Market Summary: February 26 – March 11
The Mammoth MLS reports 11 sales/closings in Mammoth Lakes for the period ranging from a low of $155,000 to a high of $985,000. Only one sale was an REO/bank owned property and only one was a short sale. There were some closings that this broker would consider to be on the “high” side.
Housing Inventory
At the period’s end there are 169 condominiums listed for sale, one less than last period. There are 57 single-family homes on the market in Mammoth Lakes proper, which is a decrease of six (6) from the last period. There are 32 residential lots listed for sale, no change.
Pending Transactions
The total number of properties in “pending” (under contract) in Mammoth Lakes is 79, an increase of eight (8) since the last reporting. Total number of pendings in the Mammoth MLS (which includes outlying areas) increased by 16 to a total of 102.
Market Updates and News
Mammoth is in a strange place; there is plenty of negative local news, we are in the midst of potentially the worst drought winter on record, the town is experiencing a very low volume of tourism during the prime-time of winter, etc. And yet the numbers would indicate real estate is still selling. What is causing this? A healthy stock market?? Cash on the sidelines getting fidgety?? More people planning for an “escape”??… Does anybody have any insight on this??
One thing I have recently observed; for second homeowners looking to purchase in the lower price ranges, there is not as much (or almost no) competition from the local residents. This drought winter has put almost everyone with a “job” on notice that a salary reduction or layoff could come at any time.
Some readers were a little upset with my candidness last newsletter about the impacts this winter (or lack thereof) will have on this town. I would rather be out in front of this topic rather than have to explain things after the fact. Don’t be shocked when one of your favorite restaurants goes out of business. The killer of local businesses will be the same as those holding real estate–excessive debt and most likely large debt associated with a purchase at the peak of the market. Many buyers just weren’t realistic about the potential growth of revenues, and competition. But for many businesses in a seasonal economy, the high debt AND the rising expenses like employees, cost of goods, utilities, snow removal, etc. just makes it impossible to continue.
Mammoth Mountain CEO Rusty Gregory has been on the “explanation tour” for the layoff of 20% of the full-time staff at the Ski Area. While this is unfortunate for many, does it really come as any surprise? Many years ago when everything was still rosy I forewarned of the strategy of private equity firms like Starwood Capital; load up on lots of debt and leverage and the leaning-out of expenses including excessive personnel.
I have seen three instances in the past two weeks of short sale properties that ultimately sold (or are in escrow) at substantially higher prices than the listing prices. And not because of bidding wars. Many agents with short sale listing repeatedly drop the prices every couple of weeks to lure in a buyer. Once the bank gets the appraisal they tend to only allow a sale at that price. Banks appear to be increasingly sticking to those numbers. If you are offering on a short sale, be sure your agents presents you with the comparable sales. You can play “options” all you like but be prepared for disappointment.
Noteworthy Sales
A few interesting sales; there was an obvious “investor” in town the past couple of months who laid down well over $1M in cash for three separate properties; a couple of multi-unit properties and a small commercial property. I wasn’t involved but this kind of activity always interests me. With these closed sales the “cash flow” numbers are starting to head back to those of the early 2000’s, which is more where they belonged all along.
At the peak of the market these multipliers went into the range of 2.5 times this. Just ridiculous!! That was the era of people buying investment property on speculation. These sales will help normalize this segment of the market. But I’m still a grouch on commercial. Apartment rents will hang-in the next 18 months, I’m not so optimistic about commercial.
The sale of a 3 bedroom / 3 bath townhome in a quality project near Eagle Base for $265,000. This was a property I showed many times over the past 12 months, and at a substantially higher price. I knew the seller was motivated (and had equity), but this ended up being an outstanding buy. This is an example of demand destruction in a medium-sized condo project when two events occur simultaneously: high common area fees (albeit budgeted well) and a higher than normal number of listings in the project.
The sale of a large 5 bedroom / 4.4 bath home in the top of the Slopes for $985,000. This large modern-built (2000) home showed great. Most buyers didn’t like all the stairs. Sold fully furnished. On the market for almost two years and the original price was substantially higher. For the “per foot” crowd it sold for $306 per foot.
Other Real Estate News
For those who saw my discussion of the Tallus Project in the last Broker’s Report, the new owner was required to re-file the subdivision with the California Depart of Real Estate. The DRE required Reservation forms are now available, so interested buyers can complete those and get a tour of the property. But as I mentioned there will be no big sales splash or media campaign like was so popular in the past. I think the underlying theme this time around is “serious buyers only.”
Many people are concerned about the impact of high gas prices on Mammoth. I recently went on a quick road trip to Los Angeles and Orange County (hardly my first trip). My overall travel times were astonishingly quick and I wasn’t speeding. My freeway city travel was at “flow” speeds and the highway was on cruise control at a “safe” speed. I had heard that higher gas pieces had reduced traffic. For me, there is economic value for not spending another 3-4 hours behind the wheel, and right now I’ll take higher prices with this result. For others that could mean more runs on the Mountain, or more time on the stream. Historically, higher gas prices have not hurt Mammoth too bad, especially during the summer. Visitors take shorter trips and Mammoth is still within “range.”
Thanks for reading!