Mammoth Cools Off And Visitors Thin, Real Estate Remains Strong!
Market Summary – August 8 to August 22
The Mammoth Lakes MLS is reporting 18 real estate closings for the period ranging from a low of $450,000 to a high of $2,100,000. Of the 18 closings, a total of 17 were financeable properties and eight (8) were financed closings. The high sale of the period was a ~3200 square foot Stonegate townhome on busy Minaret Road just below the Village. The seller purchased the property in 2016 for $1,166,000. This property sold quick and purportedly there were seven (7) offers on the property. Amazing. There was one more high-end vacant lot sale. I rarely report median and average sales numbers because there is so much disparity in Mammoth properties, they aren’t typically relevant. But average closing price during the period was $920,000. Median was just under $800,000. One year ago the average was $593,000 and the median was $602,000.
The 10-year Treasury yield is down slightly to 1.26%. Most conventional loans are being quoted in the 2.75% to 2.88% range. In the most recent months the lending and appraisal hiccups in Mammoth have been at a minimum. What a difference a year makes. I shouldn’t have mentioned it, but I did. Hopefully it doesn’t come back to bite me. The appraisers seem to be finding justification for new, higher sales prices in all segments of the market. And lenders have found acceptable condo hotel financing but these borrowers should expect higher downpayment and slightly higher interest rates.
At the period’s end the condominium inventory is down 15 to 31. There were 13 new condo listings brought to the market during the period and eight (8) have already gone to escrow. Historically the Mammoth condo inventory peaks at Labor Day weekend; a combination of inventory building through the summer and the increased fall sales activity in “anticipation of winter.” Some really interesting closings at Snowcreek 5, Courchevel and 1849. I will discuss these in the Noteworthy Sales section. There were three (3) condo closings over $1M.
Single-Family Home Inventory
The inventory of single-family homes is down one (1) to 18. There were five (5) new homes brought to the market in the period. There are 17 homes currently in escrow. Not every new listing sells quickly. There are six (6) homes listed under $1M.
The total number of properties in “pending” (under contract) in Mammoth Lakes is up 18 to 115 at period’s end. The total number of pendings in the aggregate Mammoth MLS (which includes outlying areas) is up 21 to 165. This period last year they were 164 and 212 respectively, which may have been all time highs.
Market Updates and News
Visitor traffic has clearly declined in the past two weeks although there was a good crowd in town this weekend. Labor Day weekend has solid bookings but the overcrowded fiasco of last year has been avoided. The Mammoth region has also experienced much welcomed cooler temperatures. Dry pine needles are piling up and some aspens are already turning — the early signs that winter is coming. Light smoke has been blowing in-and-out but with no heavy smoke events.
Covid cases are rising in Mono County although slower tourism should turn this around. Masks are consistently being worn inside stores but the balance of masked activity remains on the causal side. Most of the Mammoth school kids went back to to school this week. Mammoth Hospital currently reports no hospitalized Covid-related cases.
Last week’s Town Council meetings featured a review of the Town’s last fiscal year (it runs July 1 to June 30). Amazingly the Town has been spared financial disaster (or even serious distress) out of the past year of Covid, forest closures, prime holiday lockdown, rent subsidies to local residents, food banks and more. Mammoth Lakes remains a resilient community especially in its ability to produce tax revenue, namely TOT (bed tax).
Following the spring lockdown in 2020 the Town adjusted its estimated TOT revenue projections to slightly over $11M. During the winter they adjusted revenue projections upward to $14M. The final TOT figure for the year came in at $16.5M. This is essentially ~80% of all-time peak TOT generation. Pretty impressive considering the loss of TOT from the peak winter holiday period and a serious drought winter ski season. The question I have is; did increased nightly rental rates have an impact on this impressive tax generation? And did demand influence the dynamic pricing algorithms to push rental rates higher? These are questions for the future, but see my further discussion on STR below in “Other”.
Ultimately the Town probably believes that their shrewd marketing efforts resulted in this ass-saving tax generation. But I’ll suggest someone else take the credit; the thousands of local STR owners who work diligently (and take the risk) to provide great accommodations for our visitors. And the property management teams who run all of the working parts, especially during a time of labor shortages. From my desk I can see them running all day long.
One thing that jumped out of the budget/revenue report; the Town generated an additional $220,000 in revenue for TOT revenue violations, penalties and interest. The Town Finance Department reiterated that it remains in full TOT enforcement mode. Apparently many STR owners thought the pandemic was an opportunity to skirt collections and remittance. Another standout; the Town generated $146,300 in Cannabis Tax during the fiscal year. There were no projections about how high this tax could go in future years.
Some other tidbits from the meeting; the Council approved the subsidy for charter air service into Mammoth Airport this winter, maybe starting at Thanksgiving. Advanced Air will be replacing the service previously provided by JetSuiteX. Advanced Air has already run private charters into Mammoth so there is an established relationship. Bishop Airport will be available for back-up. Flights will be originating from Burbank, Carlsbad and Hawthorne Airports. There are no TSA regulations/hassles in using this service.
Lumber prices may not (yet) be coming down at your local lumber yard but lumber futures have steeply declined in the past three months. Futures prices are now down to the reasonable level of July 2020 but not yet down the prices of March 2020. This is good news for anybody looking to build, including the Town of Mammoth Lakes, and all of those vacant lot purchasers of the past 15 months.
Airbnb recently changed their policy pertaining to sexual harassment. For the past 10 years the “fine print” pushed any sexual harassment cases from either guests or hosts to a mandatory arbitration. These cases will now go to litigation. Apparently the company has spent “millions of dollars” on settlements for violent crimes in Airbnb listings. The company notes that this move follows similar moves of other major corporations and they encourage all companies in the travel and hospitality industry to change their policies too.
This last week I had the rare opportunity to do what was commonplace for real estate brokers of past generations – present an offer to sellers at their dining room table. It felt good. Doing business over the phone and through email can be so impersonal at times.
A small, almost “tear down” A-Frame home closed for $515,000. A-Frame home are experiencing a true renaissance.
A 3 bedroom / 3 bath townhome on the front row of Sierra Manors closed for $636,000. This unit is over 50 years old. I sold the unit right next door (same floorplan) just a few years ago for $300,000. Another prime example of older condos performing at incredible high price levels.
Two 3 bedroom / 3 bath townhomes in Snowcreek 5 closed, different floorplans but the same square footage and utility. One slightly newer and in more upgraded condition. One closed for $880,000. The other for $1,007,000.
Two 2 bedroom / 2 bath units at Courchevel closed, one at $660,000 and one at $716,000. The peak sale in 2007 was $514,000 with most sales from that era in the mid-$400,000 range. These units are ~50 years old and the project it currently being resided. More outstanding price performance in the older condo market.
The sale of 1849 #409. This 2 bedroom + loft / 3 bath is top floor in the first phase of 1849 with understructure parking. The unit was listed at $949,000. It closed for $1,046,000, almost $100,000 over asking.
Favorite New Listing for the Period
This 1 bedroom / 1.25 bath condo has the convenience of the Village without all of the commotion and long hallways. Unit is very light and bright with big windows and open space around it. Located right on Lakeview Blvd., this is an easy walk to the Village and Gondola. A Blue Line shuttle stop is right across the street. This very clean unit has not been a rental in over 20 years but it wouldn’t take much to make it a strong renter. Located in a smaller project that has a newer spa and common area patio adjacent to the unit. BBQ on the covered front porch, private covered deck for fire wood or hanging out. Check out the video tour.
Listed at $399,000
Other Real Estate News
The state of STR rental rates in Mammoth continues to intrigue me. The STR industry continues to be the “wild west” in many respects. Maybe more so now. From my observation there continues to be massive inconsistency across the board from how owners and managers are deriving and setting rates, what the policy for rates is, the other “considerations” for rates, and plenty more. I remember back around the year 2000 when hospitality pros from the Whistler resort came to town and tried to consolidate all of the local lodging industry, basically trying the get them on the proverbial “same page.” There was complete rejection. This included many of the “old guard” who had been in the business here from 1960s and 70s. I imagine the same thing would happen today. But getting consistent with pricing could help all of the participants. Especially if it is higher pricing.
The recent TOT numbers show that the industry is healthy despite all of the obstacles thrown at it in the past 17 months. Looking back, it has proven to be a period of strong cash flow. But when nice condos are renting for less than a room at Motel 6, something isn’t right.
I’m constantly talking with STR owners, rental management operators and observing what is going on in the various condo projects around town. My conclusion is that some owners and operators are doing very well at maximizing rental revenues and efficiency. And others not so well. I also believe some operators are “giving it away” –– simply not charging enough and actually attracting a poorer quality of clientele at the same time. This doesn’t sound like what most STR owners are looking for.
To further help me understand the Mammoth STR market I recently subscribed to the AirDNA Marketminder data service for Mammoth Lakes. There is all kinds of data to tap into. As time allows I’m starting to learn what is available. They are tracking almost 3,000 properties in Mammoth listed on Airbnb and VRBO. I don’t believe the Mammoth Hospitality units are in the system. This would include many of the condo hotel units in the Village and at Eagle.
Here are some random stats I’ve found; in July there were 51,753 nights booked in a total of 2,772 units (18.6 nights). In Dec. of 2019 the number of active listings was 2,947. In May of 2020 (during lockdown) there were only 1,667 active listings. Today there are 2,871 active listings. The total number of units available for each month does fluctuate. Some owners may be using their properties for extended stays, or have found an MTR (medium term rental), or are doing maintenance/renovation work, etc..
For units booked in the last 30 days the average lead time for the bookings was 52 days. So much for Airbnb guests being “last minute” bookers.
So far the most significant thing I am seeing is there is a substantial difference between the average daily rates amongst similar properties. The most popular rentals are also renting for the highest average daily rate. This is telling me that having the goal of a “premium rental property” is sound. But what exactly are the criteria for a premium rental? This is what I’m hoping to sort-out as I crunch through all of this AirDNA data. Stay tuned.
Thanks for reading! Please stay healthy.
** Closed sale data is compiled from in-house files and public records.