketing and facilitating of short term (or medium term) rentals much easier. But people are strategizing in all sorts of different ways.
One thing that is recognized is that many resorts have peak seasons when properties can generate substantial amounts of revenue. These owners and potential owners really don’t want to be in the resort during these peak periods. Think Mammoth and the end-of-the-year holiday period and into January. It is essentially the period that is framed by the IKON blackout. Or some simply recognize the revenue value of Mammoth in the winter and the desirability of Mammoth in the summer and fall. There are other areas that have the reverse on the calendar. So these are the second and potentially third and fourth areas of interest.
Some of these people envision keeping their big homes in the SoCal metropolis, but many are changing their minds. When they look at what their equity will buy them in these “destination” locations, some can easily acquire quality properties in multiple locations (and maybe put some money in the bank). And many of these people are in downsizing mode and mood anyway so smaller properties are appealing. Many smaller STR properties provide the best return on investment. Even more ironically, the phrase “Sprinter van” becomes part of the vision too. This is the vehicle that transports these owners from place to place and adds a whole bunch of new exciting options while doing so.
Some of this new crowd speaks about the value of being in the Airbnb super host cult and visiting and experiencing other Airbnbs all over the world. The discounts alone can make it attractive. And obviously all while other guests are paying to stay in their property(s). Others ultimately envision “home swap” opportunities. I know people here in Mammoth who do it with New Zealanders. The “Kiwis” want to be here for a Mammoth winter. I imagine New Zealand is nice in the summer, especially if you can stay for a few months in a nice home. And maybe borrow the car.
Some of these “movement” people are choosing these new destinations solely on where they want to be. Others are really crunching numbers and are more keenly looking at revenue on top of personal desirability. They are subscribing to specific communities on AirDNA.com to fully understand the exact economics of a specific resort community. This can be extremely valuable now and into full retirement. Others are trying to find the perfect middle. And no doubt Mammoth is falling into one of these locations. Proximity to children is also big issue.
There are clearly other factors going into this thinking. Many of today’s real estate buyers are hedging what they believe will be serious inflation in the near and long term. And spreading their real estate hedge into smaller properties in multiple places/states may be a good idea. Others are just looking for a little bit of income that they can’t get in CDs or bonds without the risk of being over exposed to the stock market.
And others are just saying “to hell with it” and hoping to have an exciting and healthy lifestyle before the giant meteor strikes.
Thanks for reading! Please stay healthy.
If you know anyone interested in buying or selling real estate in the Mammoth region, please send them my way!