Veterans Day Weekend Brings A Solid Crowd To Town, Ski Demand Is High!
Market Summary – October 31 to November 14
The Mammoth Lakes MLS is reporting 25 real estate closings for the period ranging from a low of $300,000 to a high of $1,458,500. Of the 25 closings, 24 were financeable properties and 18 were financed closings. The closings included 11 condos selling under $650,000 (the new affordable threshold). There were six (6) closings over $1M including two (2) townhomes in Snowcreek, a Juniper Crest townhome and three (3) residential homes.
The 10-year Treasury yield was almost even again at 1.582%. Mortgage professionals reported rates as slightly up during the period with some reporting rates up “significantly” this past week. The inflation numbers are expected to disrupt the bond market, so who knows where we are going….. If lenders do in fact allow for more desktop appraisals after the first of the year it will be an interesting change because lately appraisers seem reluctant to “hit the number” on some appraisals even though the value is arguably there. Or maybe they just like to pick my brain.
At the period’s end the condominium inventory is up one (1) to 15. There were 11 new condo listings brought to the market in the period and five (5) are already in escrow. Two (2) recent sales of Juniper Springs Lodge 2 bedroom / 2 bath units in the low $700,000 range have brought out two (2) more similar listings in the period. A top floor view 1 bedroom / 1 bath at JSL closed during the period for $529,000. That is impressive. But the market remains starved for quality condo inventory. Buyers are actively looking both while in town and on the Internet.
Single-Family Home Inventory
The inventory of single-family homes is down one (1) to 17. The average “days on market” for homes is 100 days with the median at 67. Most of the inventory is getting stale in this segment of the market. Marginal properties are testing the upward bounds of the market.
The total number of properties in “pending” (under contract) in Mammoth Lakes is down 13 to 73 at period’s end. The total number of pendings in the aggregate Mammoth MLS (which includes outlying areas) is down 13 to 113. It has become a “broken record” market report; there would be more properties in escrow if there was more quality inventory available for buyers. What will change this market condition is anybody’s guess. Many in the local real estate industry are enjoying a slower pace. Several have expressed to me they would like to “not work” in December. One agent jokingly told me she might have to “go on unemployment” if it stays this slow (trust me, she doesn’t need to). And I’m looking for available spots on December fishing trips.
Market Updates and News
A small wet storm front came through Mammoth last week and put close to a foot on the main part of the Ski Area for a much needed refresher. It was rain at the town level but we’ll take the water. I traveled north during the past week and the rivers and creeks were flowing better than they have in many months, all because of the two recent wet storms. It was good to see. This weekend was the original ski opener and a sizable crowd showed up with many staying three or four days. There was a noticeable jump in tourist-type behavior, shades of a big winter weekend. The weather has been spectacular. This weekend was almost summer-like.
Most of Mammoth is in “get ready” mode. Reservation companies and STR owners are in getting ready for the holiday busy periods, and if they are “on top”, enjoying a little time off. Property managers should have most of their preparations completed by now but are clearly getting ready for snowstorms. The early storms were wet with little accumulation but sounded the alarm. Local contractors are trying to “button-up” as best they can against the coming storms. Shoveling out construction sites is no fun. The local retailers and restaurants should be ready by now but the retailer’s will likely be getting shipments through the whole of winter at this point. The 15-day forecast has no snow and mild temperatures so Thanksgiving weekend won’t be a big ski and snowboard event. But it should be a great time to be in Mammoth.
The Town side of business has been slow but one thing has become perfectly obvious; the newer fireplace retrofitting ordinance of 2013 (as opposed to the original “EPA” one in 1990) is a complete farce. The local real estate industry has spent tremendous effort to educate the public about this ordinance since the inception (again). Sometimes the ordinance’s requirements are a critical decision point for buyers because it means a subsequent $10-20,000 remodel project after the close of escrow. And some sellers have given credits or price concessions because of the “required” retrofitting. But there is simply no enforcement of the ordinance (of course here in California I can also go in and steal up to $900 in merchandise and not be prosecuted).
The lack of enforcement has been so non-existent that many feel that any attempt at enforcement today or in the future could be potentially challenged (seek the advice of your attorney). And the mandate that all subject fireplaces be retrofitted by October 31, 2022 is laughable. This was all because of “grave” fire dangers in Mammoth properties (which we haven’t really seen after the initial problem projects). Dozens of properties that were never retrofitted to the ordinance standards have already changed hands again. Plenty more have transferred ownership since the inception of ordinance with no retrofitting changes at all. Many new owners have no intent of making the expensive changes because no one has taken notice for years.
And today, even if there was enforcement there isn’t the skilled manpower or supply of appliances to complete the retrofits for a decade or more. I ordered (and paid for) a fireplace in February and it just arrived. I was told I am lucky. One local installer told me he has seen little evidence of the “pyrolysis” in fireplaces that triggered the ordinance. Buyers and sellers beware.
This past week we had an Assessment Appeals hearing and one tax payer was asking for a postponement. The original appeal was filed by a “tax agent”. These tax agents advertise that they can help property owners appeal and subsequently reduce their property tax assessed value. Don’t bother. In my almost 20 years on the Board we have seen seen countless appeals by these tax agents. They go nowhere. The agents never show up and do anything of consequence. The only winner are these tax agents who collect fees. And they waste plenty of County resources.
The city of Vail, CO is proposing a 0.5% sales tax increase to support workforce housing. This would generate $4M per year. In Mammoth, an ordinance like this could purchase the equivalent of 10 small condos in town (for now) every year…….maybe coming to a resort town near you. At least there will be a better chance your favorite restaurant or bar will be open.
Airbnb reported all-time record revenue for the 3rd quarter of 2021. Their EBITDA also increase 120% year-over-year. VRBO also had a record 3rd quarter pushing parent company Expedia into a profitable status for the quarter. Residential STR is alive and well. Meanwhile hotel occupancies were down 13% this week compared to this week in 2019. Not bad actually, all things considered.
Three (3) single family homes closed between $775,000 and $950,000. This is a tough part of the market. There are dozens of people looking in this segment of the market but the properties are all compromised in one way or another. Most properties in this price range are 1970s built of solid construction and have “stood the test of time” in this environment. Some have great locations in nice neighborhoods. But most have no garage or only a single-car garage. And they are typically full of Formica and other dated finish. And if you start seriously remodeling you will likely be replacing the plumbing and some of the electrical.
A beautifully remodeled 2 bedroom / 3 bath Helios townhome closed for $880,000. This unit does not have a garage. But another example of high prices for remodeled units. And a Village location.
A home in the Shady Rest subdivision closed for $1,095,000. It shares a property line with The Parcel. I hope the new owner likes the hundreds of new neighbors they will soon have. The buyer was represented by an out-of-town agent.
A vacant lot on Grindelwald sold for $300,000. This upsloping lot has been on-and-off the market for many years. The buyer saved money on the purchase but this will be a very expensive lot to build on; excavation, engineering, retaining walls, massive foundation, etc.. Pre-Covid, contractors were thinking around $200K before even starting the framing. Who knows where this number is today?
Favorite New Listing for the Period
Okay, I’m giving this another round of exposure because it needs it and I now have a video tour. There are plenty of hockey fanatics out there and for them this is a dream. This is located at the rear of Mammoth Creek Park West where the new Ice Rink / Recreation Center is under construction. This will have immediate access to the facility. I have to think this will have tremendous STR potential as the Ice Rink becomes more popular. It is also located right in the hub of the Creek, bike paths, the Mammoth Museum and more. The new facility’s development will also give this location far easier access to the Old Mammoth Road commercial corridor including some for Mammoth’s most popular restaurants and attractions. This is a 2 bedroom / 1 bath unit close to the project’s spa and pool. Check out the video tour.
Listed at $489,000
Other Real Estate News
The Zillow iBuying story is just too intriguing to ignore. After halting their iBuying program for the rest of the year (see last newsletter), they announced shortly thereafter that they were ending the program entirely. The industry reacted in a multitude of ways. Jonathan Miller is one of the top appraisal and industry analysts and he very succinctly hit the high points of the iBuying program failures including; Zillow never figured out the qualitative part that enables the actual precision in the pricing of a home sale.
He also concludes the following about the iBuying industry;
• The iBuyer market is currently overcrowded, even with the loss of Zillow Offers.
• The iBuyer segment is characterized by its razor-thin margins and billions of investment required.
• It was created and run in a rising market, most of it a boom, and was recently turned off during the recent downturn.
• It is wholly dependent on housing markets with homogenous housing stock and will always need high volume just to survive. (Paul says this is why it could never work in Mammoth).
But others had some interesting comments too. One California appraiser said “Zillow can’t smell if 20 cats live there.” So true. But ultimately it is about the algorithms. CBS News said “Zillow’s enemy was its own algorithm — and an under appreciation for the individual nature of a flippable home’s quirks.”
And Nikhil Malik a marketing professor at USC said “algorithms tend to be good at making fine-grained, short term predictions, such as predicting stock prices a second in advance. But there simply isn’t enough data for an algorithm to learn about longer booms and busts.”
Zillow admits they intended the property Zestimates to only be a “starting point”. They apparently used them as some sort of definitive value.
The industry chatter was both informative and entertaining. The conclusion for most is that Zillow is just now back to being a lead generation/referral company posing as an informational service to buyers and sellers. Zillow plans to layoff 25% of its staff with more likely in the future.
Because of this move Zillow will again need to rely on the Premier Agent revenue more than ever. They originally went into iBuying because the Premier Agent program was not profitable enough despite agents paying large monthly fees. As the real estate market transaction volume slows down, both because of low inventory and perceived market tops in many markets, the industry expects them to move from the large monthly Premier Agent subscription program to a 35% referral fee arrangement with their agents (a la Homelight, etc.). They have done this in many markets already. And many Premier Agents are complaining about lesser quality leads. The business is simply getting tougher.
Zillow’s stock price has gone from $200 in March to $64 as of today. Many Wall St. analysts are saying it is a “buy” of course.
And maybe the best quote of the week from the Zillow CEO, “If each of these homes sold for Zillow’s asking price, the company would lose $6.3 million. Put simply, our observed error rate has been far more volatile than we ever expected possible,” CEO Rich Barton admitted. “And it makes us look far more like a leveraged housing trader than the market maker we set out to be.”
Thanks for reading! Please stay healthy.
** Closed sale data is compiled from in-house files and public records.