Mammoth Opens Even Further And The Market Is Still Stymied For Inventory!
Market Summary – April 25 to May 9
he Mammoth Lakes MLS is reporting 23 real estate closings for the period ranging from a low of $69,000 to a high of $1,745,000. Of the 22 closings, a total of 21 were financeable properties and 17 were financed closings. There were 12 condo closings under $700,000. The 10-year Treasury yield was almost even at 1.577%. The standard 30-year conventional mortgage rates dropped slightly lower and are once again ridiculously good for borrowers. The “clearinghouse” companies that actually order appraisals for the lenders seem oblivious to the terms of the purchase agreements. The “due dates” for delivery of appraisals to the lenders are often extending beyond the proposed close of escrow dates. And the appraisers typically take all of time allotted. All of this is causing some unnecessary delayed closings. It is always something. The funding of loans, whether purchases or refinances, is another real hit-and-miss factor in the market. Borrowers and sellers need to be patient.
At the period’s end the condominium inventory is up another six (6) to 46. There were 19 new condo listings brought to the market during the period (fewer than last period) and five (5) have already gone to escrow. The condo market remains the best barometer for overall market activity. New listings are expected in later spring and early summer. This is the typical market cycle. The most striking thing to me about the current condo market activity is that there are old condos (~50 years old) performing almost equally and sometimes better than newer condos. The newer condos have better windows and insulation, better heating, garages, washer/dryer hookups, better HOA reserves, and more. This market condition is unlike anything I have seen in my 35 years of Mammoth real estate sales.
Single-Family Home Inventory
The inventory of single-family homes is up two (2) to 18. There are still six (6) homes listed under $1,000,000 including two new ones. There’s a new $2M listing that had at least 1000+ days of marketing last decade at a significantly lower price. We’ll see how long it lasts in this market. There are some new listings in the $1-2M range where there was previously a big gap.
The total number of properties in “pending” (under contract) in Mammoth Lakes is down another three (3) to 93 at period’s end. The total number of pendings in the aggregate Mammoth MLS (which includes outlying areas) is up five (5) to 135. After the Ski Area closed Canyon Lodge and Eagle the market appeared to take a pause. But it is May and this can be a slow month with a trickle of spring skiers, fishermen and the early camping crowd. Another market condition I am noting; I see several examples of owners who in the past few years “bought the wrong property” who are now being rewarded by this heated market. Now there are new buyers “buying the wrong property.” It is a true Caveat emptor market.
Market Updates and News
There is still some ski crowd but the Mountain runs are getting thin. Alterra cousins Alpine Meadows closed this weekend and Squaw Valley is closing next weekend. The Mammoth region is greening up nicely but there is already fire danger. There will be months of fire danger. The community is already on Level 1 water restrictions.
The Ice Rink/Recreation Center construction earthwork is extensive. During the week I can hear the earthmovers and other heavy equipment from my desk. Most of Mammoth is full of large subsurface boulders of varying sizes. These all have to be removed before an ice rink slab can be poured. Maybe they can simply dig down a little bit so the structure doesn’t ultimately look so massive. Other potential construction/reconstruction projects are yet to blossom. It doesn’t look like the long anticipated “refresh” at The Westin Monache has started yet. They are just finishing up extensive work and expansion at the elementary school. Ormat has begun drilling new wells in various location.
The Town Council gave final approval for the construction contract for the first 81 units of workforce housing at The Parcel. This was anticipated. The sooner this gets completed the better. The long-term rental housing market may be tighter than ever. And if-and-when rent moratoriums are removed, rents may move substantially higher. The long time landlords I talk to are trying to be reasonable with their good tenants. But a vacancy can certainly bring substantially increased rent. How often do landlords pray for vacancies?
The Town is also reporting that the TOT (bed tax) revenue for fiscal year 2020-2021 may come in close to $15M, which is fairly normal for a drought winter. The Covid-driven budget for the fiscal year was below $12M. I find these numbers difficult to believe (what did Mark Twain say?). Looking back July and August of 2020 were strong. But September and the balance of fall went dead due to fires and forest closures. Then we had lockdowns through the prime holiday period and January. Since opening back up the ski conditions haven’t been great but the crowds have been decent. But nothing resembling “normal.” Sure there have been some busy periods but too much was lost. The $15M number is a little hard to believe. Or maybe there really is magic in higher rental rates.
The perceived pause in the local real estate market may be from simple exhaustion. It has been a crazy past 12 months. Industry participants including agents and brokers, escrow and title companies, the lending industry, appraisers, and inspectors have all worked at an intense pace. Buyers who continue to look in the market may be exhausted too. And some sellers who are vacillating between selling or not selling may be exhausted too. Fear and greed are still strong market conditions. The perceived pause has driven many industry participants out on (well deserved?) vacations. But it is that time of year here in Mammoth. And everybody missed-out on spring vacations last year.
A reader who read my discussion about the Main Lodge area redevelopment asked why the Aspen Ski Company wouldn’t build the Limelight Hotel up there? I don’t know. Maybe they have bigger plans in the Main Lodge location…..
In many of the outlying areas of Mono County the properties need wells. This has been a problem in the past and especially lately. There are (very) limited well drillers in this area. A large well drilling company out of Reno has now opened an office in Bishop. This might make some of these remote parcels more viable in the future. I’m not sure the price of drilling will go down but at least the job might get done in a timely fashion. Competition will be good in this space. Maybe it is time for me to look for a remote property.
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.
The least expensive sale at $69,000 was a 330 square foot garage in town. Prices for private garages have certainly creeped-up in the past couple of years. Garages and storage are at a premium here in Mammoth Lakes. But I recall selling (personally) a similar sized garage in the Industrial Park back in 2005 for about the same price. So in this micro segment of the market we are back to peak pricing. And for those looking to rent storage, there is a new and quite impressive storage facility in the Airport Industrial Park across from the Mammoth Airport. Beautiful new facility but don’t expect bargain rents.
The lot at 706 Majestic Pines Drive closed for $249,000. This is the classic, deceptive lot that will need significant dirt work, retaining wall and foundation and more. This lot has been traded around over the years. It was once owned by the original publisher of the Mammoth Times. His son was an architect. They passed on developing it. Local contractors were quoting about $200,000 to even start framing on a compromised lot like this. Recently one told me “add another $50,000” today.
Three older 1 bedroom + loft / 2 bath condos sold in the $450,000 to $560,000 range. These units continue to perform well.
The home at 330 Valley Vista Drive closed for $1,745,000. This home sold in 2016 for $925,000. The sellers hadn’t done much improvement over the few years. The home has spectacular views. But it desperately needs remodeling. But because of the configuration of the structure it has serious challenges (I’ve spent hours in the property trying to figure it out). So in this market $1.7M gets you a serious fixer-upper.
Favorite New Listing for the Period
Location and View! What else is there in Mammoth? This architecturally designed 3 bedroom + loft / 4 bath home is right at Eagle Base. Tremendous views overlooking the “Chair 15 parking lot” from Laurel Mountain to Mammoth Mountain and looking right up into the Mammoth Pass. Large great room with tons of light. Major remodel with new systems, kitchen, flooring, etc.. New metal roof. Recently painted. Two decks; large entertainment deck that can accommodate a spa and a smaller, covered observation deck. Forced air gas heating and gas fireplace. Large master suite with room for a sitting area. Large 2-car garage with extra storage. Large mudroom/ski room. Sold with essential furnishings. This is ready to move into and personalize and use! Check out the video virtual tour.
Listed at $1,799,000
Other Real Estate News
The STR business continues to evolve and the search for revenue, and the most efficient and quality revenue and return on investment, and simple sanity, are all growing concerns for STR owners and operators.
But more and more of my readers are commenting and questioning that the algorithm based “dynamic pricing” models really doesn’t work or don’t work as effectively as the should or could.
Airbnb has their own dynamic pricing system and most of the STR properties in Mammoth are in the system. The massive Marriott hotel chain has their own system. Publicly held Vacasa who has a significant and growing presence in Mammoth has their own “proprietary” system. There are other independent tech companies that have jumped into the business and claim they have the “latest-and-greatest” best pricing data and algorithms in the market.
Many STR owners have come to believe the Airbnb dynamic pricing system simply drives the nightly rate down the closer to the actual booking date without any real assessment of the market conditions. And many of the Airbnb guests simply “play the game” and wait until the last minute to book while looking for the best deal through a motivated host. The host can accept the lower rate or not. This is why I have stated in the past that the Airbnb system may actually be “cheapening” the STR value and revenue in Mammoth Lakes.
The latest company pushing themselves out into the market is Beyond. They were named Beyond Pricing and now refer to themselves as Beyond Revenue. They have matured from simply having “the best” pricing models for their customers but now comprehensively aim to generate higher occupancies, more reservations and more repeat bookings directly from the owner’s main site.
Many local proactive Airbnb owners are now utilizing a dynamic pricing service called Price Labs. They report to be experiencing quality, actionable data that truly indicates when rental rates should be moving up for specific periods. Looking at their website and the monthly cost for this service, it seems like a no-brainer to at least try it. As more entities compete in the arena, the more we might actually come to a dynamic pricing system that works to maximize rental revenues for STR owners. Time will tell.
The industry explains that dynamic pricing is generally an assessment of four factors. The first and primary (and where the “data” is the driver) is simply the observable demand for STRs in the market for given dates. The more data the better. But the data can be insufficient or incomplete or skewed. The private and proprietary systems may not be truly forthcoming with their data. Is Airbnb accurately sharing data with the entire system? Or VRBO? Or anybody?
The second assessment criteria is anticipated special events and holidays. These periods in many markets are normally easy to predict and can produce significant multiples in rental rates. Mammoth is classic in this case. But in Mammoth, especially in the era of cheap ski pass and remote work, there are periods when ski conditions are exceptional and demand can go very high. Do the algorithms know this? There are other textbook examples through the entire macro market of owners and operators “missing” some high demand event. Pays to pay attention. But how does an owner make sure they aren’t missing something? Ideally, dynamic pricing should be sensing this demand.
The third criteria is seasonality. Again, most resort markets have a good feel for this. But the year 2020 threw this out the window. And this may be harder to gauge in the future. And the day of the week is the fourth criteria. And again, while Mammoth’s highest demand is still on weekends, other factors like IKON, good ski conditions, and remote working can drive demand into mid-week. We will likely see more of this in the future.
And some owners and operators are already going beyond the current dynamic pricing mechanics and relying on more worldly, empirical information. Maybe bringing the old-school back –– talking to the reservationists and others on the front line of the hospitality and restaurant industry to gauge demand. I know they rely, in part, on this at the Westin Monache.
While some owners want “every night they can get at any price”, other owners and operators are thinking “quality not quantity” versus overall revenue. Flat, immovable set pricing (minimum pricing) with peak period/high demand pricing may come back in vogue. Much of the Mammoth lodging industry is hinting at this sort of pricing for the upcoming summer and fall. The shortage of housekeepers and experiencing other operational benefits during all of the Covid related regulations have taught them some things. The manic “back-to-back” turnover of units that has been part of Mammoth’s lodging industry for decades can be maddening.
In the meantime, there is a growing luxury (high $$) STR market here in Mammoth. Mammoth Hospitality (an arm of Mammoth Mountain) is going after it in a major way. It might be a driver for the Limelight Hotel project. A new operating and pricing strategy for some STR owners may be to have a really sweet and unique property and have high pricing. Do some good marketing and offer a higher level of service. The ultimate “quality not quantity” strategy. This would be a good trend to see in Mammoth.
Once this sales report is posted on the my blog site (in the next couple of days) it would be great if some readers and STR owners could share their experiences with dynamic pricing in the comments.
Happy Mother’s Day to all the moms out there!!
Thanks for reading! Please stay healthy.
** Closed sale data is compiled from in-house files and public records.