Mammoth Real Estate Sales Report – April 25, 2021

The Mammoth Lakes MLS is reporting 18 real estate closings for the period ranging from a low of $105,000 to a high of $2,075,000. Of the 18 closings, a total of 16 were financeable properties and eight (8) were financed closings. This period there were only two (2) condo closings under $500,000. There were eight (8) closings over $1 million including six (6) cash purchases. There were three (3) Creekhouse (Snowcreek Phase 7) closings. The high sale of the period was the vacant lot where the La Sierra building once stood. It is slightly less than an acre and zoned Commercial. Compared to what lots in the Village Plan have sold for in the recent past it seems like a high price to pay. I hope the new owner has something good planned.

 

The 10-year Treasury yield dropped slightly to 1.567%. The standard 30-year conventional mortgage rates dropped to below 3%. The mortgage industry reported a small surge in activity but purchases are outpacing refinances. They also report that forbearances continue to decline. The “condo hotel” lending may-or-may not be sorting itself out. One lender that was in a panic only four weeks ago now says he can be competitive. Another local lender is closing a transaction for me this next week at very competitive rates. The loan documents are signed. Fingers crossed.

The Mammoth condo market is where the really observable price discovery is occurring, and it is all over the board. A month ago we were observing price support in the $700,000 range for 2 bedroom units at Juniper Springs Lodge. Now two of these properties that were in escrow are back on the market. One of them is an especially nice unit — view and remodeling. A “big view” 2 bedroom at Sunstone just reduced the price to $695,000. And in the recent past Sunstone units have been selling for more than JSL units. A 2 bedroom unit at Solstice came on the market a couple of months ago at $799,000. That seemed high but it went to escrow (and has closed at $785,000). Two similar units listed in the high $700,000 range and they have sat. One just reduced to $749,000. The market, for now, has spoken.

 

But other condo sales are nearly inexplicable. A mediocre 1 bedroom unit at Horizons Four just closed for $410,000. It was originally listed at $399,000 so it likely had multiple offers. In contrast, I closed a very nice 1+loft / 2 bath in the same project only a few months ago for $365,000. The condos at Tyrolean Village are oddly hot also. These are old units (circa 1966) and the disjointed layout of the project gives many of the units poor access from parking. But the 2 bedroom units (slightly over 1,000 square feet) are selling over $560,000. New 1+loft  listings at Sierra Park Villas are being priced over $450,000. These 1.5 bath floorplans have only one shower/tub. The Town isn’t allowing expansion of the second bath anymore. This seriously compromises these units. One year ago it was difficult to sell similar units for ~$300,000. Units at Courchevel (at Canyon Lodge) are also pulling down high sales numbers. These are 50 year old units and they have a $24,000 assessment for new siding this summer.

The spring crowds thinned out during the period and the Ski Area shut down Eagle and Canyon. This weekend there were skiers and snowboarders hoping for some fresh powder and the eastern Sierra held a real fishing opener. But like many times in the past, opening weekend was blasted with wind and snow.  Fishing was limited to lake shores, rivers and creeks. Clearly there were guests in town hoping to take some runs, fish and maybe ride their bikes. The triathlon for some. Maybe they can stay until the end of the week when the temperatures in Mammoth are forecasted to reach 70.

 

Mammoth moved into “Orange” status which allows all establishments to increase indoor capacities. Some local restaurants/bars look to be fairly busy, even during the week. And there are a handful that simply haven’t reopened. The Mammoth Chamber of Commerce pushed through a memo that there has been almost $40 million in SBA loans and grants issued in Mono County. And now there is a new Restaurant Revitalization Fund that will fund pandemic-related revenue losses, based on eligible uses up to $5 million per location. During the period the brewery across the street took delivery of an additional large stainless steel brewing tank. And I also noticed a local distillery taking delivery of new stainless steel tanks. It looks like some establishments will not only survive but may thrive.

 

There was a groundbreaking ceremony last Wednesday at Mammoth Creek Park West for the new Ice Rink/Recreation Center. Tree cutting and earth moving crews worked all week at the location. Construction is estimated to take 12 months but I’m sure they want the “blimp” erected before the threat of snow in the fall.  Regardless of all the controversy, I have to think that STR properties within immediate proximity will see strong demand once the facility is open.

 

Alterra made a formal press release during the period announcing planned “upgrades” to their resorts. The big one for me is the $60 million base-to-base gondola at Squaw Valley Alpine Meadows. It does show that they see the value in gondolas and on-mountain skier mobility (there is hope here in Mammoth). But Mammoth’s share in the Alterra upgrades package is only the mention of Main Lodge Redevelopment starting in the spring of 2023. I’m wondering what happened to the replacements of Chairs 1 and 16 that were planned for last summer? They had to have been on order. And I had several excited inquiries about the redevelopment plan (even though I discussed it in the last newsletter). See my expanded discussion in “Other” below.

 

Vail Resorts made some interesting announcements during the period; Epic For Everyone is their new program and it reduces the cost of their passes by 20% and also makes some new interesting offers in the local and day passes. This is fascinating. I don’t think it is Covid related. Clearly, the Alterra conglomeration is impacting the ski pass market. In the meantime, the Vail Resorts CEO made a press release that stated “the key to growth is reducing crowds.” Reduce prices and reduce crowds?? I think the public should be excited for both of these directions. I hope it is a viable industry trend. Especially here in Mammoth.

 

I warned several months back that with significantly rising property values in Mammoth some owners (buyers) from the mid-2000 time frame would see their Prop. 8 adjusted property taxes rise quickly. Owners are already complaining. “I thought property taxes could only go up in small increments every year?” Not under Prop. 8. The Assessor can move assessed values back to those historic selling prices and beyond based on recent sales. And these higher sales prices continue for now.

 

As the winter STR season winds down I’m hearing from owners who have “fired” their management companies for a variety of reasons. It seems that many of the (new) companies over promised and under delivered. It was a tough winter in many aspects. Some were seriously impacted by a shortage of housekeepers. Others simply cut their fees so low (to be competitive) that they couldn’t staff properly. Others failed at various mechanics of operation. The companies that appeared to have succeeded through all of it were the larger, broader-based, more locally owned companies. The one thing I always point out to buyers and owners who are selecting a specific management company to work with is, “you can always change.” The whole industry continues to evolve in many ways, and new tech-based companies are jumping into the fray. But properties still need to be cleaned, maintained and readied. As we used to say, “there are a lot of working parts” to the STR business. 

 

Lumber prices reached an all-time record high during the period. 

 

And our local geothermal plant is about to begin a major expansion, so I went down there and shot a little video. Take a look.

The almost new Canyon Lodge townhome Mountainside #8 closed for $1,750,000. The seller paid $1,200,500 on 6-21-19. But it was upgraded with furnishings. Sold at $864 psf.

 

A duplex on Joaquin sold for $655,000. The monthly income is currently $2600. Based on this sale the four residential apartment buildings in the same neighborhood are significantly underpriced. We’ll see if any buyers agree.

 

A large (4780 square feet) luxury Starwood home (on the golf course) closed for $1,650,000. This a ridiculously low $346 psf. Hit-and-miss price discovery in the luxury home market too.

 

The vacant lot at 44 John Muir Road closed for $105,000. I knew I had some history with this lot so I searched the seller’s name in my email. I worked on a valuation back in 2013. Based on the topography (and the subsequent cost of retaining walls and foundation) of the lot I was recommending a list price of $139,000. The owners completely rejected my evaluation, they emphasized the lot is “walk to lifts.” That’s a brutal walk in ski boots. But more price discovery.

As I explained in my last newsletter, Mammoth and development hyperbole have a long history. It does appear the Limelight Hotel project is moving forward. Subcontractors are apparently being lined-up and other construction related arrangements are being formulated. While the hotel industry is reeling, the proponents here have their Military Industrial Complex financial stability and other very solid backing. So like I have said previously, this project may be viable in this normally stressed time. Quite frankly, the fact that they are proposing to do this development in Mammoth at this time is profound (and they own the land). They bring strength, credibility and resort expertise. Maybe at a level Mammoth has never experienced. 

But as I alluded to in my last newsletter, the Main Lodge redevelopment project (and the hyperbole) is a real estate play. And Alterra has to keep people interested in real estate opportunities. This redevelopment is unveiled as some multi-year plan, but it is more likely a multi-decade plan. 

Rusty Gregory as CEO of Alterra and previously the CEO of Mammoth Mountain has been the spearhead of the Main Lodge area redevelopment for the past 20 years. Interestingly, he played the same role circa 1990 in the North Village redevelopment plan. He’s played these cards before. So let’s look at some of the history of the North Village Specific Plan as approved by the Town in 1991 and 1993 (I was a member of the Town’s Planning Commission at the time). 

The NV Plan is the conglomeration of 38 parcels/owners into one specific land use and zoning. This includes the current Village and surrounding undeveloped and “obsolete” and vacant properties. There are properties that haven’t been fully redeveloped but have been essentially repurposed. They include the old Whiskey Creek that is now Mammoth Brewing, and Burgers Restaurant. One old motel is still standing but has been closed and vacant for almost two decades. Other old buildings have been torn down. In total, the North Village Plan is only approximately 25% re-developed. The Limelight would increase this percentage but not by much. It is slated to be built adjacent to the current Westin Monache. 

But Gregory was the major player in the whole North Village planning, development, and real estate transactions from 1990 to present. If we look at the history of the North Village properties, it has gone through fascinating boom-and-bust cycles, and most interestingly the undeveloped parcels. The large undeveloped parcels have been bought and sold (sometimes for major profits), foreclosed on, held in receivership, purchased for cents-on-the-dollar by various equity funds (including those attached to the Starwood Capital Group), and on and on. It carries on to this very day.

So now it appears Gregory wants to move to the next hyperbole-boom-bust development opportunity environment at the Main Lodge. So what can we expect at the newly privatized Main Lodge properties? There needs to be environmental work; studies like EIRs and EISs and extensive mapping. The whole property will likely be cut into separate parcels (subdivision) that will become chess pieces just like the North Village.

I would expect these chess pieces to be played over the coming decades. As we have learned, development happens very slowly in Mammoth (too bad we can’t ask Tom Dempsey). There will be hyperbole (there already is), and inevitably big winners and losers. Gregory will be part of the whole “sales team” that promotes the opportunities, finds buyers and financing, and eventually helps the vultures for any distressed opportunities (history will repeat). It is destined be a big real estate merry-go-round just like the North Village. It would be nice if I’m wrong, but I doubt it.

In the meantime there will be some development progress and some amenities developed. The “beach” (think of a massive Mill environment) is actually pretty easy and cost efficient. The old Main Lodge has to be very expensive to maintain and operate. So there is rather immediate cost savings by eliminating it, creating the beach and the ancillary buildings that will house the services displaced by eliminating the Main Lodge. The beach and small, efficient satellite buildings.

The really interesting question is; Do a large amount guests actually want to be up there? At 9,000 feet of elevation it isn’t the most hospitable place. Yes, it is right at the lifts but how much synergy can be created. The father of the modern (faux) alpine villages, Eldon Beck, taught us that the guests want to mingle with the local residents. This philosophy hasn’t changed in the past 30 years. Is this going to happen at the post-Main Lodge environment?? How do you attract local residents to hang out? In the Village they do it with special events. But the proximity to town (and their residences) is key.

The Main Lodge development area is destined to become a very exclusive place. There could eventually be a gate somewhere around Chair 2 and “paid” parking above that. Guests may need a reservation to get beyond there in a vehicle. But this is all likely to be be years or decades in the future. Why do you think they just put so much money into Canyon Lodge?? There will eventually be a major shift of access through the “portals” into the Ski Area as all of this progresses. Also notice the growth of paid/premium parking?? Access to the Mountain will be deliberately more difficult and costly. It is one of the new profit centers. You already have your cheap ski pass, so another $50-100 to park close to the lift (and likely a service attendant) is no problem.

Ultimately, the Main Lodge development area is just another real estate chess board (or Quija board?) for the big financial guys to play back-and-forth with. There ultimately will be some real development when the market conditions are right. But if we’ve learned anything from the North Village, the real money will be made during the boom-bust, finance-default phases of the coming decades. But it takes years of hype and economic cycles to play out.

I personally believe that the grand plan is to have some heli-ski and cat-ski operations out of this post-Main Lodge base area. The San Joaquin Ridge and White Wing Mtn. await. The proposal to link Mammoth Mountain and June Mountain is long dead. But these type of operations would have far less environmental impact and would give fantastic access to these areas. Think exclusivity. Sounds like good hype to me. The more things change, the more they stay the same.

 

Thanks for reading!  Please stay healthy.