Mammoth Real Estate Sales Report – March 17, 2024

Warm Weather Has Mammoth Salivating For A Long, Glorious Summer!

Market Summary –   March 3  to March 17 

The Mammoth Lakes MLS is reporting 12 real estate closings for the period ranging from a low of $525,000 to a high of $3,615,000. Of the 12 closings, all were financeable properties and nine (9) were closed with financing. The closings included two (2) <$1M homes, three (3) Snowcreek V 2+loft units, and the high sale of the period was a home in the Snowcreek Ranch that sold for $3.7M in May of 2021.  
 
The 10-year Treasury yield was up at the end of the period to 4.31%. Finding buyers for the 10-Year became a little problematic this last week. Persistent inflation is likely to have the much anticipated Fed rate cuts on hold for now. Some of the shorter term Treasuries moved back into the mid 5% range. The mortgage industry was still quoting the 30-year at just over 7%
 

Condominium Inventory

At the period’s end the condominium inventory is even at 49. There were 11 new listings in the period and three (3) have already gone to escrow—all new under-construction units at The Reserve. What condos went to contract/escrow in period? They include another Mammoth Green, a 1 bedroom at The Westin, 2 bedroom units at 1849, Forest Creek and small units at Horizons Four and Sunshine Village.
 

Single-Family Home Inventory

The inventory of single-family homes is down one (1) to 10. Really quiet in this segment during the period—no new listings, no pendings,…One of the current fourplex properties went to escrow. And another more desirable “Hooper” fourplex with private garages came to the market. It should sell quickly.
 

Pending Transactions

The total number of properties in “pending” (under contract) in Mammoth Lakes is down one (1) to 41 at period’s end. The total number of pendings in the aggregate Mammoth MLS (which includes outlying areas) is down five (5) to 63. A rather uneventful period in the local market, but I had some almost bizarre, random inquiries about properties that were on the market last summer. I think there is some sticky and corrupted real estate data out there on the internet.
 

Market Updates and News

Mammoth experienced plenty of cold, gloomy weather this past week but this weekend was sunny and with a modest crowd. Spring break weeks are on tap and based on the calendar and forecast, winter is over. Hopefully it is all a set-up for a long wonderful summer. After only a handful of warm days last summer, I’m sure everybody is ready for it. The winter of 2023 is becoming a distant memory (or nightmare).

The local real estate front; on March 6 the Council voted 5-0 to end the RMF-2 STR moratorium. If all goes well, that should mean it will end the last week of April. Even though the vote was 5-0, it certainly wasn’t a unanimous decision. The body language from the left side of the dais was telling. Council member Rice (finally) expressed that the purpose of the emergency moratorium was in fact to engage conversation towards creating a mechanism to motivate (or force) STR owner into long-term rentals. She stated that it was a “missed opportunity” to find the mechanism.

But what was the missed opportunity? Nobody, not Council members, nor Town staff, nor anybody else, brought a viable mechanism to the table. If the purpose of the moratorium was to “push” the conversation, where was the conversation of any value? Rice (and Council member Rea) are still looking for some mythical (and legally defensible) mechanism. It was rather obvious from the start. They simply failed to perform on their whacky ideas. They appear to simply lack the maturity to know that just because you wish something were true, that it should be true.

Council member Busber keeps reiterating that if the 2% tax referendum doesn’t pass in November, that “we’ll be back.” Back with what? A potentially failed tax referendum should create the impetus for STR caps, or limits, or what? Maybe something that will eventually limit the Town’s tax revenue while their spending continues to escalate? Or something that could draw the Town into litigation? Or something that will create more division in the community and create more underlying pushback that the moratorium has already created (it is greater than they know—they should get out on the street)?

The November tax referendum campaigning shall be entertaining and with two Council seats open this is bound to become the major campaign issue. There is likely to be a rush for STR permits under the new Certification process (can the Town handle it?). I’ve lived in Mammoth since the incorporation and this is the most authoritarian Council I’ve ever experienced. The Council majority is also clueless as to how to actually get things done, and the staff doesn’t appear interested in educating them. Hopefully the campaigning will bring effective discussion, and something beyond more taxes and more subsidies. Turning STRs into affordable long-term rentals for members of the workforce is wonderfully idealistic, but not rooted in reality. The proponents want to have it, but they don’t know where to start. Maybe they should start looking at the Mono County Housing Element and ask the County Supervisors.

On the national real estate front,  Friday’s announcement of the NAR commissions litigation settlement is big news. There will be no prolonged appeal as projected, and it is a broad settlement. Where this all ends up is anybody’s guess. Lots of opinionated folks think they already know, but it may take years of trial and error, iterations, special “apps” and all other sorts of tinkering before the marketplace finds a groove. And yes, the law of unintended consequences is sure to have its say. The consumer, who this is suppose to “save”, will likely get screwed along the way. The concept of “buyer beware” has now multiplied. One Wall St. analyst made a good summation, “The key debate from here will be can agents navigate this change with only modest changes to buyer commissions or will they be more meaningful.” 

Beyond the multi-year cash settlement, the agreed upon reforms begin in July of 2024. There will be no more advertised buyer’s broker (sub agency) commissions in the MLS (and they won’t show on Zillow, etc.). But sellers are free to make any offer of a buyer’s broker commission. How that information will get transmitted is not clear to me, that was one of the functions of the MLS. The industry will figure it out. So whatever the new system is, it will be less transparent to the public. Another reform; agents will be required to have their buyers sign a Buyers Brokerage Agreement. This will be a requirement before an agent can show a listed property (maybe this will cut down on the gratuitous, BS showings that go nowhere? And the demise of real estate lookie-loos?).  

In California, the document that offers-to-purchase are made with are known as the RPA. It will now likely include a Buyer’s Broker Compensation Agreement too (this standard form already exists). Buyer’s agents can acknowledge the offered buyer’s broker commission or negotiate for one. But first, we’ll have to see just how many sellers decide not to offer a buyer’s broker commission. Especially in a market of decreasing transactions, higher interest rates, less affordability, etc.. And will all of this scare buyers away (at least short term) thinking they now have to pay commissions along with their purchase? 

These reforms may also cause more dual agency scenarios. Good luck. I’ve never been fond of dual agency. Each party needs an advocate. Dual agents can get sloppy and not cover all of the bases. I’ve seen it before. Being an objective and truly effective dual agent requires skill and experience. Oh, and lots of integrity. But this is all for the benefit of the consumer.

Again, I have no idea where this will all go. It may lead to no substantive changes. With these new reforms coming in July of 2024, if you are a seller in the second half of the year (or beyond), you may be compromised somehow because of the anticipated confusion. The reform changes may also push some agents out of the business or into retirement. We’ll see. 

A recent, interesting academic paper from the Richmond Fed explains why real estate commissions are too high. The paper is filled with this;

The paper is an interesting read and may be helpful if you can’t fall asleep. But for instance, what does this have to do with anything like informing a buyer that the property they are looking at (and maybe falling in love with) has too many incurable defects to even consider purchasing (what’s an incurable defect?)? These poor academics have no clue about the dynamics of the brokerage business.

And the conjecture of one discussion the last couple of days; “Lower fees mean mediocre agents are likely to leave the field, but top brokers will get more business. “The good ones will absolutely do better,” he said”…. Personally, I’m not sure where that leaves me? But in the twilight of my career, all of this might bring some new excitement and motivation. Or there might be so much market disruption and confusion that I can find some “grand slam” property deals for myself?

Meanwhile, the Limelight is releasing the first five units for reservations starting the 20th. They are using a version of the old Intrawest model of pre-selling. Personally, I can’t stand the process, and I had several agents directly involved back in the heyday. It consumes a tremendous amount of energy for the sales team. I’d much rather be able to walk a prospective buyer into the finished product and let them determine what they are willing to pay. These penthouse suites ($2+M) should be incredible and come with lots of perks. 

It doesn’t look like Mammoth will reach an “average” season of snow fall based on the historic measurements made at the Main Lodge. But here’s one Sierra snowpack/water content measurement tool I like to look at. This season doesn’t look too bad.

Noteworthy Sales 

A home on Pine Knoll Place closed for $2,295,000. I remember one of my former associates having this property listed for years. It was a somewhat odd floor plan. It has been remodeled since. But the proximity to Eagle Express with relatively easy ski-in and ski-out access makes it far more valuable in this IKON era.   

A 2 bedroom / 2 bath at The Westin Monache closed for $1,112,000. This is the really nice, spacious fan-shaped floorplan with two decks (as opposed to the 2 bedroom floorplan on the corners). Overlooking the Village with down valley views. Special units at the Westin are beginning to bring premium pricing. 

Favorite New Listing For The Period

Here’s a premier unit at The Westin Monache—top floor (7th) and an oversized 1 bedroom / 1bath floor plan. The extra space is worth it for extended stays and/or owner usage. Big down valley views with sunrises and moon rises. Close to the elevator bays for quick access.   Check out the video tour.

Listed at $750,000

Other Real Estate News

There is no doubt the IKON and Epic era has changed the ski and snowboard industry. From pre-Covid, through that era and beyond including the most crushing winter anyone can remember, the question that I keep asking myself is; does the Alterra/IKON affiliation make Mammoth essentially recession proof? The term recession is bounced around the various media on an almost constant basis. But the actual, current “recession” remains somewhat elusive. I’m not obsessed with recession but I’ve lived in Mammoth through the prolonged recessionary periods of the 1980s, 90s, and the pre-Covid decade. For me, it is the norm. Two of those recessionary periods were also married to prolonged drought periods. The new, vast snowmaking capabilities help mitigate any drought. The hardening of the Mammoth economy against economic woes has always been a goal since the incorporation in 1984. It is part of the justification for the Town’s extreme marketing expenditures. 

Interestingly, the local economic downturns of the past decades inevitably pushed local residents out of town. They simply couldn’t make it. I’ve known so many wonderful people, valuable citizens, skilled members of the workforce, who have had to move on. In reality it alleviated the housing demand. It always moved in cycles. Today’s housing situation is partially impacted by the strength of the local economy driven by the Alterra/IKON affiliation. It has become a classic double-edged sword. 

A recent newsletter from Miller Samuel had some interesting graphs that showed this impact of the Epic/IKON business model. The first is More People Are Hitting The Slopes Than Ever Before In The U.S.

Anybody who has skied Mammoth in the past decades knows the new volume of participants. I hear it is even worse in the Rockies and elsewhere. It is why eight-pack chairs and overall “mountain mobility” become more compelling. Vail Resorts reported they sold over two million Epic passes this year. Do the math. That is some incredible front-end cash flow going into the winter season. Imagine what Dave McCoy could have done with that sort of cash flow?

The second graph is Vail Resorts Has Turned Skiing Into A Subscription Business.

This trend started here in Mammoth some 25 years ago with the discounted Gold Pass. All of a sudden everybody had a season pass (and they let you know it). But Vail Resorts took it all to another level. Alterra and the IKON Pass replicated the business model. This trend is profound and should continue. And with the average “walk-up” day pass at major resorts costing $200-300, they are continually forcing people into the subscription model.

The third graph is Peak Profits: Vail Resort’s Economics Lean Heavily On Lift Pass Sales

This graph is especially interesting to me. Back in 2019 I sat through extensive property tax appeal hearings on Mammoth Mountain Ski Area for the drought period of 2012-16. They were arguing for reduced assessed value due to reduced cash flow and profits during that period. The appraisers on both sides of the hearing presented profit and loss analysis for both MMSA but also a variety of other resorts. This revenue structure for Vail Resorts is incrementally similar to the MMSA profit and loss statements of the pre-Alterra era. This was pre-IKON so season pass sales were basically the majority of the revenue, but the ancillary revenue sources like ski school, food and beverage, rental/retail, etc. can add up to be significant revenue. 

For those into investment analysis, the appraisers at that set of hearings were using capitalization (cap) rates of between 9 to11 for ski areas in North America. 

Thanks for reading!

This newsletter is produced by humans.

 

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

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