The Perfect Real Estate Storm: KSL + Snow + AirBnB
While we wait for the perfect winter storm to kick-start our ‘17/’18 ski season, the Mammoth real estate condo market is in the midst of a wild rise in prices. The average $/sqft for non-Intrawest 1-bedroom condos has shot up 44.1% from Q2 to Q4 (thru Dec 3). (Intrawest condos like The Village, Westin, and JSL were excluded because they tend to skew the data higher and not enough were sold to make it relevant).
One stark example comes from The Summit condos near Eagle Lodge. See the chart below for sale prices of 1-bedroom condos in 2017. There was some variance in the condition and location of each condo, but the variances were not enough to explain the overall 64% jump $200k to $328k.
Why is this happening?
It started back in mid-April 2017 when KSL Capital, a partnership related to Aspen Resort, announced its purchase of Mammoth Mountain Resorts (which includes June, Big Bear and Snow Summit). Being brought in with other resorts like Squaw and Deer Valley created speculation that maybe our ‘temporary’ white tent at Eagle Lodge will finally be developed into a proper lodge, along with other investment.
This, after Mammoth was emerging out of an Epic Winter that dropped over 20 feet of snow in the month of January alone. (We just sold a condo that still has damage from that perfect storm; contractors have been in very short supply to repair all the damage.) Folks around town are hoping for a more ‘normal’ winter this year; was it a case of too much of a good thing? A quick drive around town revealed collapsed decks, lopped-off chimneys, and scrunched cars. Despite the snow’s effect on structures and our shoveling muscles, Mammoth Mountain had great visitation and condo rentals were very strong. Transient Occupancy Tax (the town tax that is collected on all nightly rentals) had 6 consecutive record-breaking months from Dec-May!
The AirBnB Effect: Because of the higher rental income noted above, more buyers want to get in on the AirBnB phenomenon. They first hear about the commission rates that large rental companies in Mammoth charge (40-45% for most, up to 60% at The Westin) and realize, hey I can cut out this huge middleman and manage rentals myself from my phone. It is not quite as easy as that, but many buyers already have experience with AirBnB elsewhere and want to expand their portfolio. Many are trying for their first time and therefore want something small that is manageable, thus the run on 1-bedroom condos mentioned earlier.
Perfect Storm: This trifecta of factors, in our opinion, have drastically increased interest in small condos in Mammoth. Through Dec 4th of 2017, there have been 378 condo sales compared to 303 sales in all of last year. Condos started selling more quickly last spring, creating a dearth of inventory (we are at our lowest inventory level in 14 years!), leading to multiple offers and a rise in prices.
Labor Day often marks the start of a mini buying spree as buyers want to get their rental set up before Thanksgiving. This year was tougher because of limited options on the market, so many agents took to trying to find off-market listings and buyers were willing to pay over the asking price. While low interest rates also helped some, it is still hard to beat an all-cash offer with no appraisal or loan contingencies.
Lately, however, we are feeling some resistance to some of the higher list prices that sellers are throwing out there to see what sticks. A standard 2-bedroom condo at Sunstone was just listed for $575,000 when the last sale was for $425,000 last April. This 36% jump hearkens back to the days leading up to the last market peak (i.e. 2004-ish), but our prices are still below the last peak (i.e. when someone paid $710,000 for a 2-bd Sunstone!).
Rising prices typically convince would-be sellers to wait a bit longer before selling, which further contributes to our low inventory and exacerbates the supply/demand balance. If you are considering selling or buying soon, keep in close contact with us for updates and new listings. -Dennis, Tara & Eric