Market Summary: April 14 – April 28
The Mammoth MLS is reporting 18 closings in Mammoth Lakes for the period ranging from a low of $120,000 to a high of $970,000. That is one (1) more closing than the previous period. The sales data reports only one (1) REO/bank owned property closing and one (1) short sale closing. Only two (2) of the closings were above $450,000. Simply put; consistent and stable sales data for the past couple of months.
At the period’s end there are 111 condominiums listed for sale, a decrease of two (2) from the previous newsletter. The inventory of single-family homes is down one (1) to 36 with still only two (2) homes listed under $500K. Residential lots listed for sale are stable at 37. Inventory remains stable but the big question the next few months is; Will we experience the typical, seasonal rise in the inventory that normally peaks around Labor Day in the Mammoth market?
The total number of properties in “pending” (under contract) in Mammoth Lakes decreased by four (4) to 79. Of the 79 properties in “pending,” 19 are “contingent short sales” and 29 are in “back-up” status. The total number of pendings in the aggregate Mammoth MLS (which includes outlying areas) decreased by five (5) to 106.
Market Updates and News
Warm almost summer-like weather has hit Mammoth this fishing-opener weekend and is forecasted for the next week and beyond. Property owners and managers are in the spring ritual mode of pulling up snow stakes, raking out lawns and landscape, charging-up (and repairing) the landscape irrigation, etc. Pre-summer capital improvement projects have even already begun on some condo projects. It’s hard to believe that two years ago at this point on the calendar we were still getting almost daily shots of 6-8″ of new snow and the town was completely buried.
The spring sales pop Mammoth has experienced in the past few years was mild and basically unsustained in 2013. Why? Maybe the lack of quality new snow since January? Maybe the early Easter? The low inventory and lack of selection? General economics? I don’t think we know for sure, maybe just a combination of all. But there is nothing better for Mammoth real estate than good snow. Despite the poor snow totals since the first of the year, the Ski Area and local businesses are reporting good economic numbers for the season. The December dumps were the salvation. Now we have to get through a long, dry, and probably busy summer.
Looking at the recent sales activity (and sometime shaking my head), it dawned on me that buyers are looking at properties in April that are not impacted by usual snow/ice accumulation and snowpack. I have often said that properties in Mammoth look very different in summer than they do after a series of wet, Pacific winter storms. And they do in many ways. Lack of real snowfall gives no evidence to the effects of solar aspect, wind, and overall snow deposition to a property. Or even general access to a property in a “normal” winter. These are all things to consider when purchasing a property in a place that can experience snowfall extremes.
Recent sales activity in both REO and non-REO “income property” segment could certainly fall into the category of what the current business media refers to as “mal-investment.” Investors continue to chase yield. Are they chasing it to a level of insanity? Owning pure investment properties like apartments is challenging. Owning them in Mammoth can be even more challenging (talk about the need to experience the property in a “normal” winter).
Mammoth can also be very transient so managing vacancy rates can be exacting. Many times tenants just aren’t accustomed to a winter environment and become extra difficult. Snow and ice management expenses can skyrocket in normal-to-heavy winters. Snow and ice (and firewood) can cause significant wear and damage requiring costly repairs. Unlike many businesses in town, lots of snow doesn’t bring more revenue, just more expenses. And drought winters cause tenants to not pay rent or vacate early.
Residential income properties can be good investments in Mammoth, but at the right price. Pie-in-the-sky projections and “cap rates” need to be scrutinized carefully… At least we don’t have termites…
The REO industry has new term replacing “shadow inventory,” it is “invisible defaults.” As the controlled burn of our national real estate market carries on for many more years, and squatters and defaulters get to live in properties for years without making payments, a “tale of two cities” is appearing in Mammoth. The invisible defaults in the single-family (SFR) neighborhoods look quite different from the condo projects. The SFR defaulters are displaying dead landscape and plenty of peeling paint and other deferred maintenance. The defaulters in condo projects are quite invisible, because the ongoing common area maintenance keeps them hidden.
More evidence of less-than-serious buyers trolling through Mammoth. In the last few weeks I have experienced numerous, rather standard offers on listings that were at 90% of sellers asking price. Upon a counter offer there is no communication from the buyer ever again. This is very strange and a sign of the times. One REO property had a dozen offers and within a week all but two of the potential buyers were nowhere to be found. These buyers appear to have no real commitment to a Mammoth purchase. Maybe a new term… “hit-and-run buyers”… I think they just like the attention of fawning real estate agents.
Mammoth’s new fireplace ordinance will become a new point of negotiation in some transactions. You can read my my recent Q&A Column on that.
The sale of 115 Zurs Court for $402,500. This dilapidated “sputnik” house is located on one of the nicest lots in the very top of The Knolls subdivision. The backyard of the property is the National Forest. Really special location and setting. This property came to the market and had multiple offers and was bid-up. The house and garage are truly in tear down condition but we have seen new owners fix these type of properties up. It really doesn’t make sense; this would be an awesome location for a special new home. We’ll see.
The sale of White Mountain Lodge #2430 for $970,000. This is an upgraded and top-floor 3 bedroom / 3 bath condo hotel unit overlooking the main plaza and Gondola building in the Village. Mammoth Hospitality recently reported that these units average $75K to $85K a year in gross rents.
Two units at Helios North closed at $347,000 and $360,000. These are the 2 bedroom / 3 bath units with nice great rooms/kitchens and understructure garage. They are showing their age but considering their location right across the street from the Westin Monache and steps to the Village Gondola, they are worthy buys.
Other Real Estate News
And sometimes I need to rant… I have supervised and trained dozens of real estate agents over the past 20+ years and my retirement from that is certainly improving my life, but quality sales training is once again lacking on many Mammoth real estate fronts. Many agents have reverted to only being capable of negotiating “on price” (or did they ever know how to do anything else?). That is because their clients can only fixate on trying to grind the price down. Or are they this new breed of “hit-and-run buyers? These agents just parrot their clients. Mammoth real estate buyers who simply buy on price are fools.
What ever happened to classic “features and benefits” selling? Forget it. And those of us in Mammoth have the fortune of selling the experience and emotion too. Some local agents have even come to think that whining is a good negotiating strategy. And many (potential) buyers have become fixated on the nebulous price-per-square foot value of comparable properties with gross functional obsolescence (and they probably don’t even know what functional obsolescence is). Sad, and their agents aren’t skilled enough to educate them. We have truly entered an era of continuing mal-investment. Caveat emptor.
Thanks for reading!