Market Summary: March 11 – March 25
The Mammoth MLS reports 16 sales/closings in Mammoth Lakes for the period ranging from a low of $125,000 to a high of $1,000,000. The sales data reports that four (4) were REO/bank owned properties and four (4) were short sales. Like last news letter, there were more closings that this broker would consider to be on the inflated side–somewhat perplexing to me. There are buyers who are acting like it is 2005 all over again. Everybody I run across wants to make lowball or insulting offers. I have no clue where these buyers are coming from (but I’d like to know).
Housing Inventory
At the period’s end there are 169 condominiums listed for sale, no change. There are only 48 single-family homes on the market in Mammoth Lakes proper, which is a decrease of nine (9) from the last period. The single-family inventory is clearly on the low side. There are 35 residential lots listed for sale, which is a slight increase. With one very high-end lot going to escrow, a couple of other high-end lots have come to the market (is there a REAL market for high-end lots?).
Pending Transactions
The total number of properties in “pending” (under contract) in Mammoth Lakes is 72, another decrease. Of the 72 properties in “pending,” 34 (nearly 50%) are “contingent short sales” which means they are pending short sale transactions. These properties also show as active listings to anyone looking at IDX MLS information. The total number of pendings in the Mammoth MLS (which includes outlying areas) decreased to 97.
Market Updates and News
Speaking of short sales, 2012 may become the year of the short sale. This muddling-through down cycle real estate market is bringing short sales to the forefront. Both buyers and sellers (and their agents) are going to have to get used to it (and it does create some interesting opportunities). In the Mammoth marketplace (with a high percentage of second homes), many distressed sellers still prefer to just walk away and let the foreclosure process play out. And some short sale listings languish on the market and the eventual foreclosure will occur. But more and more distressed owners are being convinced to try a short sale.
The one thing I’m beginning to look at is the emotional aspect of short sales on sellers and buyers. For sellers, they have to go through the process of documenting their financial position and “hardship.” This is a similar to qualifying for a loan (by today’s standards) and having a psychiatric evaluation and a colonoscopy all at the same time (as well as admitting some sort of failure). Then they have to go through an usually protracted and rather uncertain real estate escrow (again, not as tough on a second homeowner but really no fun for an owner occupied seller.)
For buyers there is great uncertainty too. Will the lender accept the valuation and terms? And how long will it take? (The kids keep asking, When will we get to use the property?) Will the seller accept the lender’s terms? Will a better and more suitable property come to the market during the waiting period? And even after all of this, will the property stand up to the due diligence of the purchase agreement? Even though most buyers are in “no hurry” (don’t have to buy), they do get anxious, especially of the skiing gets good.
For this more “traditional” or old-school broker (me), the whole “option” aspect of short sales is becoming more fascinating. The old concept of a “deposit receipt” is almost tossed out the window. The option is acquired for the price of a little time, some scribbles on pieces of paper, and pushing that paper through the fax machine or scanner. For those “not in a hurry” it could be a fun game; very little invested with solid opportunity on the back end. This financial environment gets crazier all the time.
Noteworthy Sales
Okay, I’ve already harped on some sales that I consider inflated and since I wasn’t a party to them I’m not going to go any further…
There is a sale of a classic 2 bedroom + loft / 2 bath Snowcreek II town home for nearly $500,000. This is one of those beautiful riparian area/panoramic view locations in the early phases of Snowcreek that are so popular. And this sales price once again proves that buyers will pay for it. The property was also nicely upgraded. This sale and the high sale of a large home in completely “buffed out” condition displays that buyers are still willing to pay a premium price for properties in excellent condition.
There were four (4) residential sales of $700,000 plus during the period. Hmmm…
The sale I’m going to focus on (for a couple of reasons) is the duplex at 347 Lupin for $197,200. This was a well-worn bank owned duplex of two 2 bedroom / 2 bath units with a 2-car garage. This property has been an eyesore for quite awhile. But a young couple bought this and they are already working to renovate it and make one of the units their home. This is happening all around town; dilapidated properties being bought by energetic new owners. A silver lining to the foreclosure market.
But there is some sad commentary too… A local general contractor who lost out on the bidding (for his client) decided to file a complaint with the Town’s Building Department claiming the property has a serious structural defect that was “life threatening” and would cost upwards of $100,000 to repair. The Town “red tagged” the property without any further investigation. As part of their due diligence, the buyer hires another local general contractor to complete a standard inspection and finds no problem. The buyer hires a structural engineer to inspect the property. Ironically, the engineer inspected the property in 1993 and 1998 as standard (escrow) inspections and still has his reports. Nothing structural has changed at the property over the years. He does make a small recommendation and we are able to get the buyer a credit and the buyer proceeds.
The escrow only closed on Friday, but there will be some fallout. Are some local contractors getting so desperate for work they have to resort to stunts like this? And what about the blatant mis-representations to their clients/investors? And the Building Department goes right along with it?(sounds like they don’t have enough to do). This has been a crazy winter.
Other Real Estate News
The Ski Area has announced the details of the 2012-13 MVP (Mammoth Value Pass) program and it will be open to all newcomers. While the old-timers (like myself) that were sold that this was somehow an exclusive club that needed to be re-upped every year to retain membership, opening it to newcomers is a really good thing. This MVP program has actually driven the local real estate market (I know it sounds crazy; save on the pass but buy a condo). And it has worked vice-versa.
Many property owners remain endeared to the program because they DO own here in Mammoth. But many new property owners, and potential owners, see the MVP opportunity as part of the total Mammoth package. They want a pass and once they have one they will come more often. So much for exclusivity, but this is a great program for everyone involved. And for newcomers the pass will be good for skiing this spring. Such a deal.
Thanks for reading!