Mammoth Real Estate Sales Report – February 12, 2023

More Digging Out For Mammoth, And More Big Weekend Crowds!

Market Summary – January 29 to February 12

The Mammoth Lakes MLS is reporting five (5) real estate closings for the period ranging from a low of $480,000 to a high of $1,300,000. Of the five (5) closings, all five were financeable properties and four (4) were closed with financing. The closings were three (3) “rental ready” condos, a small home and another new Creekhouse townhome.

The 10-year Treasury yield jumped up to 3.744% and the 30-year conventional mortgage rate went with it and is now being quoted at 6.5%. The 6-month and 1-year Treasury yield ended the period at 4.89%. Mortgage industry data from Black Knight shows that loan buydowns are fairly popular but mainly the permanent buydowns and not the new-fangled 3-2-1 type short-term buydowns. The week ending January 21, 23% of borrowers bought their rate down with 2 points or more (a point being 1% of the loan amount). That same period saw only 3% of borrowers purchasing with the temporary buydowns (actually paid by the seller). Buydowns peaked in the Sept./Oct. period with 44% of borrowers paying 2 points or more….Some industry pundits were forecasting last week that mortgage rates will come down the closer we get to the 2024 election. I wish I could figure out how that will happen.

Condominium Inventory

At the period’s end the condominium inventory is even at 33. There were six (6) new condo listings in the period and one (1) has already gone to escrow. The inventory now includes 12 Westin Monache units. There are 12 condos listed under $500,000 including six (6) Westin Studios and one (1) Town owned deed restricted unit that has been on the market for 263 days. One of the new listings is a 1970s vintage condo that has been remodeled and the asking price is almost $900 per square foot. But it is a productive STR property.

Single-Family Home Inventory

The inventory of single-family homes is down four (4) to eight (8). There were no new listings in the period and there is only one home now listed under $1.5M. Single-family homes are especially buried right now and many have had or need their roofs cleared of at least some snow load. If they are occupied, odds are they have some sort of serious ice dams or ice overhangs.

Pending Transactions

The total number of properties in “pending” (under contract) in Mammoth Lakes is up five (5) to 33 at period’s end. The total number of pendings in the aggregate Mammoth MLS (which includes outlying areas) is up five (5) to 45. Despite the low inventory and buried conditions of town, the number of properties going to escrow has inched-up in the past month. Historically, January is not a big month for real estate sales in Mammoth. The previous two years were an anomaly.

The buyer mentality has certainly changed in the last year. A year ago the buyers were still willing to make offers at over asking price. Today it seems they start criticizing (almost trashing) the property before they’ve even been inside (or outside for that matter). The pre-objections are almost comical. Me, “If it is so bad are you really sure you want to see it?” I guess they learned this perceived negotiating technique somewhere on YouTube. Other buyers are making low-ball offers and then are never heard from again.

Market Updates and News

The Mammoth “stress test” continues but now it has clearly moved to the human side. Thank goodness the snow has stopped. Overloaded roofs are now the primary concern for property managers and snow removal operators. But it too is winding down. With no major storms in the 15-day forecast the town is catching a break. The January snow removal bills are hitting the inbox and they are massive. Many of the roof clearing bills will come later and they will be even bigger.

The weather has been very nice with mostly cold but sunny days. The weekend crowds have been BIG but the mid-week is light—perfect for those who want to avoid the crowds. But Presidents’ weekend and Ski Week are coming and the town should be ready. The IKON blackouts will alleviate some of the crush.

The Limelight sales office opened this weekend. There are only 15 of the “Limelight Residences” available within the hotel complex. They are now all located in the south-end stack (it has been redesigned) adjacent to the pool area. They will have panoramic mountain views. Prices start at $2+M. In talking with the sales team management this past week, they are not pushing the fact that the units have significant rentability and revenue potential. This is somewhat different from past condo hotel sales efforts (even though the push wasn’t blatant). They expressed they aren’t sure these luxury penthouse properties will attract owners who want to rent. But they might just be wanting to stay within the legal bounds. This is their first time representing the Aspen Ski Co. and I’m sure they want to do it right.

They did say that when discussing the project with potential buyers the common question is “When are they going to start construction?” These buyers/investors have obviously been pitched plenty of projects in the past that never end-up being built. Like the Mammoth YotelPad. It can be a tremendous waste of time and energy. At least this sales effort has the right answer, although the construction site is buried in white. The sales team also confirmed that the project will not be built in modules like the proposed YotelPad and units at The Parcel. From my perspective it doesn’t look like any corners are being cut in this development. That’s refreshing.

The Town’s agenda has been quiet with no real items of significance. This may be good. There are two new Council members who really need to come to speed on matters. Hopefully with all of the water on the ground they can actually get to the Main St. and Old Mammoth Road landscape and beautification projects. They are long overdue and the property owners have paid into the projects far too long without completion.

Noteworthy Sales

A nicely remodeled 2 bedroom / 2 bath at Sierra Manors closed for $480,000. For a new owner looking to do STR this was probably a good buy; the central location and utility give it great potential. With minimal effort it will be ready to rent.

The other rental ready condo that closed was a 2 bedroom + loft / 2 bath at San Sierra just above the Village. It closed above asking price at $810,000. Older condos in remodeled condition continue to perform well in the current market.

Favorite New Listing for the Period

Speaking of condos that are “ready to rent,” here’s a good one on the low end of the market with solid potential. This is a 1 bedroom / 1 bath at The Summit just down from Eagle Base and across the street from the Sierra Star golf course and the Town bike path. Located on the second floor overlooking the nice pool and spa area. Understructure parking and elevator and stair access. The Summit project is in great shape with upgraded exteriors and internal hallways. HOA fees include hot water and internet and cable. Walk to Eagle Express or jump on a quick shuttle ride. Check out the video tour.

Listed at $475,000

Other Real Estate News

The U.S. hotel industry is reporting some interesting statistics for the week ending Feb. 4; overall occupancy was 55.3%, which is down 7.3% from the same week in 2019 (2019 is now considered the best comparison year based on the wild swings caused by the pandemic, lockdowns and post lockdown period). But the average daily rate (ADR) was up 13.9% to $145.35 and the revenue per available room (RevPAR) was up 5.6% to $80.45. Inflation aside, the industry could be arguing for quality not quantity. Interestingly, the steepest declines in RevPAR are San Francisco (—33.6%) and Seattle (—29.4%).

Airbnb announced this past week that sometime in spring they will be requiring all guests booking reservations on the platform to provide identification like valid government-issued ID. Some hosts currently require this ID requirement but this will soon be company wide for all bookings. This is seen as a further extension of the company’s new global “no party” policy. The company says there has been an increasing amount of financial fraud schemes including fake identities, stolen credit cards, and even the movement of money between fictional guest and host combos.

Meanwhile, Airbnb’s stock value has been gyrating lately (and even more so in the last 14 months). While the most recent performance has been strong, the industry is trying to assess future performance based on inflation and a potential economic downturn. Also, higher costs to the company, and to hosts and guests, have raised the overall cost of doing business which has others thinking that many travelers will return to staying in traditional hotels. One side note, stock ownership in the company by mutual funds has almost tripled in the last two years.

The various aspects of STR remain an important topic in the Mammoth real estate market—from revenue potentials and performance to management structures and fees. It is a fluid market. Despite all of the technology, it is still a business of “many working parts” and very “personnel dependent.” (That is one of the reasons I departed direct involvement in it some 30 years ago.) But today there are so many varied ways an STR property can be managed, and some owners have to go through several iterations before they “figure it out.”

But one thing dawned on me recently—we may be “heading back to the 38% industry standard.” What? In the 1970s, 80s and 90s the local STR industry operated on a rather flat 38% management fee. This included booking (think hard-line telephones and reservation agents in front of large paper calendar charts), key handling, cleaning, linens and supplies, etc.. Many guests booked their reservations months ahead of time (there were no cams to watch). The reservation companies and management didn’t compete on price, they competed on service and performance, both to the owners and guests. Many times they were part of the condo onsite management team.

But those days went away with the Internet and the demise of most onsite management models. And of course the advent of platforms like Airbnb and VRBO. So here we are at an almost ridiculous state of the industry with so many different operating styles and systems. The management “take” can range from 10% to 60% (subject to all sorts of variability). But the high priced “resort” services (Village, Westin, Snowcreek, etc.) are under constant pressure and owners are increasingly balking and looking for alternatives. Lower priced arrangements are increasingly filled with hassles and add-on costs. It looks like the industry is heading toward some sort of meeting in the middle and simplification. But we’ll see. Maybe the STR old timers had it all figured out decades ago and tech just convoluted it all.

Thanks for reading! Please stay healthy.

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