Mammoth Real Estate Sales Report – October 29, 2023

STR Moratorium Impacts Begin And Alliances Are Forming!

Market Summary – October 15 to October 29

The Mammoth Lakes MLS is reporting eight (8) real estate closings for the two week period ranging from a low of $800,000 to a high of $1,810,000. Of the eight (8) closings, all eight were financeable properties and four (4) were closed with conventional financing. The two high closings were Creekhouse townhomes, one new and one resale. Interestingly, the MLS comments from one closing states, “Purchase price reduced $52,000 and commissions reduced to 5% to keep buyer from cancelling, thanks Town Council.” The new STR moratorium is less than two weeks old but is already impacting local real estate values. This period last year there were 15 closings.

The 10-year Treasury yield moved upward again during the period to 4.845%. The rate flirted over 5% for a few brief moments. The mortgage industry is keeping rates in the 8% range with Friday’s 30-year conventional quote at 7.88%. Good luck getting that in Mammoth. The industry pundits are now realizing that the recent government overspending will bring a massive new supply of Treasuries to the market just as demand is dwindling, especially from foreign buyers. Some believe 8% mortgage rates will look pretty attractive in the rear view mirror. And what about all of those 3% mortgages? These are going to be increasingly hard to pay off in the future. The 10-year was at 4.01% a year ago.

Condominium Inventory

At the period’s end the condominium inventory is down two (2) to 62. There were 12 new condo listings in the period and one (1) has already gone to escrow. There were three (3) new listings just this weekend, all three in Canyon Lodge locations and properties subject to the new STR moratorium. A rush to the exits?, or just coincidence? One year ago there were 47 condos on the market.

Single-Family Home Inventory

The inventory of single-family homes is down five (5) to 18 and this includes three (3) new listings in the period. But two of these new listings were recent purchases—one an apparent flip, and one a possible regret. One year ago there were only nine (9) homes on the market.

Pending Transactions

The total number of properties in “pending” (under contract) in Mammoth Lakes is up 16 to 51 at period’s end. The total number of pendings in the aggregate Mammoth MLS (which includes outlying areas) is up 16 to 76. Hmmm….Is the “anticipation of winter” finally kicking in? But sellers are finding that the buyer attitude of the past three years has, and is changing; they want to negotiate price and terms, haggle on repair credits, etc.. This time last year it was 50 and 69 respectively.

Market Updates and News

The beautiful, dry fall weather continues in the High Sierra. A little dusting of snow covered the higher elevations this past week and gave the local photographers that rare opportunity to capture some bright aspen colors with the fresh snow backdrop. I missed the opportunity‚ closing escrows took precedent. The high temperatures are forecasted in the low 60s this week, and with virtually no crowds it will be an exceptional time to be in the region. There is now snow in the current 15-day forecast and nobody is complaining. Contractors continue to work on repairs all around town.

The Ski Area is scheduled to open Friday November 10. The forecast is not favorable for making snow. This will be interesting to watch and everyone can have a front row seat via the Mountain’s website cams. But the impressive, modern snowmaking “fan guns” on the Mountain can make it happen. It will be an exhibition of modern snowmaking capability worth watching in the next two weeks..

The STR moratorium is the big real estate news of the day. There were dozens of comments from the public at the Council meeting and based on the variety of comments, the law of unintended consequences has a broad scope. The Council did make some adjustments to the ordinance and excluded properties currently in escrow or in the application process. The moratorium will certainly impact this segment of the market, but the interest rates were already putting a substantial dent in it.

There are already numerous applications from those who want to be involved in the working group and thankfully they are business owners from the younger generations (I’m way past my prime and patience level on these exercises). The Mammoth Lakes Board of Realtors and California Assoc. of Realtors are forming a task force. Other property owner groups are certainly preparing to engage. I do a deeper look into the staff report below in the Other section. But the real question remains; how are the owners and potential owners in these RMF-2 neighborhoods responsible for Mammoth’s housing shortage?

Steve Searles aka The Bear Whisperer dropped into my office Thursday afternoon. He was back from a book tour in SoCal. He said his new book What The Bears Know is experiencing popularity far beyond his expectations. He had an initial book signing in Mammoth while I was out on the ocean, so I missed-out on a first edition copy which is now sold out. I haven’t read the book yet but I’m thinking that copies will make good Christmas presents. Searles said that Thursday morning he had been on an east coast radio interview with over 70,000 live listeners. I’m guessing that there is a sequel to the existing book and a movie/documentary in the future. At one time he was contractually obligated to Disney for the movie, but that has expired.

What is so sad and pathetic is that the Town personnel decided to alienate Searles years ago, and they remain estranged to this day. Many of those original Town personnel are long gone. The real problems arose when Searles tried to use his peak persona (Discovery Channel) to challenge to Town on the ongoing crime in town that he saw while working with the local police department. The administration didn’t like it, and they made him pay. So the Town now loses out on the opportunity of his new and future celebrity. The short sightedness is amazing. I wish him the best of luck, and he left the door open for another future collaboration (we had some fun years ago).

Friday’s edition of the Miller Samuel Housing notes highlighted three markets well known to Mammothites; Los Angeles, Orange County and San Diego. Consistently, while sales are in a downward trend the inventory is below pre-pandemic lows and more than 50% of closings were involved in bidding wars, “accelerating price growth” in these markets. This should bode well for Mammoth.

And lastly, the community of Crested Butte in Colorado is now demolishing 22 units of affordable housing that began construction in 2020. The contractor defaulted and now the project, and all of the substandard construction, needs to be demolished so the project can be started over again. Makes me wonder when this will happen here in Mammoth?

Noteworthy Sales

The sale of Snowcreek #971 for $1,200,000. This is the 3 bedroom / 3 bath end-unit townhome with a 1-car garage. The end unit position affords lots of windows for incredible natural light in this floor plan. These units may be more popular than ever.

Other Real Estate News

I remember the first day of my Administrative Law class at UCLA and the phrase “arbitrary and capricious” was drilled into our heads. It is the benchmark for how government is NOT allowed to act. The new moratorium is selectively in the RMF-2 zone (the orange in the Town’s zoning map). This includes most of the 1960s and 70s built condominium projects including those around Canyon Lodge, the Village and the downtown area. At some point we should hear some the legal reasoning from the Town’s legal counsel, but on face value it certainly appears to be arbitrary and capricious. But that is for the attorneys to decide.

Digging deeper into the “staff” report that was written by the Town Manager and Finance Director (almost embarrassingly so), they admit that “the precise relationship between the prevalence of short-term rental properties and the lack of housing units available for long term rental or purchase by residents is not known.” ( Let me give them a clue, it has been this way for decades, it is part of the character of real estate in a mountain resort community, and many local residents simply turn their noses up at the thought of living in a condo—they deserve better!) But based on the implication of the staff report, the property owners in the RMF-2 zones are to blame for Mammoth’s housing crisis.

Because the Town can’t figure it out, they have hired the firm BAE Urban Economics to do an analysis ( I can’t wait for them to contact me, but in reality these consultants usually spend only a day or two actually in town). The resulting report could truly become laughable. What are they going to say when they discover that the recent STR movement is driven less by Airbnb and more by the IRS code? Are they going to blame the federal government? I can’t wait to see their thoughts about how more STR regulation in Mammoth is going to create more housing opportunities. Are they going to suggest Gestapo-style techniques on the RMF-2 owners?

According to the staff report, the Quality of Life ordinance of 2015 “did not address the impact of STRs on the availability of housing for our local residents and workforce.” Of course it didn’t. In 2015 anybody with a decent credit score and a job could have bought a nice property in Mammoth. Employers throughout town could have secured employee housing units (and ironically, the debt could have been refinanced in the future at ridiculously low rates). The same opportunities existed in the late 1990s when real estate was dirt cheap in town. But now it is the owners in the RMF-2 zone’s fault??

The staff report becomes even more nonsensical when it talks about the existing housing projects that are underway that “are anticipated to generate 256 units over the next 2-3 years.” So the fact that the Town can’t get their projects completed anywhere near their budget or within the timeframes is now the fault of the RMF-2 condo owners?? The Parcel Phase 1 (top photo) was scheduled for occupancy last spring. Now it is scheduled for next spring. And I’ve written about the ridiculousness of the Access apartments on Sierra Manor Road. They purchased the property in 2017 and it has been a blighted eyesore ever since.

The staff report also goes into a lengthy discussion about AMI, Area Median Income which is the benchmark for affordable and subsidized housing. This is now some new problem because the average 2 bedroom condo in the RMF-2 zone is unaffordable based on AMI calculations. But who is to blame? I sat as the Town Planning Commission’s representative on the regional housing panel 30 years ago. The AMI was a problem then (and property was dirt cheap). The Town has had 30 years to figure out the AMI solution, but it hasn’t.

And speaking of 30 years ago, the Shady Rest (now The Parcel) affordable housing plan from that era included 52 zero lot line homes that could house “middle income” residents; teachers, nurses, managers, etc..This is the real critical need today. It probably could have been developed over time at market rate with no subsidies. But the Town decided not to pursue it. The need for an AMI solution was reiterated in 2017 with the months-long Workforce Housing Needs Assessment project (and I was part of that working group too). Now our Planning Director for the past decade-plus has moved on. But the RMF-2 condo owners are to blame.

The staff report presumes that local residents who don’t own their own homes almost deserve to own a condo in the RMF-2 zone. But 37 years of showing these condos to many, many local residents has shown me that most simply don’t want to live in a condo, especially if there are “nightly rentals” going on in the project (funny how they don’t want to coexist). Most balk at the HOA fees too but they have no clue about the true expense of owning a single-family home. The irony; the local residents who did make the condo choice now have amazing equity giving them a bright future of options.

And lastly for this issue, the staff report suggests that under new STR regulations, each STR owners will be required to pay the annual fee to cover the Rentalscape monitoring contract that the Town is currently paying for each property. Hmmm…I see the black market growing already. And whatever happened to that “goose that lays the golden egg” concept? I guess this is beyond the Town’s thinking in 2023.

Thanks for reading!

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