Mammoth Real Estate Sales Report – October 17, 2021

Light Snowstorms And Fall Colors Make For A Splendid Period In Mammoth!

Market Summary – October 3 to October 17

The Mammoth Lakes MLS is reporting 19 real estate closings for the period ranging from a low of $335,000 to a high of $1,500,000. Of the 19 closings, 18 were financeable properties and 15 were financed closings. Very similar to the last period. The closings include five (5) Snowcreek condos including three (3) at over $1M.

The 10-year Treasury yield moved slightly upward to 1.576%. Mortgage rates have moved up into the 3.25% range for conventional 30-year fixed loans. This is up ~.5% in the past month but rates are still quite attractive. Buyers in escrow with good loan rates locked in are getting nervous about closing (I have a couple in this scenario). And according to the rate sheets I’m looking at the jumbo loans are still being quoted lower than conventional loans. Weird. The rise in rates will certainly slow the refinance volume, but this should open the door for the quicker processing (including completing appraisals) of purchase mortgages. This would be welcome.

Condominium Inventory

At the period’s end the condominium inventory is down five (5) to 15. There were 11 new condo listings brought to the market in the period and four (4) are already in escrow. There are now NO Westin Monache units on the market and only one Juniper Springs Lodge unit on the market. One of the units that came to the market during the period was a JSL 2 bedroom / 2 bath priced at $720,000 and it sold immediately. The buyer resistance to new listings and any perceived higher prices is hit-and-miss with no logical explanation. As you will see in the “Other” section below, properties in upgraded and turnkey condition continue to bring premium pricing. But some that aren’t offer the least incurable defects. Buyer beware. And in the next two months we will likely see some buyers who “lose their minds” and buy anything just to have a property secured for the holidays (this is a real phenomenon in the Mammoth market).

Single-Family Home Inventory

The inventory of single-family homes is up one (1) to 22. This includes two brand new offerings from long-time Mammoth contractor/developer John Hooper. Both are 4 bedroom /4.5 bah homes, 3,000 square feet, 3-car garage homes. Both are listed just under $2.3M. One is in Starwood (on the fairway) and one in the Snowcreek Crest (big view and sun). Both are “luxury” neighborhoods. Finding a contractor to build a new home today at a fixed contract price (materials are out-of-control) in Mammoth would be impossible. But here is the opportunity. A new owner of one of these homes could probably be settled-in by the end-of-the-year holidays in 2022. There are now only two (2) homes listed under $1,050,000.

Pending Transactions

The total number of properties in “pending” (under contract) in Mammoth Lakes is even at 94 at period’s end. The total number of pendings in the aggregate Mammoth MLS (which includes outlying areas) is also even at 143. There are lots of buyers looking including several 1031 tax deferred exchange buyers in my sphere who have “clocks ticking”. The local real estate market and all of its participants are increasingly showing signs of exhaustion. It has been a crazy past 16 months. The questions about a “market peak” are increasing. But buyers continue to push and sellers continue to be interested in selling, especially at these current prices. If there was more inventory there would be more sales. And everybody now has “inflation” on their minds. Calculating “replacement costs” for properties will be an interesting exercise in the future.

Market Updates and News

Two storm fronts came through the region during the period depositing dustings of snow throughout town and on the mountain tops. Most of the snow in town has melted but the snow on the higher elevations and the fall colors have made the Sierra a classic fall spectacle. The storms and precipitation have cleaned the air. This weekend was nearly perfect and there was a decent crowd of visitors and second homeowners here taking it in.

The annual turnover from summer to winter is well underway; from snow stakes appearing all over to irrigation lines being blow out. The storm fronts and low temperatures spooked many to be concerned about frozen pipes but the temperatures have moderated and are forecasted to remain so through the end of the month. Many restaurants are on their usual fall hiatus (much to the disappointment of many visitors).

The current slow season has the local rental management (STR) companies back to business fundamentals. This includes educating the locals Realtors® on their latest management programs. Many “offsite” companies have a variety of service programs for STR owners. It seems to me that the “premium” programs that offer full service including TOT (bed tax) remittance at a rate of 30% are a bargain. Back in the 1980s and 90s the industry standard was 38%. Automation has helped streamline many basic functions but the breadth of marketing and advertising is far superior. As comparison, the Snowcreek and Village (Mammoth Hospitality) programs charge in the 50% range. The Westin Monache is in the 60% range. The industry has evolved to offer different styles of management programs that can be matched to specific owners, their properties, and their needs and desires. These offerings alone have added value to STR ownership.

Automated valuation models (AVMs) like Zestimates are increasingly common as a component of real estate websites. They crunch millions of data points to determine what the likely value of a home is. When I look at the same property on Zillow and Realtor.com I often find great disparity. And as one agent recently asked “Has Zillow been in the home?” But I recently came across this Zillow statistic about their own valuations; Zestimates are currently within 20% of the final sale price 82.5% of the time. This means that a Zestimate could be 20% higher or lower (or more) than the home’s actual value. In the Mammoth market, this is a pretty high margin of error.

I have the old Slocums bar and restaurant space on Main St. offered for lease so I speak with entrepreneurs all the time who dream of operating a bar and restaurant in Mammoth. Recently, I have spoken with a number of parties interested in opening an Indian restaurant. They have very successful operations in other areas. This would be an interesting culinary addition to Mammoth but not necessarily a match for this premises (it’s a BAR!). Amazingly Mammoth has very little vacant restaurant space at this time although some of the space that was vacated for “future development” may come back on line. Dominos Pizza is gone. And I’m sure there is a faction of the community that is depressed about it…..

This next week the Town Council will consider budgeting $200,000 for new drought tolerant landscaping for Main St.. This would be great. I could cross one of the dysfunctions off my list. Hopefully the planners can design it so there is a nice flow from the landscape at the entry/monuments signs to the new landscape for Old Mammoth Road. Or not. Why break the tradition of disjointed planning in Mammoth?? The new ice rink foundation work (see above) looks almost complete. The mechanical area workings look impressive. With the escalating cost of steel and concrete, I can only imagine how over budget the project is.

My friend and client Ed Hoffman has published a book titled Experience Matters. I read it while I was out on the ocean last week. Ed has owned a large mortgage company in SoCal for the past two decades and is a substantial investor. It is full of great real estate knowledge and wisdom (including his own mistakes). If I had young agents working under my license today I would make it mandatory reading. I commented that the core real estate “experience” information would make a great continuing education course for the CA Dept. of Real Estate. Agents might actually learn something of value.

Noteworthy Sales

A 1 bedroom loft /1.5 bath unit at Sierra Park Villas closed for $530,000. Wow! The loft was enclosed (this is a popular modification) but the 1.5 bath floorplans have been rejected by buyers in the past for the lack of a second shower. Big price for this unit.

A 1 bedroom / 1 bath condo hotel unit at Grand Sierra Lodge closed for $570,000. More Wow! It wasn’t too long ago that this is what 2 bedroom units in the Village were selling for. These Village 1 bedroom units do produce solid revenue.

A nice 2 bedroom / 2 bath at Juniper Springs Lodge closed for $700,000. This floorplan at JSL is finally starting to appreciate. The project has recently completed some nice interior and exterior upgrades. It looks great. And has become a popular summer rental location.

Two 3 bedroom / 3 bath townhomes in the Fairway Homes closed for $950,000 and $1M. These are great units. And they have appreciated nicely

Favorite New Listing for the Period

This is a coming soon, real soon. I can’t wait to see how the market reacts to this new listing. This is a 2 bedroom / 1 bath condo at La Vista Blanc. The location is steps to the new Ice Rink center being built at Mammoth Creek Park West. It is right at the property line. Can’t get much closer. Not only is there currently so little inventory, but this unit is perfect for any hockey or ice skating fanatics (we know they are out there). The rental potential could be “off the charts” once the facility is operating. And based on the “recreation programming” scheduled for the facility the rental potential should be strong during both cold and warm months. Sold furnished with upgrades. Project has nice pool and spa area. Easy access to town. Stay tuned.

Looking to list around $469,000

Other Real Estate News

I continue to be fascinated by the “movement” of the past 16 months. The level of real estate activity, especially in the higher-end or “luxury” segment of the market, has been at incredible levels that Mammoth has never seen before. A recent article at the real estate website Inman focused on the “16 luxury buying and selling trends you can’t ignore”. The parallels of the article to the recent Mammoth market activity are spot on. I can’t help expounding on them in light of the specifics to the Mammoth market. Here are some of the highlights.

From the Inman article;

What do your luxury buyers want?

1. Buying for space or privacy

“Get out — way out. If buyers had to quarantine, they wanted to go where they had space, and lots of it. Ranches, self-containing compounds and estates were high on the priority list. This trend is still continuing as buyers are looking for a comfortable place to be able to spread out and live, work and play as well as safely be able to host family and friends amidst the backdrop of COVID-19.”

• The immediate post-lockdown demand trend in Mammoth was large homes and townhomes with plenty of space. Condo hotel and high density condo projects lagged (but sales activity has recently increased). But Mammoth as whole is all about open space — “Small Town, Big Playground”

2. Views, views, views

“If they had to be on lockdown or quarantined after getting exposed to COVID-19, luxury buyers didn’t want to feel confined to four walls of a property. They wanted to have a view — something to take their minds off the stress and focus their thoughts elsewhere in an inspiring environment. Properties with views of water, mountains, valleys, golf courses became in high demand.”

• Maybe this is why Mammoth has been such an extraordinarily hot market. Mammoth real estate demand has always emphasized views and there is a diversity of incredible views to capture. Views and special open space settings have brought premium pricing in the past 16 months.

3. Turnkey properties

“Today’s luxury buyers want it all, and they don’t want to do any work. Well, they might because they can, but they don’t want to buy something that they can’t move into and have immediate use of without having to tackle a major redo.

With all of the uncertainty surrounding COVID-19 and various contractors coming in-and-out of a home during a renovation, not to mention delays in the supply chain causing major disruptions with building materials and appliances, buying a project is not the main priority in the luxury space today, unless the buyer is an investor.

A large-scale renovation could take several months and require a ton of carrying costs. Today’s luxury buyers are drawn to turnkey properties and move-in ready properties.

Seasoned luxury property owners have likely gone through many renovations throughout their lives, and they just want to spend their time enjoying the property without it being under construction. Younger luxury buyers are even more attuned to instant gratification, so if the property is well-appointed, they’ll gladly buy it with the furniture if they can.”

•Bingo. This is Mammoth in the past 16 months. Turnkey properties have brought premium pricing in recent years but this demand accelerated post lockdown. For many of the reasons stated. Conversely, many properties sold in “need work” state may have been good buys. Especially if they had special #1 and #2 features.

4. Extended living arrangements

“Buying a home that can aptly accommodate family being able to stay for an extended period of time — or perhaps even live there permanently — is also important in the luxury space.

Casitas, guest houses and attached or detached apartments on the property are also important to today’s luxury buyers. In short, buyers today expect their luxury homes to have enough space for guests, even if they don’t host people that often.”

•This is the simple explanation for the recent demand for larger properties in Mammoth. Also, the new, strong demand for multifamily capable STR properties. It is a growing travel trend.

5. Health, wellness, green and clean

“This trend has been written about many times since the onset of the pandemic, but it bears repeating. Buyers are focused on properties and communities that offer amenities related to health and wellness……”

• Nothing new here. This has always been a large part of Mammoth’s appeal.

6. Technology

“Today’s luxury buyers are all about technology. They are expecting their homes to be tech-savvy to fit their lifestyle. Think: electronic vehicle charging, home automation and the ability to have multiple TV screens in one room. Sophisticated home-office setups equipped for Zoom meetings are a must-have, especially if they’re distanced from the hustle and bustle of the household..…”

• In the past decade Mammoth has gone through a digital renaissance. The Digital 395 project brought powerful broadband to the region. Subsequent hardware investment (by Suddenlink) in Mammoth Lakes specific has made Mammoth a truly viable work-from-home location. The local Internet service providers are a pain-in-the-ass to deal with, but once your service is up and operating the bandwidth is fantastic for doing business.

What do your luxury sellers want?

When it comes to selling, there are also several luxury trends that have emerged over the last year.

1. Cashing out

“Today’s sellers are sitting on some serious equity. Many chose to give up their long-time property to cash out and do something different. Maybe it was just too large or required too much upkeep and maintenance. With their families grown and on their own, many luxury owners are taking advantage of optimal market conditions and low inventory. They usually have other properties they can go to while they figure out their next move.”

• Perfect description of Mammoth. Additionally, many of the recent Mammoth real estate sellers were buyers from the 2003-07 era. The upswing in values finally made them “above water” on values. This psychology alone turned many owners into sellers. Nobody wants to admit to a loss.

2. Desire to explore

“Many luxury buyers are selling their properties to allow themselves to become more flexible and mobile, particularly younger buyers who aren’t tied to a specific area.

They may want to travel or set out to have unique life experiences instead of being tied down to a property that requires a ton of maintenance and overhaul.”

• A key factor to the “movement”. Many Mammoth buyers are finding our region as the new exploration of their lives. And many Mammoth sellers are heading to new locations for exploration including places like Idaho, Wyoming and Montana.

3. Buying multiple properties

“Speaking of exploring, luxury sellers may opt to buy a couple of properties after selling their large one, homes that are a bit more manageable and turnkey in multiple locations.

The love to have real estate that allows them to transition between beach, mountains, desert or a lake or river. They may seek out lesser-known areas away from the crowds of more popular destinations…..”

• I have talked about this trend; the increasing number of people I meet who see their future just like this, including owning STR properties in multiple locations in diverse areas.

4. Moving closer to family

“After being isolated from loved ones over the last year, many luxury sellers are choosing to sell their homes to be closer to family. They’re trying to figure out a place to live where their adult children and grandchildren are based…..”

• Many of the seller’s I have represented in the past 16 months are in this category. It is their children who have moved away from SoCal.

5. Political and tax-related moves

“After years of living in high-cost, high-tax areas, some luxury owners are opting to sell and leave areas they’ve lived in for along time to better align themselves geographically with a location they feel that matches their beliefs and political ideology.…”

• The California ambivalence. I have clients of the past 16 months that can’t wait to leave, and others that will never leave, no matter what their political ideology.

Thanks for reading! Please stay healthy.

** Closed sale data is compiled from in-house files and public records.