Fabulous Fall Weather Makes It A Great Time To Be In Mammoth!
Market Summary – September 25 to October 25
This report is for the past three weeks. The Mammoth Lakes MLS is reporting 26 real estate closings for the period ranging from a low of $395,000 to a high of $1,850,000. Of the 26 closings, 25 were financeable properties and 12 were closed with financing. Plenty of cash buyers through the whole range of pricing, especially the higher-end. The closings included two (2) Westin units, two (2) remodeled units at Mammoth Sierra Townhomes, and nine (9) total condo closings between $700-800,000.
Single-Family Home Inventory
Market Updates and News
The beautiful summer rolled into a spectacular fall and it remains almost entirely smoke free in the Mammoth region. The fall colors are turning slowly this year making for endless opportunities to explore the visuals. There are great displays right in town. Cooler temperatures are coming but it looks like October 2022 will go down to be a rather perfect month to be in Mammoth. Second homeowners, guests, hikers, photographers, bird watchers and others are here taking it all in.
The major construction locations show no signs of slowing down, to the contrary. The Limelight site is a parade of trucks hauling dirt down to the Airport gravel yard and cement trucks pulling in to dump their load. It will be interesting to see if they back-off once it snows. At the Sierra Nevada Resort the new courtyard cabins are built and the new exterior cabins are likely to be “buttoned-up” by winter. The balance of the renovations to the existing buildings should be in place for the winter season. And The Parcel phase 1 foundations/garage are almost complete and the “boxes” are lining up at the special yard at the Airport ready for delivery and assembly (see above). The massive Ice Rink parking lot was just paved and this will include another substantial electric car charging station for the town.
More Mammoth reshuffling; restaurants. Stay tuned. We’ll see if all of it happens by the end-of-the year holidays. This is part of Mammoth’s history too. So many restaurants have come and gone over the years. But despite all of the difficulties in operating the past three years, successful operators are constantly looking at Mammoth. I’ve had the 3221 Main St. building (the old Slocums) offered for lease for the last year+ and I’ve talked with many of them. The housing and availability of employees is the biggest obstacle for most. The seasonality seems to be a lesser concern. None of them say it, but I believe that they too are thinking about their Plan B. The ~300 new workforce housing units in the next couple of years could certainly improve the local restaurant choices in the future.
A few years back some local agents were advertising “cap rates” for STR units. The thought of putting investment real estate type return rates on vacation properties was cringeworthy. Those of us that have been around these markets know they can be too variable. Properties with “stable and durable” fixed rental incomes are worthy of cap rates. Properties with more unstable and variable income streams are harder to apply cap rates to.
A recent AirDNA column on STR cap rates caught my attention. The article is reasonable enough and STR investors should be trying to make these rough calculations before purchasing, but it seems to avoid the most important point of owning an STR in the first place; owner usage. If a buyer is purely buying for some specific financial return, maybe they should be purchasing something else. And if the cap rate is poor at a property/place where you really want to spend some quality time (including all of those “maintenance days” that you really enjoy), then who cares? This is where owning an STR or a pure second home in a place like Mammoth converge; there is no reason to own either unless you plan to spend quality time there…. That is unless you are just parking money.
The two Mammoth Sierra Townhome units sold at $770k and $775k. Both had the newly remodeled and reconfigured U-shape kitchens which is a massive improvement over the original kitchen and bar tops. This project is in outstanding shape and centrally located. Probably good values in the current market.
The two Westin Studio sales are of interest, both had nice locations in the building but they are a story of different floors. Unit 205 closed for $395,000. Obviously the lower floor but nice open space view and light that won’t be disturbed by any Limelight development. Unit 733 closed for $100k more and had spectacular views up into the Mammoth Lakes Basin – awesome unit unless you suffer from vertigo.
Two higher-end closings in Lodges and Snowcreek 5 show continued price support in Snowcreek.
Favorite New Listing for the Period
This just came to the market and is a perfect spot for winter and summer users. This is a corner upstairs 2 bedroom / 2 bath condo at Mammoth Green tucked inside a private aspen grove and overlooking the third green of the Sierra Star golf course. What make this even more appealing is that it is reasonably short (and flat) walk to Eagle Express. The unit also has a small, adjacent outdoor parking lot and understructure parking; convenience for most of the year but enclosed during winter. Project is in excellent shape and has a lovely pool and spa area overlooking a fairway. HOA fees include gas for fireplace and cooktop and all hot water. Sold furnished and sleeps six.
Other Real Estate News
So far the responses from Town Council candidates are focused heavily on local resident housing (aka workforce housing). Not surprising. But are any of them looking beyond housing? The incumbent wants to talk about solid waste which is a nightmare for every California community. And budgeting the Town’s dollars. Pretty important but rather blasé.
One candidate is concerned about the the amount of drugs coming into Mammoth, including meth and fentanyl. But that, like the housing shortage, is nothing new (I still have the Mammoth Don’t Feed Our Bearsversion of the stickers that say Mammoth, Not Mammeth). These stickers are almost 20 years old.
And so far there is only one candidate who wants to lightly hint at limiting STR to improve the workforce housing shortage (which hasn’t factually been prove to work in other resort communities). But no real solid proposal the community can put their teeth into.
Since this is a real estate newsletter, and I have been involved with government sponsored housing in Mammoth for over 30 years, I feel compelled to express my insights.
Like a pendulum, Mammoth is always going to be very short housing when demand is high. The recent demand here is a double whammy of high levels of tourism and the post-lockdown demand created by work-from-home and those seeking their Plan B. Will this incredible demand continue? No one knows for sure but the pendulum always swings. In the second half of the 1990s and the multi-year period just 10 years ago, there were exceptional opportunities for local residents to purchase their own homes at ridiculously low prices. Some did, many didn’t. Many of those who didn’t have now been priced out of town, both for purchase and rental. I can tell you some simply didn’t “believe” in the community.
A critical element to successfully building workforce housing is cooperation from the government, and most important in the form of dollars. These current workforce housing projects don’t “pencil” without government grants, tax credits, and more. They don’t now and haven’t in the past. When the monies and incentives are available, like now, the local counties and municipalities need to take advantage. It may (will) not last. This too has been cyclical. We are currently at peak cooperation from the government. It is a very good thing the Town is taking advantage of it.
New Council candidates traditionally want to hold private developers to larger contributions to workforce housing as part of their ultimate project approvals. But naive Council hopefuls always miss this point that the private sector needs to see a reasonable expectation of profits. Without it the project will never go forward. Real estate developers are risk takers and negotiators. While the public side has the luxury of wasting resources on these housing projects, the private side doesn’t.
A Council candidate’s platform to exact (the planning term) or extort (the developer’s term) more housing out of a project sounds great until you are sitting in the chair having to make the decision. Most of the established housing requirements are arbitrary, and almost dreamy. They can easily push the profitability out of a project. Mammoth has a long history of accommodating developers by relaxing workforce housing requirements. Without doing so, Mammoth would probably look very much like it did in 1980. Pretending to be tough on developers in the future is simply naive.
It was suggested to me that part of the current housing hysteria is a generational thing, that today’s younger generation has more expectation and feels more entitlement to housing. Basic employee housing has always been tight in Mammoth. It is true in almost all mountain resort communities where land is scarce (and expensive) and construction costs are high. And today, most areas of California have workforce housing shortages. I think the new premise is that living in Mammoth should be easy. But it never has been. And it isn’t for everybody. It used to be a rite-of-passage to secure a good place to live in Mammoth, especially with ownership. This concept seems to be lost.
Another comment I had from a local resident was that many of the existing deed restricted workforce housing units are not being occupied by people who were actually “working.” This could be true, but the tenants and owners of these properties need to be “certified” annually or semiannually. The certification assures the tenant (or owner) still meets the State and local requirements to qualify for the housing. But under the current demand it is likely “others” have moved into the property. Some of it is a cultural thing. And some are watching the kids and cooking meals for people who have worked all day.
The current housing rage in California is ADUs. We used to call them mother-in-law units or caretakers quarters. Now they are Accessory Dwelling Units. The State is now allowing them almost everywhere and there is destined to be local neighborhood controversy in many communities. I expect less so in Mammoth because the lots are inherently small. Making them work here is far more difficult, especially with the need for snow storage. Regardless, the Town now has off-the-shelf approved plans for ADUs in Mammoth. I believe some less-dense condo projects could consider adding ADUs to their properties in the future. The concept of on-site employees may make a return.
Ironically, when the Ski Area took me to Whistler in 1991, the Municipality there was already encouraging caretaker units in large luxury homes to alleviate their housing demand. In actuality it can be a true win-win for both the property owner (second homeowner) and the tenant. One of the best ways to keep a large property from having problems in winter (like frozen plumbing or unnoticed gas leaks) is to have live bodies occupying the property. But again, it isn’t for everybody. The growth of ADUs in Mammoth will be worth watching. And somebody will end-up pissed off about it.
The Town Council’s perceived crises 10 years ago was the lack of guests spending dollars in town and feeding the TOT and tax coffers. It was a byproduct of the Great Recession and drought winters. They spent millions and millions on marketing. Arguably to an excessive point. Today’s crisis is again workforce housing because Mammoth has become a bustling resort. Thankfully the State and federal governments are almost going overboard with spending for workforce housing and the Town is tapped into it. The problem will alleviate and will never be perfect.
In the meantime I’m waiting to see if the candidates get to any of the other pressing community issues over the next three weeks. It is a solid slate of candidates. The incumbent will likely garner the most votes, history has shown this. So far, the rest are a toss-up. Hopefully we can find out more of their thinking in the coming weeks.