Market Summary: May 20 – June 17
This report is for the past four weeks. Going on vacation is always great (the big fish were mean). But coming back to lovely summer weather in Mammoth and anticipating great biking and hiking is even better. The Mammoth MLS is reporting 22 sales/closings in Mammoth Lakes for the period ranging from a low of $105,000 to a high of $1,629,750. The sales data reports 3 REO/bank owned property closings and 6 short sale closings, so “distressed” sales make up 41% of the total, or less than the 50% where it has been running. All 6 of those short sales were under the $300K mark (what, no more high-end short sales??)
Housing Inventory
Inventory numbers remained flat over the past four weeks which is very unusual for this time of year, especially considering the drought winter. At the period’s end there are 166 condominiums listed for sale (no change). There are now 59 single-family homes on the market in Mammoth Lakes proper, a decrease of 2 from the last period. There are 43 residential lots listed for sale, a small and insignificant increase (normally it is hard to market lots when they are buried under snow). During the period overall, small amounts of new listings came to the market but were outpaced by properties going to contract. Quite frankly, a little unusual for this time of year from a historical perspective.
Pending Transactions
The total number of properties in “pending” (under contract) in Mammoth Lakes increased to 62 which is interesting considering this should be a traditionally slower sales period. Of the 62 properties in “pending,” 34 are “contingent short sales” (which means they are pending short sale transactions), which is, again, a growing percentage. And again, this is due in part to the typical length(months) of these transactions AND the fact that fewer REOs are on the market and buyers are finding the best (potential) opportunities in the short sale market. The total number of pendings in the aggregate Mammoth MLS (which includes outlying areas) increased again to 84.
Market Updates and News
The Town’s bankruptcy filing feels eminent. I personally have had no involvement but the mediation process has reportedly consumed hours and hours of time including that of many highly-paid lawyers. The Town has laid-off senior long-standing employes in the past week. The homework, preparation and pre-negotiation are near completion. All that is left are the headlines and then we’ll get to see how all of this works out. And if, and how, it affects real estate values and inventory.
The Mammoth market has definitely entered a new phase in the past month or two, and this is really uncharted territory. The REO inventory has dried up (for now). Short sales and regular open-market sales will dominate the balance of the year. Many underwater owners (including second homeowners) are turning to short sales for debt relief and to get under the Debt Forgiveness wire (12-31-12).
It has almost become fashionable. These sellers are finding the process amenable and the minor credit “hit” worth the trade-off. Some of my recent sellers engaging short sales just shake their heads at the state of this new economic environment. Owners who once considered this whole scenario rather immoral are jumping on the bandwagon, and are delighted to do so.
For buyers these short sales are full of uncertainty and require patience (don’t plan on being “in for ski season” unless you start soon). BUT these short sales can be opportunities to score great properties at market value or less, AND these transactions are very much like free options during most of the process. And there certainly appears to be the ability to further negotiate as the process continues.
Where the REO transactions of the past few years have been very restrictive on the buyers, these short sale transactions are rather un-restrictive on the buyers. Short sales are more like throwing sh!t at the wall and seeing what sticks. We’ll see how long all of this continues.
Meanwhile, as I drive around town I see homes that have been foreclosed on that the owners are still occupying and have been for months(un-evicted REOs). I also see homes that I know the owners have been in default for years and their lenders continue to stall foreclosure. I also know of properties that are in “limbo”; foreclosed on, vacant, but stalled with “title defects.” And many owners stalling foreclosure (but still living high) while proceeding through a very protracted bankruptcy. Only in a small town, resort town, with someone who is paying attention (me), does all this become so apparent. But maybe this is the way it is across the whole country.
Noteworthy Sales
The closed sales are all over the board. I see some great buys and some not-so-great buys, but as most of you know, I am jaded…
The sale of 149 Mono St. at $220,000. This REO duplex in the “ghetto” consisted of two individual structures–one house built in approx. 1957 and the other a small log home built in 1981. These “investor” opportunities have some appeal for second homeowners; some steady income, a consistent warm body at the property, and a separate property for owner/guest usage. This was financed.
Two sales in the early phases of Snowcreek, both the traditional 2+loft / 2 bath townhomes, one an end-unit in Phase I for $385,000 and one an interior unit in Phase II for $380,000. These set the tone for Snowcreek valuations this summer. Snowcreek is a popular summer seller. These sales would tell me that there is a small premium for the Snowcreek II exterior upgrades. There was also a rare Snowcreek garage sold with the Phase I unit for $50,000. That number seems to be the sticking-point value for a private garage in the early phases. That is an interesting number in relation to units with garages, and independent garages in other locations (like the airport).
The sale of Villa de los Pinos #17 for $220,000. This 2/2 town home was on the market a LONG time and I showed it dozens of times. This property showed great with a beautifully remodeled kitchen, many tasteful upgrades, etc. and a nice big deck with southern exposure overlooking one of the nicest common areas in town. Originally started at $399,000, eventually sold as a short sale. This buyer should be stoked.
The sale in Snowcreek Crest of a lovely, large modern home for $960,000. This home had been marketed for the past few years (by several different agents) at a higher asking price. The seller had moved on, and was obviously ready to sell (“the market had spoken” as I like to say). The sale for this quality home closed at $261/per square foot–couldn’t come close to replace it for that. BUT the recent REO sale (last newsletter) in the same neighborhood sold significantly higher despite being very similar in size and age and nor nearly as nice. Why? VIEW! In this case these recent sales could arguably place a value of $300,000 or more on a great view.
Other Real Estate News
Between the buyer inquiries I directly receive and through other agents, more and more (potential) buyers are asking about rental income; do you have real numbers? will it “break even”? etc etc? Here’s my take on what this is all about; many “investors” are chasing return on investment. Someone has planted it their minds that a rental in Mammoth will provide that return plus some “enjoyment.” Forget it. It sounds great but is not reality. Try the Inland Empire. Basically, real estate in Mammoth is too expensive (initially) and the expenses are too high (think snow removal, remoteness, etc.). Mammoth is also VERY seasonal.
But here is Paul’s rule-of-thumb(and there are plenty of variables). For the average condo buyer who puts their condo into some sort of nightly rental arrangement, the net return should be able to cover the common area fees and taxes. Again, plenty of variables to consider(which is what consulting with a knowledgeable Mammoth agent is all about). Don’t expect the net to cover a mortgage payment, most utilities, etc. And the “prime time” holidays are sacred for rental income. And drought winters don’t help at all. Again, lots of variable, but this rule-of-thumb is a great place to start.
Happy Father’s Day to all of the fathers out there!!
Thanks for reading!