Market Summary: June 1 – July 15
The last two weeks have been tourism rich here in Mammoth; a week of 4th of July celebration to the annual Jazz Jubilee. The Mammoth MLS is reporting only 7 sales/closings (the lowest since this newsletter began over a year ago) in Mammoth Lakes for the period ranging from a low of $109,500 to a high of $675,000. The sales data reports only 1 REO/bank owned property closings and 1 short sale closings, so “distressed” sales continue to make a decreasing amount of the total.
At the period’s end there are 161 condominiums listed for sale, a decrease of six (6) from the last newsletter. Very bizarre for this time of year, the condo inventory is typically building during the summer. The inventory of single-family homes increased by eight (8) to 63. Residential lots listed for sale increased slightly to 43.
The total number of properties in “pending” (under contract) in Mammoth Lakes increased again by 10 to 82. So properties going to contract have been solidly “up” the last four weeks. But closings have been down as we come off the lag of slow, late-spring selling season. Of the 82 properties in “pending,” 41 (exactly half again) are “contingent short sales” (which means they are pending short sale transactions). The total number of pendings in the aggregate Mammoth MLS (which includes outlying areas) increased again to 98. The bank owned property inventory remains low but the classified section of the Mammoth Times is growing with new Trustee’s Sale notices and Notice of Defaults are rising at the County level. The Mammoth real estate market remains a nice little micro-economic environment with multiple cross currents.
Market Updates and News
As expected the Town of Mammoth Lakes filed for bankruptcy on July 3 and the first court appearance was this past week. Based on initial court discussions the process will take longer than most expected, but mostly because of the conflicting personal calendars of the involved parties. So for anybody waiting for the absolute resolution of all this, the wait will be prolonged. The Town has produced a valuable “Frequently Asked Questions” that can be found here TOML BK FAQ.
Also, don’t miss my last blog post “Open Letter to The U.S. Bankruptcy Court” that was also published in this week’s The Sheet. I’ve had several calls from long-time local business people thanking me for writing this piece. But so far, it is too early to really grasp what the “BK stigma” will be for Mammoth real estate.
The Ski Area’s decision to pull the plug on June Mountain has also provided great media attraction. MMSA CEO Rusty Gregory met with the June Lake community this past week. While this is a heartfelt decision, it is another example of corporate downsizing, and purging divisions that don’t (and won’t) turn profits. The future of June Mountain will remain uncertain for many months. The Forest Service may pull the permit, there may be potential purchasers, or as some have suggested, maybe it is all pre-destined and part of the “the big land swap.” Only time will tell…
And if that wasn’t enough, the LADWP litigation against Mammoth’s claim to Mammoth Creek’s water is also making headlines and creating more uncertainty. Luckily, the Mammoth Community Water District is one of the more sound and solvent entities in the region. Most of the experts agree that it isn’t so much about the water itself but more an attempted money-grab by LADWP. Personally, I’ve been paying water bills on behalf of banks for the past five years all up and down the Sierra, from Walker to Big Pine, and Mammoth’s basic water rate is relatively reasonable. Oddly though, those rates are less than what most people pay in southern California. The early hunch is to ultimately expect increased rates here in Mammoth. Is anyone surprised?
As the 2012 clock ticks away the financial media is increasingly picking up on what has been discussed here; the looming “fiscal cliff.” Looks like the media is trying to prompt the pols to make some pre-election decisions about the looming sunset of the Bush-era (and capital gains) tax cuts, etc. Last Friday CNBC even ran an article titled the “Mansion Cliff”; sellers with substantial capital gains on very high-end properties looking to sell before the end of the year. There might be some “Mammoth Cliff” selling before the end of the year; the inventory is low, demand is steady, and even in the last couple of days agents are shooting out emails inquiring about select properties that other agents might be holding as “pocket listings.” More cross-currents…
Not too many specific sales to discuss with only seven closings, and one of those was a partial sale of a hangar interest at the airport. One of my favorite exercises of the past few years is to go back to the old MLS sales comps. books from the early 2000’s and look at the sales in a backward direction. I like to look at specific condo projects, compare condos that are older versus newer, compare condos versus single-family, etc.
There are lots of variables and if I was completely enamored with statistics (as opposed to getting out on my bike) I could plot some interesting historical data. The Intrawest built-and-hyped properties sold at premiums compared to other condos. The newer Snowcreek condos have actually held value better than most. And for the past year the condo sales have been very similar (in price) to the 2002 time frame.
A recent sale in Hidden Valley Condos of a Studio + loft / 2 bath unit for $117,500 made me go back and look at historic sales of that particular floor plan in that project. This sale price reverted back to 2001 and late 2000 levels. (BTW, 2000 was a very strong appreciation year here in Mammoth, there is quite the disparity between sales in early and late 2000.) So I looked some more and in the older condo segment, some very recent sale prices are nudging back into the 2001 values. Conversely, single-family homes aren’t even close. Those values remain higher, more like 2003-04 values.
The REO sale of an upper floor 1 bedroom / 1 bath unit at the Westin Monache for $180,000 is a noteworthy sale. No damage to this property; it was ready to go right back on the rental program at the close of escrow. Values have slipped slightly lower at the Monache, and values on the “pool view” side are slightly higher. I still like this property and rarely miss the chance to go up there and poke around in specific properties. I think I’d like one for myself for when I retire in 30 years. My knees will appreciate the elevators.
Other Real Estate News
The old Royal Pines Motel and Swiss Chalet up on Viewpoint Road were both torn down in the past two weeks. I’m sure that will bring a few nostalgic tears from some, but too bad we can’t get a few other old dogs on Main St. torn down and hauled away. For now, Mammoth’s true bed-base is decreasing. In retrospect, plenty of old buildings have been torn down in Mammoth in the past 15 years. Laughingly, there are many people who wish the rest of the town could be torn down and rebuilt. But that won’t happen, quality rent-paying tenants and solvent owner/occupants are just too hard to come by in this seasonal resort.
As I drive through the various neighborhoods I see an inordinate amount of For Rent signs. Mammoth has always been tight for long-term rentals and the middle of summer is the peak of vacancy. But the general economy and drought winter has likely impacted that part of the market. Mammoth is an expensive place to collect unemployment or welfare… Of course, if the banks turn up the foreclosure mill then many of those people will be looking for a new place to stay.
A new California law known as the “Homeowner’s Bill of Rights” is the latest government sham. I’m sure the Realtor® groups all think this is another “victory” but it is all more hooey. The core of the law prohibits banks from “dual tracking” which means if the (deadbeat) homeowner is in discussions with their lender about a loan modification, principal reduction, etc., then the lender cannot foreclose during that discussion process. We’ll see how this piece of wisdom from the Ca. Legislature works out; may result in more “extend and pretend” (and free rent for deadbeats) or may motivate the banks to end the discussions altogether and move solidly toward foreclosure.
Thanks for reading!