Forest Service Shuts Down The Large Labor Day Crowd!
Market Summary – August 22 to September 5
The Mammoth Lakes MLS is reporting 34 real estate closings for the period ranging from a low of $250,000 to a high of $1,850,000. Of the 34 closings, a total of 29 were financeable properties and 16 were financed closings. The closings included six (6) condo closing over $1M. In years past, condo closings over $1M were somewhat uncommon. Not any more. These sales included three (3) Lodges townhomes all selling at impressive numbers. There were four (4) Creekhouse closings. These brand new Creekhouse units were put to contract many months ago and now look like steals in the market. There were four (4) more residential lot closings including three (3) in the Bluffs. The low sale of the period was an office suite condominium in the 587 Old Mammoth Road building (Mammoth Tavern) and will be the new home for Nomadness Rentals.
The 10-year Treasury yield is up slightly to 1.322%. Mortgage rates remained basically the same through the period. The appraisal and lending glitches of a year ago are gone, for now. The appraisal extortion game is over. Things have normalized in the financing arena. I’m sure hoping it stays this way. There was a Trustee’s Sale notice in the Mammoth Times this week. Weird. There’s a back story for sure.
At the period’s end the condominium inventory is down one (1) to 30. There were several new listings in the last few days which is also a sign of some normalcy; historically many sellers think they have to get their properties on the market before a holiday weekend. In the Internet age it isn’t so important. Right now, anytime is a good time to put a property on the market. There were 20 new condo listings brought to the market in the period and nine (9) are already in escrow. The new listings included three new Westin Monache listings. This is interesting timing because the “refresh” remodeling work has commenced and is expected to continue for a few months.
Single-Family Home Inventory
The inventory of single-family homes is up two (2) to 20. There were four (4) new homes brought to the market in the period. There are people shopping for homes but the lack of quality inventory is frustrating many.
The total number of properties in “pending” (under contract) in Mammoth Lakes is down 21 to 96 at period’s end. The total number of pendings in the aggregate Mammoth MLS (which includes outlying areas) is down 20 to 145.
Market Updates and News
Mammoth experienced some beautiful clear days this past week. There was a touch of smoke during the holiday weekend but some of the best air quality conditions of the summer. The Forest Service made a surprise move this past week and closed the Inyo National Forest until Sept. 17. Clearly, the threatening forest fire south of Lake Tahoe influenced them. A big crowd had been booked into Mammoth and the local region for the Labor Day weekend. Local rental agencies reported to me an approximate 50% cancellation rate following the closure. The local media and Chamber of Commerce were quick to point out all of the areas and recreational opportunities that are still open, but the damage was done. All-in-all it was a very pleasant weekend and in stark contrast to last year’s fiasco.
I have a client who is very critical (from experience) of the Forest Service fire policy. He sent me the interesting article from ProPublica about forest management. I’ve listened to ex-Forest Service employees complain about these policies for decades. Some interesting points in the article; “Academics believe that between 4.4 million and 11.8 million acres burned each year in prehistoric California. Between 1982 and 1998, California’s agency land managers burned, on average, about 30,000 acres a year. Between 1999 and 2017, that number dropped to an annual 13,000 acres.”
And “A seventy-word primer: We dug ourselves into a deep, dangerous fuel imbalance due to one simple fact. We live in a Mediterranean climate that’s designed to burn, and we’ve prevented it from burning anywhere close to enough for well over a hundred years. Now climate change has made it hotter and drier than ever before, and the fire we’ve been forestalling is going to happen, fast, whether we plan for it or not.”
The point is that California’s forests need to burn. There are areas visible from town that absolutely need to be control burned when the conditions are right. Otherwise they threaten our community. But as I have mentioned before, Mammoth is very lucky because there has been proactive and ongoing thinning and fire-break creation on the periphery of town for almost 20 years. And strict private property monitoring by the local fire department.
A story from Inman this week proposes that institutional investors will soon be targeting STR properties. One industry pundit stated “I see incredible parallels to the single-family rental space — the long-term rental space — a decade or so ago. It’s a big asset class which has yield associated with it in an environment where people are starving for yield.”
According to the article, the challenges for the institutional investors include the “revenue optimization models” and the specific regulations in each market. Conjecture is the institutional investors will need to buy-up local rental operators to smoothly enter the market. I think I remain a little skeptical. As I have recently pointed out, the best operators in Mammoth right now are the ones that are locally owned. It’s a crazy business with “lots of working parts.” And the business requires good employees in an age of declining workforce availability and skill. At least the institutional investors won’t be pressing to spend quality time in their properties.
Anecdotally there seems to be a re-emergence of MTR (medium term rental) demand, especially this fall. And owners are gladly cooperating. The benefit is no license requirement and no TOT remittance due to the Town. I believe the demand for MTR will grow in the future. Some owners may try to specialize in it. It may prove to have less wear-and tear on the property.
I received a “love letter” with an offer from a buyer this week on one of my listings. These buyer introduction letters have become contentious in the industry and the National Association of Realtors® is warning against listing agents and sellers accepting them. They are the new breeding ground for discrimination lawsuits. The State of Oregon has already outlawed them. I sent the young agent who brought the offer and love letter a link to the NAR educational video for his enlightenment. He said I was being condescending. In my opinion he has poor broker supervision and training. Buyers beware.
The latest condo remodeling trend in Mammoth is what I’m referring to as the “Las Vegas-izing” theme –– making the property feel like a high-end hotel room in Las Vegas. Some are going to real extremes. They seem to have forgotten that STR guests in Mammoth have skis, snowboards, mountain bikes, heavy boots, big bags of equipment and all sorts of other stuff they bring along. And all of it can create excessive abuse on a property. This is starting to become reminiscent of the South West decor craze of a couple decades ago. It went out of fashion fast and people were saying “yuck” in no time.
The 2020 Census data for Mammoth Lakes is curious. The town’s population as of April 1, 2020 was 7,191. Ten years earlier it was 8,234. In the year 2000 it was 7,093. Hmmm…
And lastly, check out my Curing Dysfunction Q&A that appeared in this weekend’s issue of The Sheet. Laughingly, if any Town officials find it critical of them, they should see the lengthy email I received from a long-time local resident in response to the column. I’m apparently too nice. The comments are downright toxic.
There were 11 condo closings under $600,000. This is the new “inexpensive” threshold in Mammoth Lakes. This volume as a percentage of overall sales is more normalcy in the current market. Most older 1 bedroom condo sales are pushing close to or above $400,000.
The Old Mammoth Road commercial lot on the corner of OMR and Chateau Road has been on the market for almost 20 years with a variety of local agents. It closed for $635,000. One of Mammoth’s most popular restaurants may be expanding soon.
The three closing of Lodges townhomes continues the strong demand for Snowcreek luxury units and higher sales prices. But these values are just beginning to reach the peak pricing of 2007.
A top floor (7th) Studio at the Westin Monache closed for $367,000. This is still ~$100,000 less than 2007 peak values.
The two “rim” lots in The Bluffs closed for $375,000 each. They had been off-and-on the market for years. Probably a steal in the current luxury market. Around the corner is a relatively new home built on two combined rim lots. It was recently assessed at $5,000,000. And I thought that might be low.
Favorite New Listing for the Period
This is very different. This is 880 acres of raw land located between Mono Lake and the Bodie State Park. This is a classic off-the-grid opportunity. There are three parcels in total with one being zoned Estate Residential and the other two zoned Resource Management. The property is accessed off of Cottonwood Canyon Road which links Highway 167 to The Bodie Park. The entry to the property is at approx. 7200′ of elevation and rises up to almost 8000′ (very similar to Mammoth). There are mature and healthy piñon pine trees on most of the land. There are some natural building/development sites. Lots of wildlife. Fantastic views of the Mono Basin, Mono Lake, Mono Craters and the Sierra Crest. Only 17 miles to the entry of Yosemite National Park and 45 minutes to Mammoth Mountain Ski Area. Check out the video tour.
Listed at $999,999
Other Real Estate News
In the news this week; Two resort areas are proposing to take radical new steps to cure their workforce (affordable) housing crunches. The mountain resort community of Breckenridge in Colorado is working through legislation that could reduce and limit short term rental (STR) licenses. The City of Honolulu in Hawaii is once again pushing a proposed “Empty Homes Tax” on both single family residential and condominiums.
Members of the Breckenridge and Summit County’s Housing Authority attended a housing conference here in Mammoth a few years ago. Those of us in attendance were very impressed with their aggressive program to develop workforce housing. It is a public/private partnership under the direction of the Town of Breckenridge. They have produced, and continue to produce a significant amount of government sponsored and controlled housing.
The problem Breckenridge has is somewhat different from Mammoth. Mammoth has almost 9,000 condominiums that are zoned for and available for STR. Breckenridge has far less. The Airbnb/VRBO/STR popularity has driven many Breckenridge landlords to convert from long term rental to STR. The STR licenses have grown by over 500 in the past five years. A total of 52% of existing housing in Breckenridge is now STR. The conversion has happened faster than the Town can build new workforce housing units. So now they are working on legislation to cap the number of STR licenses. As one local official said of the new legislation, “the bottom line is we are restoring the balance which has been thrown completely off by the rapid growth of short-term rentals.”
The proposed cap appears to have strong support from the local residents but is causing uncertainty in the real estate and property management side. Owners of STRs are fearful of losing their license and potential buyers who desire to operate an STR are concerned that may not get a license. The proposed legislation makes approx. 1,500 of the current 3,900 licenses exempt. The exemptions are for condo hotel type properties where there is a front desk and security. The balance is reducing the almost 2,500 existing STR licenses down to 2,200 (as a comparison Mammoth has almost 3,000 units alone listed on Airbnb). This in theory would open up 300 units for local resident housing.
Meanwhile in Honolulu they are proposing to deal with the workforce housing crisis in a different manner; raising a potential $1B in new taxes for “empty houses”. This new tax would provide money to develop workforce housing but also motivate some property owners to rent long term. The tax was proposed in the fall of 2020 by the Honolulu City Council and is now picking up momentum. “The idea is to get folks who have vacant homes to rent them out, or to sell them, hopefully to other local people,” said Honolulu City Council chair.
A recent article stated “empty homes and condos blanket the island while locals struggle to keep up with Honolulu’s cost of living; nearly 40,000 units are vacant at any given time, according to a UCLA study the City commissioned in 2020.” (How did UCLA get involved? Sounds like somebody got a nice working vacation.)
The advocates of the plan say “other jurisdictions with extremely high-priced housing have also needed to find new solutions.” According to the study, even just a 1% tax would create tens of thousands of rental units without building anything new and it would also bring in about $40 million in extra annual revenue. This is based on the idea some owners would start renting their homes while others would pay the tax.
One Council member stated “the empty House bill is likely to get moving again soon, along with other property tax bills aimed at recognizing the impact of the soaring housing market on local owners and renters — like the second-home tax category.”
Special taxes on second homes and “empty homes” to create long-term rental opportunities and tax revenue to develop more workforce housing….more taxation without representation. An idea coming to Mammoth Lakes in the future??
Most of Mammoth’s solution is right in front of us –– develop the almost 500 workforce housing units at The Parcel. And make the Ski Area develop their fair share on property they own.
Thanks for reading! Please stay healthy.
** Closed sale data is compiled from in-house files and public records.