Mammoth Real Estate Sales Report – July 16, 2023

Slower Tourism Makes It A Great Time To Be In Mammoth!

Market Summary –  July 2 to July 16 

Condominium Inventory

Single-Family Home Inventory

Pending Transactions

Market Updates and News

The 4th of July weekend was big but the tourists cleared out quickly and Mammoth has been unusually quiet for the balance of the period. Some business owners and STR owners might complain, but it has been a delightful time to be here, especially after the brutal winter, and the crazy crowds of the past few summers. The slower tourism can possibly be blamed on the lack of access to some of the region’s most popular locations; the Lakes Basin (it opened this weekend with limited access to campsites and trails), Red’s Meadow, Yosemite Valley, etc.. Or maybe we don’t really need the big Mammoth Lakes Tourism budget, we just need our most popular attractions. Interesting to ponder. Media reports have been showing hordes of tourists in Lake Tahoe, and oddly, significant numbers actually pursuing the extreme heat in Death Valley. Maybe that is where they are. 

Construction and repair work is in full swing but there are also plenty of hang-ups. Insurance claims are being delayed, all while insurance costs skyrocket. Many of the winter damaged repairs may not happen before it snows again. And the forecasters are now predicting another big winter. The thought of massive snow volumes is cutting both ways—some people no longer want anything to do with it, others are loving it and want more of it. 

California Senate Bill 584, the proposed 15% tax on short term rentals to help fund workforce housing, has moved to the State Assembly. The first hearing scheduled on June 28 was canceled at the request of the Bill’s author/sponsor. There is no new information EXCEPT in reading the details of the proposed bill, the tax will not apply to any operator who grossed under $100,000 in the previous year. So that would be the majority of STR properties in Mammoth. If this bill does eventually pass under the current terms, it could create an interesting new dynamic in the Mammoth STR market—larger, luxury properties might become less desirable, not only to rent, but to own and operate. STR owners could also stop renting just before hitting the $100K mark. Others may really pursue the quality not quantity goal. Time will tell.

The Snowcreek golf course continues to be an enigma. Not only is it not open, the greens are now deteriorating, perhaps beyond repair. Some have proposed that the course is going to be redesigned to compliment the “back 10” on the property that surrounds the Snowcreek VIII land. Many newcomers to Mammoth don’t realize that the “back 10” property was acquired in a 25-year Forest Service land exchange process. 

My last Real Estate Q&A mentioned the $30 million ice rink that the Town is developing. I received an email from the Parks and Recreation Director expounding on the fiscal responsibility of the Town and he assured me that the ice rink is NOT a $30M project. Well, I do “back-of-the-envelope” calculations all the time. It is part of my business thinking. And at some point the community deserves an accurate, comprehensive accounting of the current costs, cost projections and budget for the next five years. My $30 million is an estimation of that. 

Here is what I see; the original construction contract was ~$16.5 million. Any such contract normally allows for modifications, cost overruns, “Acts of God” (like the winter of 2023), etc.. So where are we? Most general contractors are reporting steep increases in material costs and labor. Some as high as 30-50% or more from just a year ago. So the basic construction cost today could actually be in the $22-25M range.

The true cost should also include the planning, architectural, engineering, consulting, staff expense, etc.. This should include the several iterations of the project. This alone could be another $1M or more. Next, how about the interest and loan (bond) related fees? The original borrowing was $5M. It would be nice to know how much has been borrowed today, what is the balance, how much interest has been paid, and will be paid in the future? This is all part of the cost. This could be a couple million in interest in the past and the next five years.

I see this ice rink facility like building a brand new home. Once the contractor is completely finished, there are all sorts of add-ons and additional costs to the new owner (I’ve been there). They can be endless depending on the budget (and don’t forget, this is a classic case of people spending other people’s money on other people—you know how that goes). This ice rink will command numerous additional expenses especially because the project was completely stripped-down to make it approvable in the first place. There are even more expenses in the five year horizon including replacements (ice rinks get beat-up fast) and additional recreation equipment (pickleball, etc.). And on and on. And don’t even consider the opportunity cost. Where would you like to see $30M spent in town?

Meanwhile, the construction at the ice rink is curiously slow. I’ve been watching and there are normally no more than one or two people on site during the week. Looking in the few windows and nothing looks finished. The cinder block building that houses the chillers is half built. But the Tesla charging station looks ready to go. The facility was suppose to be ready to open last fall, then March, now in August. According to an ad in The Sheet they are taking registrations for Youth Hockey this winter in the “new indoor rink.” So at least someone is hopeful the $30 million rink will be completed by then. 

Other Real Estate News 

I was recently dealing a young out-of-town “broker/officer” and I was reflecting on what it takes to become a truly experienced and competent real estate broker or agent. Some of it is innate. But continuous learning is critical. You will never “know everything.” Under California real estate law there is a delineation between licensed brokers, licensed salespersons, designated (supervising) brokers, and broker/officers. Basically, salespersons (agents) need to be licensed and work under a supervising broker. The supervising broker is responsible for the actions of the agents under his/her license. The system conceptually places the supervising broker in the role of the teacher and mentor to the licensee. Sometimes it works, sometimes it  doesn’t.

I was fortunate in my career. I became a supervising broker at a young age, but I had tremendous mentors. The first was my father. He was a broker in Los Angeles for decades. He was an old school “by-the-book” broker. This apple didn’t fall far from the tree. Growing up (pre college), the telephone was in the kitchen. I remember my father talking business in the evening. I tell people that I knew what an escrow was before I knew what a condom was.

One of the most interesting things I recall him saying was “tie it up.” Over the years it has only proven to be an increasingly important real estate idea. The concept worked well for many buyers in the last three years. “Tying-up” a property means you have it under contract, or pending in MLS terms. The buyer who has tied-up the property has the first position to close the sale. But it doesn’t compel the buyer to close. The buyer has the right to perform due diligence as outlined in the purchase agreement. The buyer has the right to cancel the purchase agreement if the property doesn’t meet expectations. Or gives the buyer the right to “re-negotiate” certain provisions.

The real key to “tying-it-up” is that every piece of real estate is unique, and often not immediately (or ever) replaceable. The uniqueness is what can make real estate valuable, and desirable. When properties with outstanding qualities come to the market, they are likely to sell quickly, even in a slower market. Prospective buyers often hesitate for a multitude of reasons. But experienced real estate buyers know the value of getting the property under contract, and then figuring out if it is worth purchasing. The cost of cancelling an escrow/agreement is quite small.

But beware, and especially in a small market like Mammoth, if a buyer repeatedly puts properties into escrow and subsequently cancels, the word gets out. It could ultimately compromise the buyer from purchasing anything worthwhile in the future. Buyers in the Mammoth market who recognize quality properties, and move quickly, often acquire the best offerings. The key is knowing the market.

I learned other things at an early age. In the old days I suspect that escrow officers made critical mistakes. It was before word processing and other tech that made the task more uniform and consistent. But my father’s warning that “escrow officers can get you in trouble” is why I probably watch their work with a more critical eye. I don’t see it as a big problem today, the industry has matured. But you still need to pay attention.

I had other fantastic mentors. In the 1990s many experienced brokers came to work in my company. Several had started in Mammoth real estate in the 1960s and 70s. They had tremendous knowledge and history about the properties here (I still have many of their archives and they were recently digitized for the Mammoth Museum collection). They had been involved in the development and sales of many new condominium projects. One actually owned the parcel where the Limelight is being built. He also created a new residential subdivision while in my company. One had been a County supervisor. One was involved in the sale of mobile home parks all over the West Coast. One had been classically trained in sales from IBM and Xerox. One had been a top producing broker from Los Angeles. Needless to say, I learned plenty.

The original Intrawest sales team (circa 1998) included four of my associates. Even though they were training and operating under the Intrawest banner, I was still responsible for their actions. I had to pay attention. It was interesting and entertaining times. I learned even more. The phrase “selling is the transfer of enthusiasm” was their mantra. That selling process is now from a bygone era. For many who participated in that training and process, there was tremendous success.

Another valuable mentor was the Town’s Planning Director in the early and mid 1990s. I became a Commissioner about the time he was hired. I believe Randy Mellinger was the best Town employee ever. He guided this community at the critical time between incorporation and the beginning of the Intrawest development period. His legacies are numerous, but maybe the most important one was in teaching the Town how to apply for and capture State and Federal grant dollars. The planning and community support has to be in place to be successful. The ever growing bike path and trails system is a byproduct of this skill. Much of the real estate development of the past 30 years was master planned and approved under his tenure.

One last one to mention is Rick Liebersbach. He has been the pre-eminent real estate attorney in Mammoth for the past four decades plus. He is recently retired. I have sat on the County’s Assessment Appeals board with him the past 20 years. Again, I’ve learned so much. He is the legal mind that has helped protect the property taxpayers of the County, all without any ego or greed. He also has great stories about buddies Dave McCoy, Tom Dempsey and Allen Davis (who he worked for) in the 1980 era. They envisioned Mammoth’s future with gondolas into town, narrow gauge trains running through town, etc.. Mammoth’s real estate values were amongst the highest of any ski resort in North America at the time. At least we got one gondola into town.

I’m hoping the young and future real estate brokers have the chance to have such great mentors. I can’t imagine they’ll be found on social media, but maybe they will.

Thanks for reading!