Mammoth Real Estate Sales Report – October 30, 2022

Mammoth Prepares For Winter, And The Skiing And Snowboarding Opener!

Market Summary – October 16 to October 30

The Mammoth Lakes MLS is reporting 15 real estate closings for the period ranging from a low of $425,000 to a high of $1,600,000. Of the 15 closings, all were financeable properties and 12 were closed with financing. All eight (8) closings under $800,000 were financed. The residential closing on Summit Street had basically been on the market pre-Covid and all through the crazy post-lockdown market. It finally found a buyer. There were four (4) more condo closings in the recently popular $700-800K range.

The 10-year Treasury yield ended the period even at 4.01%. Mortgage rates came down slightly. Some of the remaining mortgage companies and loan officers are now pushing “2-1 temporary buy down” programs for conventional loans on primary and second homes (no jumbo or investor loans). The program lowers the borrower’s loan rate by 2% the first year and 1% the second year, and then the true rate for the balance of the term. The cost is pricey (very pricey in my opinion). These are not discount points, and the upfront fees mustbe paid by the seller. I haven’t quite wrapped my head around the benefit of this program but the industry seems excited and is saying that “everybody knows loan rates won’t stay high forever.” Everybody knows? I wish my crystal ball was so clear. Other parts of the mortgage industry are predicting interest rates above 10% in 2023. That should help the market.

Condominium Inventory

At the period’s end the condominium inventory is down five (5) to 47. This despite a little push of new listings in the last few days. There were 12 new condo listings in the period and three (3) have already gone to escrow. There were two (2) condo price reductions in the period. There seems to be an inordinate amount of new listings at Mammoth Ski & Racquet. And some have been legacy owners. Something’s up. The final foundations are poured at Creekhouse (Snowcreek Phase 7). They’ll be hustling to get these final units “buttoned-up” before the real winter storms hit.

Single-Family Home Inventory

The inventory of single-family homes is down six (6) to nine (9). There were two (2) new listings in the period and both priced below $1M. There are now only four (4) homes listed under $3,750,000. Mammoth has probably never seen this condition.

Pending Transactions

The total number of properties in “pending” (under contract) in Mammoth Lakes is up four (4) to 50 at period’s end. The total number of pendings in the aggregate Mammoth MLS (which includes outlying areas) is up eight (8) to 69. The Mammoth real estate market has gone from one set of crazy market conditions to another set of crazy market conditions. Watching the inventory remains key. And watching for distress in the market….

One interesting phenomenon I have experienced in the last two weeks is buyers trying to accelerate market conditions to their favor; buyers already expecting deep price discounts, motivated owner-financing opportunities, etc.. These things don’t happen that quickly, and may not happen at all. I’m always watching for stress in the market, and it is far too early. These radical market changes have happened very quickly. My brokerage is still active in the foreclosure/REO industry and there are not even the early signs of stress in the Mammoth market; things like orders for drive-by inspections, etc.. I remember back in the 2010 era when the local newspapers had dozens of Notice of Default publishings each week. And the best buying opportunities hadn’t even shown yet. Real estate is “sticky”. Government intervention and the promotion of short sales eventually put a bottom into the market. Otherwise values could have gone much lower. This time around we have no idea how bad it may get, and how creative the mortgage holders/servicers or the government will get. And based on the last cycle, the institutional buyers may get first dibs on the distressed properties. Maybe Zillow will get back to iBuying, but in bulk. Or maybe Airbnb should be forming an acquisition department focused on vacation properties in bulk. But for now, it is just too early.

Market Updates and News

Outside of a major wind event last weekend the weather has remained spectacular. But all of this is about to change this week and lower temperatures should allow the Ski Area crews to make quantities of snow. It is time. It is the new industry standard; guaranteed openings with making an ever increasing amount of terrain available until it isn’t necessary. The buzz will become palpable in the next two weeks. The kooks are ready. That could even include me.

The major construction projects continue to impress. Check out the video I shot this morning. The massive portable crane at The Parcel has begun stacking the “boxes” on the foundation. These buildings should go up quickly now. Two major crane bases have been installed at the Limelight site so the winter visitors should see major ongoing aerial construction. Looks like they plan to build all winter. The former Intrawest executives who proposed the YotelPad development were adamant that they didn’t ever want to build in Mammoth during the winter again. The Aspen people have different ideas. Major garage concrete walls are already being formed streetside on Canyon Blvd.. The work at Woolly’s Park is impressive too. Clearly, the Ski Area is making a major move into this mid-Mountain area. The Sierra Nevada Inn paved a major parking lot this last week. Their construction site is now quite visible to the public, and there is obviously a strong commitment to upgrade this historic Mammoth property. And the Ice Rink Sprung structure is now fully enclosed and the back “freezer” building is under construction. We’ll see if they can get it open for winter.

The Town Council election has become a big muddle-through. Maybe everybody is too busy doing their summer-to-winter preparations. The Sheet even seems confused about who is worthy of a vote (I am). They gave some overall review of the candidates this week and the first one was described as “angry”. There was conjecture as to the two candidates who strongly promoted the Ice Rink and how they would fare. Another has a great background but has only lived in town “for a few minutes.” Another thinks that repeatedly mentioning “housing” will be enough to get elected.

The Sheet and I certainly don’t agree on everything but they summarized it well as “Here’s the thing, not one of these people has said maybe the most important thing; what I can do when I’m elected is to proceed with caution in an uncertain macroeconomic environment. Maybe we should conserve money and pay down debt.” That’s been my mantra for a long time. And now we have this massive maintenance/cost sucking machine known as an Ice Rink. Maybe angry sounds good?….Meanwhile I was talking to some of the local Public Works guys and they told me that the snow removal crews for this winter are almost all rookies. They said it could be a “sh!t show this winter.”

I’m closing a nice 1 bedroom condo (listing) this week and the whole scenario makes me think of the one Council candidate who thinks limiting STRs in Mammoth will somehow alleviate some of the housing crisis. I’ve covered this topic in the past but this transaction has a new twist. This property has been a popular Airbnb/STR including producing plenty of bed tax (TOT) for the Town. But the buyers won’t be renting, they intend to live in the property; they are a young couple who work-from-home (WFH) and are relocating from the east coast. Interesting. Not exactly workforce housing. So the Town loses tax revenue and there is nothing gained for local employee housing. I’m guessing that in the future some brilliant Council member will decide we should restrict WFH people in town. Which by-the-way, WFH has been a clear trend in exacerbating the housing problem in Mammoth. But are we going to discourage it? Maybe we should tax them or their landlords?

Numerous media outlets were sounding the alarm bells during the period warning that newly acquired STR properties will become a major stress point in many real estate markets. Reports of declining Airbnb demand had some declaring an upcoming “catastrophe” in this market segment. Apparently in some markets a good percentage of the existing STR properties have been purchased in the last two years. Mix that with novice operators and oversaturated markets (beware of properties that have 1 star reviews!). Some were stating that rising nightly rates, rising housekeeping costs and increased performance demands (like washing the sheets or mowing the lawn) on the guests all had Airbnb properties losing their competitive advantage over hotels. Others are claiming that the STR industry has become similar to the MLM (multi level marketing) industry.

A major shake-out may be coming for the STR industry. The competitive advantage will certainly fall to unique, well-run properties. The market forces may drive some of these properties in Mammoth to the long term rental market (to the delight of Council candidates). There was even suggestion that it is probably a good time to “short” Airbnb stock. But here in Mammoth we’ll just have to see if the heavy demand of 2022 carries into this winter. The STR industry has been alive, well and entrenched in this community for 50 years, so it isn’t likely to be going anywhere. And in Mammoth it may remain to be more about owner usage than ROI. So pray for snow.

Noteworthy Sales

A nicely upgraded 2 bedroom / 2 bath at Sierra Megeve closed for $850,000. This is located right across the street from Canyon Lodge. Understructure parking. Properties in good condition in quality locations are holding values for now.

A brand new Hooper built “spec” home located in the Mammoth Slopes closed for $1,549,000. Aprox. 2400 square feet. This was put under contract in July of 2021.

A dated and whitewashed (yuck!) 2 bedroom + loft / 2 bath Snowcreek II townhome closed for $974,000. Beautiful open space and riparian location. These values are holding too.

Favorite New Listing for the Period

I used to own and live on this street in the Old Mammoth district. This is part of the oldest subdivision in Mammoth, put to paper 100 years ago. This is one of the best places to get a “rural” experience in Mammoth. This 3 bedroom / 1.5 bath home was originally built in 1958 but has been upgraded over time. This is on a forested 30,000+ square foot lot so there is room to add a garage and/or ADU. Or just have a real mountain experience as it is. This is high ground so no flood issues like other areas. Modern metal roof to survive the big winters. Super spot for summer lovers.

Listed at $800,000

Listing courtesy Mammoth Realty Group

Other Real Estate News

I’ve recently had several calls about the Westin Monache (aka “The Westin”) properties here in Mammoth. One even noted that I tend to mention the Westin often in this newsletter to imply there is something special about it, often mentioning or highlighting the project, specific units, listings/sales, etc.. The project certainly does deserve some notoriety. So what are the notable features of the property that make it so special?

First of all, the Westin is the premier lodging facility in Mammoth. The Limelight (under construction) may change this, but time will tell. The Limelight may actually elevate the Westin. The Westin brand remains very popular, especially with international business travelers. The Limelight is a little known brand outside of a few mountain resort communities.

One of the factors that makes it the premier lodging facility is the way that it was built. All of it is to “Westin standards”. I remember this being a point of contention during the construction between Intrawest (the developer) and Westin. It affected the sales process and sales team (including agents on the team under my broker’s license). Simply, the construction quality is superior to the other condo hotel properties in Mammoth. That quality cost the developer extra money from the previous condo hotel construction, and they were claiming it was squeezing their profitability.

As I often point out to potential buyers, the “Westin standards” includes two very important features; first, true ventilation where guests simply raise or lower the thermostat for personal comfort. This is standard in quality hotels. No other condo hotel properties in Mammoth include this feature. This has caused many of the other condo hotel units to install the “sputnik” air conditioners for cooling in the summer. And the ventilation in winter is opening the windows. Heating is the gas fireplace or electric baseboard heaters. This is a big difference at the Westin, like a real hotel.

Another feature of the Westin standards is in the acoustics. The acoustics are superior to the other condo hotel units in Mammoth. There is no ambient noise in the rooms (or squeaky floors). There is no “hearing your neighbor.” The building is mostly steel and concrete. The windows are of superior quality. And because of the true ventilation, guests don’t have to open windows to get fresh air.

The things that make the Westin the premier lodging facility also make it an expensive facility to maintain. This is true with any “luxury” project. The Westin may be the extreme. This is why the HOA fees, management fees and ultimately the room rates are all high. None of the luxury or Westin standards comes cheap. Not everybody wants to pay for these details.

The common areas and services of the Westin are also a cut-above from the other condo hotel properties, including the lobbies, pool and spa areas, valet parking and the attached restaurant and bar facilities. The personnel are also trained to “Westin standards.”

The Westin rooms and hallways were recently “refreshed” or renovated/remodeled. Most quality hotels refresh every 7-8 years. This leads to another significant difference from the other condo hotel properties. The Westin system wants standardized rooms. To remain on the front desk program owners are not allowed to personalize or change from the standard furniture and decor. This is quite opposite of the other condo hotel properties in Mammoth where the front desk operators encourage owners to make significant upgrades and personalize the unit interiors.

Which leads to this interesting condo hotel trend; over the years many owners have become frustrated with the designated front desk management program. High fees, poor rental performance and/or perceived lack of service are typically the reasons. Many owners have moved to offsite or straight Airbnb style rentals. Walk down the hallways in Juniper Springs Lodge and you will see many front door locking systems that are not associated with the front desk operators. Many owners are renting independently. But it doesn’t always equate to a higher net revenue. The front desks are very good at generating high occupancies and gross revenue.

The Westin has probably had fewer owners move away from the front desk, but it is an ongoing and increasing movement (and many of these owners are renovating/personalizing their units). Westin management takes approx. 60% of the gross reservation revenue. The precise accounting is subject to the basic management percentage and then a host of “junk” fees, shared expenses, etc.. This high percentage is often a deal breaker for many potential buyers, they simply don’t see the value. As a comparison the Village, Juniper Springs, and Snowcreek charge 50% for management (and many think that is too much!). This is an increasing challenge for the front desk operators.

Interestingly, when Alterra was forming their conglomerate, they acquired the whole of the then-public company Intrawest. The public filing list of assets included the “front desk” operation at the Westin Monache. At the time it was valued at $36 million. Many years before, one Intrawest executive explained to me that when they build a condo hotel project, that the front desk remains a “long term cash flow position” for the company. Indeed.

Another interesting aspect of these front desk operations; the actual front desk (where guests check-in) and the immediate back offices are separately deeded and owned parcels in the project (I have been involved in property tax appeals on these). The ownership of this parcel essentially guarantees the rental management of the project. In this case, Alterra owns (and controls) the front desk at the Westin.

And one last interesting aspect; at seven (7) stories high the Westin is the tallest structure in Mammoth Lakes. The North Village Specific Plan (which is now 30 years old) allows for the tallest buildings in the Plan to be in the central core around the Village Gondola base. If the Plan is followed the newer buildings (like the Limelight) should have fewer floors as the projects move away from the Gondola core. Add that to the fact that the Westin is built on the highest elevation of the Village, the Westin is destined to sit above it all. Recently, a Studio unit #733 closed escrow. The view was like you were looking down into the Lakes Basin. Simply incredible and quite desirable in Mammoth. That is if you like stunning mountain views from your living room (or office).

Thanks for reading! Please stay healthy.

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