Large Bluesapalooza Crowd Sees Light Smoke and Ignores Mask Mandates !
Market Summary – July 18 to August 8
The following report is for the past three (3) weeks. The Mammoth Lakes MLS is reporting 36 real estate closings for the period ranging from a low of $200,000 to a high of $3,250,000. Of the 36 closings, a total of 34 were financeable properties and 23 were financed closings. Five (5) of the six (6) highest sales (all over $1M) were cash purchases. There were two (2) more high-end residential vacant lot closings. There were 11 condo closings under $600,000. There were three (3) apartment building/income property closings.
The 10-year Treasury yield remained almost even at 1.29%. Mortgage rates remain very low. There is nothing in the most recent economic reports or messaging from the Federal Reserve that any of this is likely to change in the near future.
At the period’s end the condominium inventory is down again by four (4) to 46. This despite a handful of new listing in the last two days. There were 17 new condo listings brought to the market during the period and seven (7) have already gone to escrow. Impressive sales continue in the high-end townhome segment of the market. Two Plan 4 Lodges units both went to escrow at significantly higher prices from just two months ago. A large Stonegate townhome (that we serviced as an REO just a few years ago) came to the market at $1,995,000 and purportedly had seven offers and went to contract above the asking price. A 3 bedroom / 3 bath condo hotel unit in Grand Sierra Lodge closed for $1.399M. Developer John Hooper released units at his new Lakeview Blvd project and the response was overwhelming. It looks like the new 1450 square foot townhomes will sell beyond $1.3M — basically twice what the similar 540 Old Mammoth Road units just sold for. This time last year the listing inventory was at 92.
Single-Family Home Inventory
The inventory of single-family homes is down one (1) to 19. There were four (4) residential closings under $800,000 in the period, all small older homes including two in Old Mammoth. Two residential closings above $2.6M continue the parade of luxury home sales. This time last year there were 38 homes on the market.
The total number of properties in “pending” (under contract) in Mammoth Lakes is down 14 to 97 at period’s end. The total number of pendings in the aggregate Mammoth MLS (which includes outlying areas) is down 11 to 144. This time last year it was 120 and 170 respectively. This time last year the market had gone completely crazy. Interest in Mammoth real estate has not waned; there is low inventory and a reminiscent “dog days of summer” feel in the air. People are enjoying vacations for now. Wait until they start thinking about skiing and snowboarding again.
Market Updates and News
Thankfully, Mammoth continues to avoid heavy concentrations of forest fire smoke. For the most part the smoke has been distant and has created local haze. Mountain breezes have consistently moved concentrations out of the area. The Bluesapalozza event capped the period and carried on the theme for the summer; people looking to have good time. Summer tourism remains very strong but generally well behaved. Nothing like last summer. Tourism should be peaking with many schools reopening in SoCal in the next few weeks.
Mono County decided to follow Los Angeles County with new indoor mask mandates as of last Friday. Positive tests have moved up locally. I was in VONS early Friday morning for some groceries and for some general research. The local residents seemed to be complying but the guests weren’t. They certainly didn’t seemed to care. Most were rapidly moving to the beer aisle. It will be interesting to see the level of compliance from here on out…
The local workforce housing issue is at a boiling point. The pain is reaching into all conceivable areas and to everyone. Most businesses are short employees and cannot provide adequate service levels and are limiting hours of operation. General maintenance and repairs are being delayed and deferred at condominium projects, local residences and commercial properties (will the snow just make it go away?). Long-time (and valuable) local residents are leaving town because they cannot find a respectable and affordable place to live. And plenty more. The heat is on the Town Council at every meeting. The massive expenditures on marketing and the ice rink are now looking like major administrative blunders. At least they can blame the unforeseen pandemic for triggering it all.
A closer look at the whole administration of affordable/workforce housing in Mammoth Lakes over the past 10 years is a story of dysfunction. Mammoth Lakes Housing (MLH) was established decades ago as the arm of the Town to develop and manage the community’s government sponsored housing. MLH produced large amounts of new housing in the 1990s and 2000s. The projects are scattered throughout town and are well managed by MLH. But in more recent years the Town Council has underfunded and alienated MLH and taken more control of the direction of workforce housing. Whether the public realizes it or not, the Council has complete control over development at The Parcel, not MLH. They clearly overpaid for the property to begin with and now they can’t get the project “in the ground”. Just a few months ago they had two eager construction companies with competitive bids AND they received a $20 million grant from the State. But nothing is happening.
Another proposed workforce housing project I am almost too intimate with is the 238 Sierra Manor Road project. This commercial building is the former Country Glass building in the center of town. I had the property listed for sale and the Council became interested in a housing renovation project for the property. Specific Council members were strongly promoting the acquisition. During the escrow their construction consultants told them it would be too expensive to renovate. They closed escrow in October of 2017. The Council then handed the project to MLH and told them to “figure it out.” MLH has applied for grants, etc. and nothing has happened. This past week the Council agreed to supplement the project with an additional $1.5M to get it moving. As of this week the cost estimate for project completion is now totaling over $8M for 11 Studio units. That is over $700,000 per unit (twice the cost of a Westin Studio). Even worse, I had a private developer a few months ago offering to purchase the property and develop the Studio units himself and was willing to restrict the rents. His renovation estimates were far below the Town’s. He had just completed a similar project in Mammoth.
The Council did just complete the acquisition of a lot in the Sierra Valley Sites (aka The Ghetto) and is proposing to build housing on it. We’ll see how this proceeds. But now building costs have skyrocketed and contractors are swamped. This mess took ten years to create. It will take ten years (at least) to turn around. The community will continue to suffer for a lack of employees….
Based on the tourism of the past few months there is an even stronger argument for STR owners to raise rates during peak periods and maybe even during less-than-peak periods. Some STR owners still want “everything they can get” and are willing to discount based on the dynamic pricing data. But many owners are bound to evaluate the wear-and-tear on their property and think seriously about a different strategy. One thing I’ve witnessed over the past year; kids appear to be more accustomed to playing indoors as a result of lockdowns. STR living rooms appear to have become the new jungle gym.
Another interesting industry tidbit that I didn’t see reported anywhere; the Chief Strategy Officer of Airbnb liquidated $353 million dollars of Airbnb stock from May 17 to July 14. The stock price has been in the $140 range during this time but was as high as $210 back in February. I wonder what he is seeing………?
A top floor (with vaulted ceilings) 1 bedroom / 1.25 bath at Aspen Creek closed for $380,000. Very clean and remodeled condition. The HOA recently approved a major special assessment cycle to address roofs, siding, windows and more. This unit will have a $13,000 per year additional assessment over (at least) the next four years. Another 2 bedroom unit is currently in escrow at a low price. Purchasing in this project at a low price could still make sense over the long run.
Another oversized 2 bedroom / 2 bath in White Mountain Lodge (the Village) closed for $969,000. These oversized units having been bringing nice premiums. Another “penthouse” 2 bedroom / 2 bath at The Westin closed for well over $1M. Interesting, a high performance niche in the condo market.
The sales of a Mountain Shadows 1 bedroom + loft / 2 bath and a Timberline 2 bedroom / 2 bath continue to show the performance of older condos in the market. The Mountain Shadows closed for $490,000. The 2007 peak sale for this floor plan was $405,000. The Timberline closed for $515,000. The 2007 peak sale for this floor plan was $380,000.
The three apartment building sales are of interest. They don’t indicate any rise in value from pre-pandemic sales, but rents have definitely moved up in the past 15 months. The challenge for landlords is to actually realize the rent increases. Many are landlords are also faithful to their long-term local tenants. Government imposed restrictions and moratoriums also get in the way. Vacancies are actually a godsend.
Favorite New Listing for the Period
This should be officially listed any day now. I’m excited about this listing because “A-frame” homes appear to be in a renaissance period, and this is a Mammoth classic. This is a large three level home with the great room and 2 bedrooms on the entry level, the master bedroom featuring Sherwin views and a private deck on the second level and a lofted level perfect for kids, an office, crafts room, etc. Large front and side decks, enclosed and lockable storage shed in back, forced air heat and wood burning stove, washer/dryer, and custom stained glass lighting in kitchen. Convenient location with easy access to Red Line shuttle and a short walk to Main St. restaurants and shops and Forest Service land trails and open space. Good parking out front. A unique Mammoth opportunity!
Should be listed at $819,000
Other Real Estate News — “Get the deal done”
In the last week since returning from an outstanding ocean fishing trip I am seeing some history repeating (or rhyming) here in Mammoth. At least within the internal ranks of the local real estate industry. And it probably isn’t to the benefit of the consumer; both buyers and sellers. This may also affect the periphery players of the industry like escrow and title, loan officers, inspectors, etc..
People who have observed my real estate career over the past 25+ years often ask me if I’m happy NOT owning a large company any more. From 1995 to 2010 my brokerage averaged about 20 associates (agents) in size. It peaked around 2005 at around 25. My company was doing the most volume of sales in town during much of this period. The Mammoth real estate market roared from 2002 to 2005 and surged again from late 2005 and 2006 after the Starwood Capital acquisition of the MMSA assets. But the local real estate business was so prosperous that some participants “lost their minds” as I like to say. It became a very difficult time to be responsible for their actions. I’m sensing that the market (and maybe the circumstances) of the past 15 months may be returning us to this type of environment.
Some examples from the past; one agent decided that in order to “help” her buyers she crafted a sneaky way to “defraud the lender.” In her mind it was necessary to “get the deal done”. She was caught (by me) and ultimately had her license revoked by the California Department of Real Estate. She could have done jail time for her actions. All of it created great disruption within the company and with her clients. Today, under modern lending laws, the principals themselves could end-up in legal trouble. All to “get the deal done.”
Another agent made outstanding commissions over a three year period but failed to pay her taxes. She was living a lavish lifestyle with her new income and there wasn’t any money left to pay taxes. Then came the IRS garnishment letters. Would a buyer or seller want somebody representing them with this kind of pressure? Real estate sales can be murky enough without this sort of undue pressure. It benefits no one.
Other associates threatened to sue me over a lot they purchased and alleged misrepresentations. It was their mistake, they represented themselves! Even worse; he was a Planning Commissioner at the time of the project’s approval (and somehow forgot) and should have known all of the aspects of the lot’s development. Unfortunately, more internal disruption. But would a buyer or seller really want somebody with such clouded thinking representing them?
Other associates lived lavish lifestyles through the boom period. I tried to advise them. After the crash in 2008, two of them immediately filed for personal bankruptcy. Again, with this type of pressure, can they really do their job with clarity?
I’m sure most of it came down to the extreme greed and hubris of that era. The problem is I’m getting a whiff of it again, and strongly in the past week. The market has been crazy the past 15 months. To the point that some could “lose their minds”. I have evidence of agents doing stupid things, all to get “one more deal done.” And I have recently had other brokerage’s clients in my office asking me questions about how things should be handled (never good). I’m seeing friction and jealousy amongst certain agents that hasn’t been there in the past 10 years. It can be fascinating doing this type of business in a small community.
The biggest challenge of the current market is “leaving money on the table” for sellers. It is very true in the Mammoth market. But I’ve read articles by agents across the country that are in similar market conditions. Pricing for a quick sale and little effort is a golden opportunity for some agents. But it doesn’t meet the fiduciary test in this type of market. Communication with the seller is imperative. Everyone’s circumstances are different. It is a great time to be a seller and many Mammoth sellers are liquidating properties that would normally be very difficult to sell. And maybe this is a warning to buyers too…..
Thanks for reading! Please stay healthy.
** Closed sale data is compiled from in-house files and public records.