Market Summary: December 29 – January 12
The Mammoth MLS is reporting 10 closings in Mammoth Lakes for the period ranging from a low of $179,000 to a high of $1,290,000. This marks fewer closings in the Mammoth market and the typical tax driven “close-before-the-end-of-the-year” or “close-in-the-next-year” activity. Of the 10 closings, seven (7) were financeable (conventional) properties and six of the seven were in fact financed with conventional loans. During the period there were NO REO/bank owned property closing and NO short sale closings. The presence of REO and short sale properties continues to decline, but there is a hint that this may change in 2014.
At the period’s end there are 86 condominiums listed for sale in Mammoth Lakes, and that is down six (6) from the last period. There WAS some new condo inventory brought to the market during the period, but a slew of expired listings as well. The Mammoth market needs condo inventory. But without quality ski conditions now or forecasted in near future, the pressure will subside in the short run. The enthusiastic visitors and potential buyers simply won’t be here. And we’ll see what this drought winter will do to rents and vacancies. It can’t imagine it will be positive.
Single Family Inventory
The inventory of single-family homes is down a couple to 37. There are only three (3) homes listed under $500K. And those prices need to come down. There are 41 vacant lots on the market and a handful of them are “investment” type lots. There are a couple of attractive residential building sites in the ~$200K range. But this is not the best time of year for marketing them, even though they aren’t loaded with the usual winter snowpack.
Residential Lot Inventory
The past summer’s rush for vacant lots appears to be over. The “investment” lots are cheap; but making them “pencil” is the reason–construction costs are high.
The total number of properties in “pending” (under contract) in Mammoth Lakes is up four (4) to 42 for the end of the period. Of the 42 properties in “pending,” five (5) are “contingent short sales” and 18 are in “back-up” status. The holidays clearly brought some buyers to town. As I have said for years, “selling real estate is a function of people in town.” The internet has changed some of that in the past few years, but it still holds true. When there are crowds in town, we sell real estate. It wasn’t gangbusters, but there were sales. The total number of pendings in the aggregate Mammoth MLS (which includes outlying areas) was even at 64.
Market Updates and News
The Ski Area is pulling out all stops to keep the skiing decent. Many of the Olympic trials are scheduled here in the upcoming weeks. Much of the snowmaking effort is directed at making half-pipes and super-pipes. And to keep Canyon Lodge and Eagle Base open. The 10-day forecast has no snow in it, just more gorgeous weather. This is my 33rd winter living in Mammoth and this may be the worst I’ve experienced, but it is very reminiscent of 1991. (Really) old-timers will tell you that it will snow eventually. We had 197 inches of snow in March in 1991. But it was too late to save the ski season.
Regardless of how much snow Mammoth receives between now and spring, the economic damage will become more apparent in the months ahead. Decreased cash flow will affect the Town and all businesses that rely on tourist dollars (are there any that aren’t?). The major retailers are either discounting fast or sending product back to their suppliers. Food service entities with high debt and/or rent will be in jeopardy.
Local businesses that rely on payment from other local businesses will be greatly compromised. Local reservation companies and the property owners on their programs will experience dwindling cash flow, if any. Landlords can expect early vacancies and plenty of “negotiations.” And certainly the long-promised development at Eagle Base will be delayed even longer. And on and on. No one will be spared.
But as in 1991, there will be new opportunities. For real estate and potential buyers, maybe diminished cash flows will shake some needed real estate listings loose. There will be other opportunities, and likely some surprises too. 2014 is now destined to be the “very interesting.”
Meanwhile, Mammoth’s new internet service had dubious results during the holidays; it worked well, and not-so-well. Apparently there are some hardware bottlenecks in the local Suddenlink system. And those are promised to be rectified/replaced soon. Meanwhile, Verizon has offered nothing new as of yet, although my DSL has been working well, just not as well as Suddenlink’s via the TV cable.
The Dodd-Frank regulations moved into place this last week. Mortgages will be harder to qualify for and complete. We are already seeing the challenges. Little nit-picking by underwriters. Offers including financing now need to be written for 60-day escrows, and hopefully we can close early. Sellers will simply have to be patient.
Sometimes when I see closed sales come through the local MLS I ask myself if some buyers ever ask their agents for the latest comparable sales, so they can make a reasonable assessment as to what the property they are offering on is really worth. But why would they want to do that?? And as more-and- more of the purchases include financing, it would appear the appraisers are playing along.
The sale of Seasons Four #155 struck me. This 2 bedroom / 2 bath condo sold for $221,000. The “days on market” for this property was less than 90 days. But I showed this property many times over the past few years. It has been on-and-off the market. The market finally came to the seller’s price. This property has an unusual view opportunity in Seasons Four; located across the street from Crestview’s tennis court and the “Voodoo shoot” gives it a nice southern and sunny Sherwin view that won’t be obstructed in the future. Sometimes, potential buyers just can’t see the view.
The Stove restaurant closed escrow. The new owners are the existing owners of Gioavanni’s. They are very good operators. With this move I would expect The Stove to become better than it has ever been. I would also expect to see them try to expand the operation, after all, there is a vacant lot next door.
And one more of my pet peeve sales… somebody paid $1.3M for a home that, quite frankly, is in a substandard location. The property had been on the market a long time (for good reason). The three most important things about a piece of real estate still applies WITHIN Mammoth. The current era of mal-investment continues.
And to a closed sale, but this week there was a new manufactured home listing for $65,500. The listing photos made it look pretty good. But then potential buyers discover that the space rent in the park is almost $900 per month (but that does include water and sewer and trash removal and some snow removal) and there is disappointment… There still is no “cheap” way to own property in Mammoth.
Other Real Estate News
Some interesting national real estate statistics came out this week comparing certain micro-markets (zip codes) within major metropolitan areas. The stats compared 2013 values to 2008 values. There were some amazing disparities; the greatest in San Francisco Bay area where Palo Alto is up 40+% and neighboring San Pablo is down 58%. Even Pittsburg had neighboring disparities of 40%.
So I pulled the sales in Mammoth from 2008 for some comparison. First of all, ALL neighborhoods and market segments are down. But some far more than others. The worst performer since 2008 is The Westin. Sale prices there are down an average of 50 to 60%. Many of the newer Intrawest built properties like Juniper Springs, Cabins, Mammoth Green, White Mtn. Lodge are down an average of 40%. Interesting, Lincoln House is more in the minus 20% range.
Of the newer built projects (for the era), the least decline was at The Lodges. In fact, all of Snowcreek shows declines averaging 20-30%. Looks like The Pointe (condominiums) have the least decreases of all. The least declines by segment are the mid-range single-family homes. There are actually some same-home(addresses) sales that closed in 2008 that also closed in 2013. Without allowing for upgrades, the differentials are in the minus 15-18% range. Just looking at the average sale from 2008 and where values are today, that seems to be the average variance in that part of the market.
The lower end of the condo market is also in the ~20% range from 2008. Yes, those values declined substantially after 2008 but they have also rebounded in the last 18 months due to the lack of inventory. Also, going through these sales showed me one other interesting factor; purchasing an REO in 2008 was probably a good buy. The sales numbers show there was still plenty of hype in the market in 2008. But the REO market was new and asset managers were pricing aggressively.
Thanks for reading!