Mammoth Real Estate Sales Report – July 30, 2023

Summer Attractions Are Open And Mammoth Remains On The Quiet Side!

Market Summary –  July 16 to July 30 

The Mammoth Lakes MLS is reporting 16 real estate closings for the period ranging from a low of $450,000 to a high of $2,600,000. Of the 16 closings, 14 were financeable properties and only seven (7) were closed with financing (an interesting volume of cash purchases). The closings included two 2 bedroom units at Sierra Manors for cash (bottom of the barrel properties), two cash purchases for vacant lots in The Bluffs, and the high sale being a 2015 Hooper-built home selling for almost $1,000 per square foot. This period last year there were 13 closings.
The 10-year Treasury yield ended the period up to 3.969%. Mortgage rates rose to slightly over 7%.  The  1-month to 1-year Treasury yields remain well above 5%.  John Mauldin’s newsletter last week featured some excellent mortgage information written by Barry Habib. Habib is Zillow’s main mortgage analyst and considered by many to be the best in the industry. Anyone seriously interested in the current state of mortgage rates should read it. Here is the last paragraph; 

“In conclusion, savvy mortgage servicing analysts agree with us that inflation will continue to decline and that the fundamental relationship between inflation and long-term rates will resume. This bodes well for investments in long-term Bonds like MBS and Treasuries, as well as the 10-year Treasury Note. Additionally, as previously mentioned, we’re already seeing home values increase in the face of roughly 7% mortgage rates. A decline in rates is likely to spark even more demand for housing and could accelerate the already impressive pace of home price appreciation we’ve seen thus far this year.”  

Time will tell. Prediction games seem dicey at this point. 

Condominium Inventory

At the period’s end the condominium inventory is up one (1) to 46. There were 16 new listings in the period and four (4)) have already gone to escrow. Nine (9) of the new listings of the last 20 days have already gone to escrow. Most are older condos in nicely remodeled condition. There are small concentrations of listings at Bigwood, Mammoth Green and The Lodges. There are five (5) Westin Monache units on the market. This time last year there were 77 condos on the market.


Single-Family Home Inventory

The inventory of single-family homes is up another three (3) to 25. Two of these listings are to-be-built. There are now four (4) homes listed under $1M and all are in quality neighborhoods. There were showings on the high-end inventory, but none to escrow yet. This time last year there were 30 homes on the market.


Pending Transactions

The total number of properties in “pending” (under contract) in Mammoth Lakes is up two (2) to 63 at period’s end. The total number of pendings in the aggregate Mammoth MLS (which includes outlying areas) is down one (1) to 85. This time last year it was 47 and 82 respectively. The latest comedy I experienced during the period was seller’s (new listings) relatives telling them they should arbitrarily list their properties for some substantially higher price, far beyond a reasonable asking price. It must be the latest thing on HGTV or YouTube. What they probably don’t realize is that buyers aren’t stupid (especially most Mammoth buyers). And they are constantly looking at Zillow who is providing them the comparable sales for the specific property. Sure, there are always errors and variables in the Zestimates and comparable sales, but at least the buyers have some reasonable base line. Buyers are better informed today than they have ever been. And most times, we still have to deal with appraisals, and appraisers are very conservative these days.      
I’m also really beginning to see the impact of higher interest rates, both for borrowing and the returns in Treasuries and money market accounts, on investor sentiment. “Cap” rates for investment properties that were acceptable just months ago are no longer desirable. Sellers of many investment properties will find changing (and lower) price expectations. And millions of dollars are flowing into Treasuries that, up until recently, could have flowed into some sort of investment property. Times are changing.


Market Updates and News

Mammoth’s “weird” summer continues on. The major attractions are open but access is still limited. And yes they are still skiing and snowboarding at the Ski Area. The weather has been wonderful and the weeks of haze caused by controlled burns in the area is gone. The natural areas continue to become even more green, especially in the upper altitudes. Photos of the summer of 2023 will be used by the Chamber of Commerce for years.  This coming week is Bluesapalooza week which has become the busiest week of the summer. The event has been plagued in the past with bad smoke from regional wildland fires, but this year is looking good, so far. There is still considerable snowpack in the high country and hopefully that helps keeps fires at bay. 

Tourism remains on the lighter side but last weekend’s Reggae Fest has clearly become a favorite. The slowdown in tourism may be inflation related. But the winter of 2023 has impacted the Mammoth region in many strange ways. I’ve noticed far more European tourists this year (which was common in the past) and lots of Texas and Florida license plates (hmmmm….). Oddly, the national media has been full of articles featuring the Tahoe region being on Fodor’s No List for being so overcrowded. They apparently have a “people problem.”  But Mammoth has experienced this people problem the past three summers. Maybe the word got out. Finding some balance will be nice. 

Projections from the U.S. Bureau of Labor Statistics (BLS) on the nation’s fastest growing industries have three Leisure & Hospitality sectors on the very top; event promoters and managers, amusement parks and arcades, and performing arts. Sounds like Mammoth has plenty of room to expand on guest experiences in the future, but will also have more demand for workforce housing. Of course, if these are the hottest growth industries in the nation, there will be increased competition for Mammoth for the public’s attention and dollars. Maybe there is even more balance to be found.

I keep snooping around the new ice rink. They are cleaning-up the site and removing the cargo containers that were being used for storage. But peering in the back door of the structure there is nothing going on including a few unfinished walls. I guess I have to give them the benefit of a doubt that there is a legitimate construction delay. But standing there on a beautiful Mammoth summer day and looking into a large almost windowless blimp it is hard to imagine that kids (and adults) are going to want to be in there playing instead of outside? The LED lighting certainly won’t provide any vitamin D opportunities. And like the Sprung structures at Eagle, they will eventually smell bad inside, really bad.

My recent fourplex deal had an interesting twist for the tenants. They for some reason thought there was some benefit in complaining about the heating configuration (wood burning stoves and electric wall heaters) and mold growing on the window sills and bathrooms in the winter. They complained both during the physical inspection and later in a memorandum to the brokers, seller and buyer. They clearly thought they could disrupt the transaction. But the California Tenant Protection Act of 2019 specifically states that a landlord  has “just cause” to evict a tenant if the landlord intends to “substantially remodel” a unit, and that includes the substantial modification of mechanical (heating and air conditioning) systems and/or abatement of hazardous materials including mold. Mammoth’s extremely tight housing market is sure full of pitfalls. Meanwhile the workforce housing project at The Parcel looks to be progressing at the same pace as the ice rink.

Mammoth might be experiencing a new phenomenon referred to as “Bright Flight” — the moving out of affluent city areas and into remote suburbs, all while housing demand remains high, bolstered by favorable demographics and rising real incomes. New name, same trends.

Noteworthy Sales 

Two St. Moritz 2 bedroom + loft /2 bath units closed in the period for ~$830,000 each. This is an interesting “tell” in the market. In the past these units weren’t all that desirable in the overall market for several reasons; the great room is on the ground level and the entry enters right into the living room (they were truly buried in the winter of 2023), the floor plan also feels “narrow” inside and the free standing woodstove is right in the middle of the living room and dining room (weird). The windows are all on one side of the floor plan. The bedrooms and loft are all sizable. I’ve never had a potential buyer get excited about the layout. But today they are selling for really good prices.    

The two Bluffs lots sold for $565,000 and $575,000. These were basic lots with no real special features in this luxury subdivision. Prices are clearly up for lots in luxury neighborhoods.

Favorite New Listings For the Period

This is coming to the market as soon as the housekeepers/cleaning is completed. This is 3 bedrooms / 2.5 baths with a nice 2-car garage with room for a full sized vehicle (Suburban, etc.) on the right side. Completed in 2007, this is located in a lovely Mammoth Knolls neighborhood with south facing (large) driveway and great room. Forced air gas heating and wood burning fireplace for a great heating combination. On demand hot water heater. Added storage loft in garage. Large entry with slate flooring from front door to back door/laundry room. Backs to Forest Service land and close to the Village. 

Listed at $1,349,000

Other Real Estate News 

Billionaire Barry Sternlicht and his Starwood Capital Group were recently in the news for defaulting on a $214 million mortgage borrowed against an Atlanta office tower. Sternlicht referred to the current commercial real estate environment as a “Category 5 hurricane.” The industry is reeling from the work-from-home trend in the United States, the shorter-term financing nature of commercial real estate, and the recent hyperbolic moves in interest rates.

The mention of Barry Sternlicht is a trip down memory lane for Mammoth. And even though he has essentially been gone for only six years, retrospectively it seems like much longer. Plenty has happened since his departure. And just like he bailed on the Atlanta office building, many in Mammoth feel like he simply bailed on this community when the going got tough.

Sternlicht “won” the bidding to purchase the Mammoth Mountain assets in 2005. Reports were there were somewhere between 18-38 total bidders for the purchase. The prospects for Mammoth were bright because of Sternlicht’s expertise in real estate and hospitality development, and his ability raise and control capital. Mammoth was destined to become one big “heavenly bed”—the Westin invention attributed to Sternlicht. It was interesting timing.

Historically, he essentially bridged the gap from Intrawest to Alterra. Intrawest wanted out primarily because construction and development costs were so high here in Mammoth (how do I know? I remember having lunch with Jeff Skinner who was one of my associates and the leader of the Intrawest sales team at the time. He said they had just had a meeting with Intrawest and they were pushing the team’s commissions down because of the very high construction costs.)

And historically too, the Great Recession and the serious 2012-2016 drought gave MMSA CEO Rusty Gregory the time to find the next buyer/ financial arrangement. Interestingly, Rusty tapped into Sternlicht’s capital resources to acquire Village parcels at cents-on-the dollar during the stress period. And this “reset” of values has actually made Village development more viable since the 2004-2006 peak.

The October 2005 purchase announcement created a local real estate sales boom like no other. I remember the summer of 2005 being quiet in real estate. It was nice to have a breather after five years of strong business. But the local market experienced crazed business for the next 20 months. Those peak values are the ones I’ve been doing comparisons to the last three years.

I had to go back and look at some of the media quotes from the era, like ““The news has hit everyone who has ever thought about Mammoth, and they want to get in before it’s too late,” said Cheryl Wood, 47, a broker associate with Coldwell Banker Mammoth Real Estate and the wife of the town’s mayor. “We’re lining up purchases sight-unseen.””

Or, “Normally I’d be playing golf this time of year, but now I’m incorporating a new business every week,” said Neil McCarroll, a business lawyer who has lived in Mammoth since 1980 and runs the planning commission. 

And ““That’s probably the biggest challenge to the town. What are you going to do with the extra 20,000 people?” said Rusty Gregory, the 51-year-old chief executive officer of Mammoth Mountain Ski Area, who began his career at the company 28 years ago as a ski-lift operator, said he shares the concerns about over-development. “I definitely hear those fears expressed,” said Gregory, who will retain a 15 percent ownership stake in Mammoth Mountain after the sale to Starwood. “The positive implications of development will significantly outweigh the negatives.””

And this, “The goal is to bring in other hotel brands, a mixture of both boutique and large hotels,” said Marc Perrin, managing director of Starwood Capital. “We’re also focusing on bringing in hip restaurants as well as new residential, hotel and entertainment experiences.” He predicted that changes would be evident in three to five years.

And Sternlicht’s quote from the era, “We are excited about the opportunity to work with Mammoth on their transformation into a world-class resort destination with a real estate component to match one of the continent’s finest mountains.”

It sure is fun to look back. The “1” Hotel never got built on the present-day Village parking lot. No Ritz-Carlton either. Sternlicht appeared to lose interest quickly after the Great Recession hit. Ski Area operations were stripped to bare bones in classic hedge fund style. Rumor is he visited Mammoth once and found it so lacking in the luxury qualities he expected, that he never came back. I was told he was behind the push to make the hotel staff wear Norwegian-style sweaters as uniforms (he’s definitely not from California). I still see some Mammoth Hospitality employees wearing them. Almost laughable.

Since the Sternlicht era here in Mammoth, he has gone on to other hotel development themes including Baccarat. I don’t think that would have fit in Mammoth either. Earlier in the year he launched his latest hotel brand Field & Stream Lodge Co. with the billing as “modern and affordable lifestyle lodging.” The hotels will be located in U.S. markets with close proximity to national parks, beaches, and mountain and ski towns. According to Sternlicht, the move ““comes amid growing, pandemic-driven consumer demand for “brands that connect them with the outdoors.”” They will specifically target destinations where “existing lodging options are lacking or outdated.”

So maybe he’ll be back to the Mammoth region. But these days, the existing lodging options that are “lacking or outdated” seem to be the target for the workforce housing advocates. That’s probably a good thing. Or maybe the Field and Stream Lodge brand would go good at the base of the Sherwins in Snowcreek Phase 8.

The Sternlicht era does have some take-aways. Mammoth’s overall cash flows can be negatively impacted by macro economics and drought, but these periods do create opportunity. Sometimes big opportunity. Everyone should plan accordingly. And poor economics and drought will kill development too. But the advent of global ski passes like IKON and Epic help smooth out the economic downsides and regional droughts for all of the participants. Mammoth wasn’t a player on that field during the Sternlicht era, and it made a difference.

In 2023, we now have the Aspen folks. Far less hype and hysteria. And they are actually building something. The Limelight construction site is looking quite impressive these days.

Thanks for reading!

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

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