Market Summary: January 12 – January 26
The Mammoth MLS is reporting 9 closings in Mammoth Lakes for the period ranging from a low of $65,000 to a high of $1,482,500. This is one (1) less closing than the previous period. Of the 9 closings, seven (7) were financeable (conventional) properties and five of the seven were in fact financed with conventional loans. The trend is cash buyers are becoming fewer. During the period there were NO REO/bank owned property closing and NO short sale closings. The market has clearly slowed but with the dismal snow and ski conditions it is difficult to assess. There were high-end closings and new high-end sales/escrows during the period, so So Cal’s wealth effect continues to play in the market.
At the period’s end there are 84 condominiums listed for sale in Mammoth Lakes, and that is down two (2) from the last period. And again, there were new condo listings brought to the market during the period, but new sales and expired listings as well. The drought related loss of rental income for many condo owners may indeed bring much-needed new condo inventory to the market by mid-year. We’ll see.
Single Family Inventory
The inventory of single-family homes is up two (2) to 39. A couple of new lower-end residential offerings including a short sale and a nice little modern home in a compromised mix-use area; that property will look good on the internet but won’t look so good in person.
Residential Lot Inventory
The vacant lot market hasn’t changed, and there are still a couple of attractive residential building sites in the ~$200K range.
The total number of properties in “pending” (under contract) in Mammoth Lakes is up six (6) to 48 for the end of the period. That’s decent new activity considering the poor snow conditions AND the time of year. Buyer interest has not dissipated. Of the 48 properties in “pending,” six (6) are “contingent short sales” and 21 are in “back-up” status. The total number of pendings in the aggregate Mammoth MLS (which includes outlying areas) is up five (5) at 69. So the new sales activity is in Mammoth. Normally, the Mammoth real estate community would be prepping for the President’s weekend/Ski Week surge. That has been a productive sales period in the past few years. So far, it looks like this year will be a bust.
Market Updates and News
Last weekend’s Olympic trials were well executed and Mammoth looked great on TV except for the brown dirt in the background. The TV crews kept it to a minimum. The Ski Area is maintaining the runs that are open and they are makings snow at every opportunity. There just aren’t enough runs open to hold the interest of most skiers and snow boarders (even though the parks are open and decent). The warm weather continues in Mammoth although there was a brief 15-minute snowstorm the other afternoon. That was disappointing. The economic impacts of the drought are beginning to manifest publicly, but the two most profound are the result of a long-term trends rather than the result of immediate despair.
Most publicly is the closing of the Whiskey Creek restaurants in Mammoth and Bishop. This has been coming for a long time but the two restaurants were employing close to 100 people. Ouch. The Mammoth restaurant is part of a larger plan for Mammoth Brewing Company (MBC) to take over the property. MBC had been looking for expansion space for the last few years. Appropriate space in the High Sierra for their operation is quite limited. One key to their brewing is the Mammoth water. But MBC placed massive new brewing tanks adjacent to the brewery on the property last year.
Now they will take over the entire facility. My guess is the existing structure will become more brewery and less restaurant/bar. But the best news is that the MBC owners, Sean and Joyce Turner, are proven and excellent business people. And because of the growing outside distribution of their award-winning beer, their revenue source is not entirely in Mammoth. And their music events, including Bluesapalooza, are increasingly successfully. Personally, I can’t wait to see the entire evolution. It should prove to be great change for Mammoth.
Also gaining public attention (and clearly a current macro trend); Bank of America recently announced that it will close their Mammoth Lakes branch. BofA once owned and occupied the entire Footloose corner building. Now it will vacate the back space it has occupied since The Footloose folks acquired the property in the North Village shuffling. BofA has been a mainstay of Mammoth and Mammoth business for decades.
Now it will downsize to a “kiosk” type operation. I have business-banked there for decades myself and can probably work with the changes, but many merchants will simply have to change. But this is all part of the larger changes in the consumer banking world. Thankfully, Union Bank and Eastern Sierra Community Bank are still here and occupy buildings they own.
Less publicly are lay-offs at the Ski Area; first the seasonal employees and the “less-critical” employees. Local restaurants and retailers are more likely to just cut hours back. The volume and velocity of dollars in Mammoth is down to a trickle when it should be at peak. This will certainly create an outward migration of young employees and others as well. Vacancies will rise in residential rental properties, and many won’t be filled until next fall. And quietly, the Mammoth MLS is already showing new business listings and price reductions on those already listed. This would not be a good time to try to sell a business in Mammoth, but it may become a good time to buy one-if all the conditions were right.
Meanwhile, the owner of the largest local carpet and flooring store was in my office this last week and he said he was “slammed with work” and had over a dozen workers in the field in the local area. The local cabinet maker/supplier is “just catching up” after a very busy end-of-year and has new projects already staring for 2014. The major local fireplace company is busy with three full-time crews in the field. And on-and-on. So again, the wealth effect from So Cal will keep many parts of the local economy alive. But others will suffer seriously from this drought.
The drought certainly creates other problems besides economic ones. Even if we get major snow storms before the end of the season, water will be an huge issue. Expect all kinds of restrictions. Those with limited landscape and/or xeriscape will be glad. Luckily, treated water from the sewer plant now irrigates most of the golf holes. The bigger nightmare is fire danger. We had a preview last summer and it wasn’t pleasant. The heavy smoke from nearby fires seriously impacted summer tourism. And with limited snowpack the threat comes even earlier in the season. We can only hope for a Miracle March like in 1991. But the entire state, and maybe the whole country, will be impacted by this drought.
With fewer sales there isn’t that much to report. The highest sale of the period at nearly $1.5M was another high-end sale in a less than premium neighborhood. These buyers just don’t seem to care about the old-school fundamentals of real estate investing. So be it. The interesting thing is that the property appraised at the sales price and there was a new loan put on the property.
The other high-end residential sale at $1.1M is located behind the gate in the Snowcreek Ranch. This home was on the market for a long time and is probably the worst lot in the whole subdivision. Why? The lot backs up to the Ski Trails mobile (manufactured) home park. Nothing like looking out the kitchen and dining room windows of your million dollar mountain home and looking at a mobile home park full of local residents and all their junk. At least the view out the front is nice. The new owners can always close the blinds. But just another example of ignoring fundamental real estate theory.
A 2 bedroom / 2 bath at White Mountain Lodge closed for $380,000. With a recent sale of a similar sized unit at Grand Sierra Lodge closing for $100K more, there is now an established $100k price difference in Village condo hotel units based on location.
A Sierra Valley Sites lot closed for $65,000. This is a multi-family zoned lot in “the ghetto” that would accommodate a fourplex. With construction/development costs high, and rents moderated, the value of these investment lots declines. At least somebody didn’t overpay…
Other Real Estate News
RealtyTrac recently came out with a survey of “The Best Ski Resort Towns For Real Estate Investing.” Mammoth scored #8 between #7 Bend,Or and #9 Park City.
The Factors for scoring:
- Distance from the nearest airport
- Unemployment rate
- Median list price
- Foreclosure inventory
- Rental vacancy rate
- Gross rent yield
- 2013 foreclosure rate
- Foreclosure rate drop from 2010
- Pure awesome factor
Number One on the “Best” list is Whitefish, Mt, then Vail,Co, Truckee, Ca, Avon, Co, Jackson, Wy, Bozeman, Mt then Bend, Or and Mammoth… If one of the “factors” was; “~ six hours drive from the home of millions of hardcore recreation enthusiasts” then Mammoth would have scored higher…
Speaking of foreclosures and REOs, some stats and anecdotes; according to a recent Black Knight Financial Services Mortgage Monitor report, as of Nov. 2013, 6.2% of all mortgages in California were delinquent and 2.9% of all mortgages were in default.
And in the past week this office was assigned a new bank owned property. The only quirk is that another Mammoth real estate office has been managing it for a couple of years. Apparently there is a “title defect.” But we were managing a property for a few years that was re-assigned to this company a few months back with a similar “title defect.” And now they tell us that they are sitting on a bunch of Fannie Mae properties with “title defects.” So essentially there are a dozen or so condos here in Mammoth that are sitting there empty for years with title defects-basically, nobody can figure out who really owns the property. And until they do, they will continue to sit there…
Thanks for reading!