Mammoth Real Estate Sales Report – July 7, 2024

The Holiday And Heat Bring A Substantial Crowd, But Tourism Is Clearly Down!

Market Summary –   June 23 to July 7 

The Mammoth Lakes MLS is reporting 10 real estate closings for the period ranging from a low of $540,000 to a high of $2,000,000. Of the 10 closings, all 10 were financeable properties and five (5) were closed with financing. Seven (7) of the closings sold between $700,000 and $900,000—six (6) condos and one (1) single family home. This seems to be a popular price point in the recent market, it is the new entry level to get a property with at least two sleeping areas and with a reasonably good location.      
 
The 10-year Treasury yield ended almost even at 4.27% at the end of the period. Conventional mortgage rates are still being quoted in the low 7% range. Several parties were pointing out that the yield curve is becoming “less inverted.” What that means at this point is a Who Knows? More Mammoth specific, a second home buyer I now have in escrow was quoted a rate of 7.35% for a 30-year fixed loan, no points and the waiving of the $1,800 in lender fees. This is for second home ownership with the intent to do nightly rentals. This was from a popular Mammoth lender who also has “project approval” on the subject HOA.
 

Condominium Inventory

At the period’s end the condominium inventory is up 21 to 91. This is the most condo inventory in a number of years. Going back to the newsletter archive, the inventory for this period in 2019 was 118 condos and 55 homes. 2018 was 103 condos and 55 homes. 2017 was 82 condos and 50 homes. The new condo inventory is through the whole spectrum with some very nice, new offerings in the higher end.  There were 32 new condo listings in the period and three (3) have already gone to escrow. What condos went to contract/escrow in the period? They include new listings at The Bridges, Bigwood, the Westin Monache (a 2 bedroom / 2 bath penthouse priced at $1,695,000) and two units at Lakeview Villas and a recently reduced 2 bedroom at the Summit. There are new concentrations of listings; 12 now at The Westin Monache, five (5) at The Lodges and five (5) at The Summit.
 

Single-Family Home Inventory

The inventory of single-family homes is up three (3) to 23. There were eight (8) new home listings in the period and two (2) have already gone to escrow including a $4+M home in Juniper Ridge.  There are now eight (8) homes listed under $1M and there were some price reductions in the bunch during the period. Based on the numbers above from 2107-2019 we can see that this segment of the market is still historically starved for inventory. 
 

Pending Transactions

The total number of properties in “pending” (under contract) in Mammoth Lakes is up four (4) to 38 at period’s end. The total number of pendings in the aggregate Mammoth MLS (which includes outlying areas) is up 10 to 69. In the coming weeks we’ll find out if the holiday period brought any serious buyers to town…. Based on recent bids and response times, it appears the log jam of contractors has opened up a bit. Some answered the phone and were actually available to discuss projects. Even though lumber prices have dropped, other materials remain expensive. One thing that has caught my eye—the pricing of the “slurry” coat they put on parking lots all over town in summer. They seal the cracks and put an oil based emulsion over the entire asphalt surface. In a snow and ice, freeze/thaw environment this process is critical to maintain the integrity of the asphalt. This year the bids were twice what they were just two years ago and three times what they were five years ago. Some parking lot owners are now looking to delay this preventive maintenance due to this rising cost.
 

Market Updates and News

The ever popular 4th of July holiday and a heat wave down in the lower elevations brought at solid crowd into Mammoth over the past five days. But relatively speaking it could have been a much bigger crowd. Mammoth is seeing less overall tourism but strong bookings during the peak periods (like the upcoming Bluesapalooza week). I explore more of this topic and other tourism-related topics down below in the Other section. The daytime temperatures have been in the low 80s and Mammoth has had more 80+ degree days in the last week than it had all last summer. Many remarked that the 4th parade seemed like the largest number of entries ever. It remains the best event of the year to mix the local residents, local businesses, second homeowners and visitors all into one happy mass. Mammoth has now moved into full summer mode. And again, with lighter crowds it should be an exceptional time to be here.

Last week the Town Council approved the $27+ million construction contract for the new civic center/Town offices. But there seemed to be some hesitancy. One Council member said it was “positive” that the contractor actually appeared to know where Mammoth Lakes is (at least on a map). The staff seemed confident that they have spelled out to the contractor the challenges of building in Mammoth. They agreed that the Ice Rink and first phase of The Parcel have been “learning experiences.” Both of these projects took twice as long to complete and with significant cost overruns (that many suspect hasn’t been fully accounted for). Construction could start as soon as August. I’m guessing it will be a new source of local entertainment.

The sale of the bonds for the civic center project was described as “highly successful” with strong demand which actually allowed for some slightly lower interest rates that will in turn create some long-term interest savings. Because of the massive TOT generation of the past few years and “conservative” budgeting (there’s been major surpluses), the bond market liked the offerings. I wonder if any of the bond purchasers were around 10-14 years ago when successive drought years, the Great Recession, and some really poor decision-making had the Town in a very media-hyped bankruptcy proceeding and appeal? (Interestingly too, existing workforce housing units could have been purchased back then at 20 cents on the dollar compared to today.) Let’s hope all of these grandiose expenditures don’t land us back there again.

And for the Council, the 2% tax increase referendum proposed out of the STR/RMF-2 moratorium nonsense is now becoming quite the debacle. A variety of election rules have them boxed-in. They need a new campaign committee of local individuals, but nobody seems to know any thusly motivated volunteers. In fact, they admitted they really haven’t even taken the temperature of the general voting public about the tax increase concept. To add to the confusion, if the 2% increase is going to be a general tax (which was injected into the proposal at the end of the moratorium) it will have to pass by 50% + 1. But these general tax funds cannot be specifically allocated to housing, they simply pass to the general fund (and allocated to more marketing?). A special tax referendum, which could be specifically allocated to housing, would have to pass by 66%.

Meanwhile, the clock is ticking to get the referendum on the November ballot. There was discussion that it might have to be pushed back to March. They have two weeks to “take the temperature” of the community (the voters are actually a small pool of people) and come up with a campaign staff (the Town can’t push the referendum—the campaign has to). Sounds to me like after the decision to push the 2% referendum, the proponents forgot that this is when the work begins. Authoritarians seem to think this way. And a summer of slower tourism could have an impact. And let’s get the ~90 units of workforce housing occupied and let the displaced rentals get sorted through, and then see where we stand.

My 4th of July Mammoth Real Estate Q&A — Under All Is The Land covered some of my more memorable real estate transactions. One statement I made in the column “If anyone has a lack of confidence in the Mammoth real estate market, just take drive through The Bluffs.” I was up there the other day and there are seven homes currently under construction including two brand-new starts.      

The Berner St. demolition is just about complete. The largest, lingering eyesore in town is almost gone.

Noteworthy Sales 

A 1 bedroom + loft / 2 bath at Bigwood closed for $715,000.  It has been fully, and beautifully remodeled and was originally listed at $689,000. Updated and “turn-key” properties are still bringing a premium. Interestingly, this condo had been on the default radar for years and was in massive arrears with the HOA. The unit was eventually purchased at a good price by an obvious flipper. So a derelict property is converted to a premium property in a very short time. And may even be producing tax revenue to the Town in the near future.   

A single-family home on Rusty Lane closed for $2,000,000. It never came to the broad market. It is a large, modern structure that is overbuilt for the neighborhood and was probably a “big winter” motivated sale. Another prime example of the demand in the Mammoth home market.

Favorite New Listings For The Period

Speaking of “turn-key”, this 1 bedroom + loft / 2 bath, 1 car garage condo is a popular 5-star rated Airbnb rental property. Appropriately described as “Bigwood Tree Tops”, the property has a panoramic mountain view and great sun. Perfect in summer and winter. Modern kitchen and baths and the property uniquely has its own classic sauna. Large stack-stone fireplace with a modern pellet furnace. Two sunny window boxes. Private end-unit setting and located between the Village and Eagle Base. Check out the video tour.

Listed at $689,000 

Other Real Estate News

While travel this 4th of July weekend was projected to be the “busiest of all time,” the national summer travel expectations are mirroring what most in Mammoth are expecting—strong peak period travel with overall downward tourism and occupancies. But it appears to be a tale of two visitor markets; one hampered by inflation and tight money and another travel segment spending at a very high level. This was anticipated weeks ago by Deloitte’s summer leisure and travel trends. But now it appears to be playing out.  

The most recent headlines are “4 In 10 Americans Will Stay Put This Summer As Money Is Tight.” For 42% of Americans, travel is unaffordable this summer, or just too expensive. How things have changed in the last three years. Now we will see how effective the millions of marketing dollars spent by the Town (MLT) will be to putting Mammoth in a competitive position against all of our travel competitors.

AirDNA returned to producing some relevant (?) information this past week and theoretically it is not good news for the Mammoth STR market. But, we’ll see. Their article “Best Vacation Rental Markets in the Next 5 Years” is out. Their latest concept is about determining what STR markets will be the best (and worst) for investment based on “feeder cities”—cities and regions where there is increasing population, solid employment and income growth. The theory is “if a feeder city is booming, the vacation spots its residents love will likely thrive too.” Houston, Texas seems to be AirDNA’s favorite feeder city and the popular resort areas surrounding it are all on the “Best” list.

They flip the script to highlight the “Worst STR Markets in the Next 5 Years.” There in the #5 position is Mammoth Lakes. And #4 is Bear Bear. The theory is that the outmigration from Los Angeles will eventually make a substantial impact on the STR demand in Mammoth. This will be an interesting concept to consider in the future. AirDNA seems to think all of Mammoth’s visitors come from Los Angeles (forgetting Orange County, San Diego, etc.). Will people fleeing LA really impact Mammoth tourism (or maybe this is why MLT needs to be marketing in China?). 

I’m still looking to IKON and macro-economics for the Mammoth demand. The affordability of skiing and snowboarding and general economics have been the key determiners of demand for decades. And the one wildcard for STR properties here remains the “usage” component. AirDNA is trying to cater to a pure ROI-driven investor crowd. Mammoth occupancies have been stuck at ~54% for decades. Some do better and some do worse. The Town has tried (spent $$$) to attract visitors in the shoulder seasons with only small, incremental success. And most mountain resort communities are actually in the same spot.

And during the period The Colorado Sun reported on a community survey completed by a local council of governments and the Colorado Association of Ski Towns. Not surprisingly, the local residents want less spending on marketing and tourism and more on affordable housing. The 70-page report “ranked affordable housing and the lack of housing for workers as “severe problems.”” Longer-term residents placed more value on a “sense of community” and “a small town atmosphere.” Lower-income residents are focused on cost of living, emergency services and public transportation. Both groups expressed a decline in the quality of life. And second homeowners were less likely to see a declining quality of life. And “Second homeowners who rent their properties as short-term rentals have the most positive outlook when it comes to the quality of life in mountain towns.”

From the article, “A vast majority of respondents said it was appropriate to divert tourism marketing funds to other community needs. (State legislation in 2022 allowed communities to ask voters to redirect tourism dollars collected from lodging taxes toward housing and recreational infrastructure.) The survey showed almost a third of elected officials support directing 75% to 100% of tourism funding toward other needs. Owners of short-term rentals were the least inclined to reduce marketing funding.”

The extensive survey was designed to help policymakers who “would benefit from trying to be clear-headed as they try to balance a thriving economy that is dependent on tourism and the quality of life that most second homeowners and full-time residents want and deserve.” They are referring to it as a tool called the “Destination Continuum”…to “maintain and find balance.”  The article admits the survey and report are a tool to help communities “carefully plot” the transition as towns crackdown on short-term rentals and pulling back on tourism funding. “Economic shifts away from the long-term foundations of the economy can be done but it’s not something that can be accomplished in a year or two. It’s a decades-long project.”

This is an excellent article on the future of mountain/ski towns. Clearly, the critical issues in Mammoth Lakes are very similar to the ski towns in Colorado. The Town fathers in Mammoth would be wise to pay attention. Their actions of the past year have proven that. Meanwhile, we’ll just have to see what the likes of Vail Resorts and Alterra Mountain Company think about less and limited tourism.

Thanks for reading!

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

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