Market Summary: April 20 – May 4
The Mammoth MLS is reporting 15 closings in Mammoth Lakes for the period ranging from a low of $115,000 to a high of $820,000. This is nine (9) more closings than the previous period which was a long-time low. Of the 15 closings, eight were cash purchases, one owner financed, and six with loans including a large Village unit financed. During the period there was one (1) REO/bank owned property closing and one (1) short sale closing. The market the last two weeks was more reminiscent of late 2013.
At the period’s end the number of condominiums listed for sale in Mammoth Lakes was down three (3) to 108. New listing prices continue to be all over the board. And so are closed sales. Spring typically sees increased inventory, but this year it stops and starts. There are still 14 condos listed under $200,000. And six (6) of the 15 sales during the period were condos under $200K.
Single Family Inventory
The inventory of single-family homes is down 2 to 49. Again, this should be time of year to see new listings; winter is over, there is strong evidence the rental market is breaking fast (which should be expected based on the poor winter), most properties are totally free of snow and ice, and the grass and trees are greening up. There is essentially no “winter damage” to repair. The buyers are certainly waiting for new offerings, but at the right price.
The total number of properties in “pending” (under contract) in Mammoth Lakes is up again by two (2) to 69. Of the 69 properties in “pending,” six (6) are “contingent short sales” and 38 are in “back-up” status. The total number of pendings in the aggregate Mammoth MLS (which includes outlying areas) decreased by one (1) to 87.
Market Updates and News
The national media has been full of varying statistics regarding substantial drops in mortgage applications both for purchase and refinance. All of this might be due to the new Dodd-Frank regulations or perhaps the fact that banks have laid so many people off. But one thing is for sure, getting loans completed in Mammoth is getting harder by the day. These are primarily second home purchases with very well qualified buyers, but the underwriters are nitpicking over everything. And not all out-of-the-area loan officers are skilled at getting the local condominium projects “approved.” It is the shades of the late 1980’s when condo loans basically took 60 days.
But the real impact to buyers is that we’re back to the REO type market of a few years ago. The mortgage seeking buyers are going to be beat out by those with cash. Like the asset managers of the past few years, listing brokers like myself (just this past week) are more and more seeking cash offers to avoid the new delays and headaches of dealing with lenders. And I hear the same from other experienced agents. As long as there are still cash buyers floating around (and there are), the lenders may be putting themselves out of business. And the statistics don’t lie. Many people just don’t want the headache.
Last newsletter my conjecture was that it would end up snowing for the fishing opener. It is almost tradition. But after this drought winter who would expect that? And it sure did dump. Mammoth had two feet of fresh snow in town on last Saturday and more than that on the Ski Area. The weekend was great skiing and the Sierra received a good shot of much needed water. Maybe the best storm of the winter. But now it is back to spring skiing and drought. May is one of the slow seasons in Mammoth; some skiers, some fisherman, lots of raking and spring cleaning, and vacations out-of-town for many locals. I’ll leave at the end of the month. Town Clean-Up is the 17th.
Mammoth CEO Rusty Gregory backpedaled (or did he?) on his comments about closing Sierra Star golf course if the Lodestar property zoned for hotel was re-zoned for single family residences. He now says he will simply oppose the zoning change. So he recognized his tantrum. What we will have is battle over the zoning before the public officials. There are worthy debating positions on both sides. Odds are Mammoth will have three new Town Council members seated by the time this makes an agenda. So our neophyte Council will have an early test to see if they can be manipulated by Mr. Gregory. I wonder if anybody will ask that line of questioning in an upcoming Q&A?
Meanwhile, there is increasing buzz around town that I might be wrong. Namely, the powers-that-be are doing their best to create hype for near-term major development. There is clearly demand for quality single-family homes in the $1M to $2.5M range. But in Mammoth you always have to ask; “How many can the market absorb?” Mammoth development is about capacity and scale. This isn’t like building 2,000 new homes in Irvine. How many of these homes can our market absorb?… And there is a substantiated report in the local media that a large parcel in the Village is about to change hands and the developer wants to build timeshares. Hmmmm… maybe they should go across the street and visit 80/50. Okay, timeshare and fractional are different, but as they say, a distinction without a difference. And apparently the parking garage at 80/50 is slated for a high-rise tower of luxury condo hotel units. There is some demand there, the oversized units (3 bedroom) in the Village have sold better in the last year than in the last five years.
Regardless, the hype machine is desperate to build momentum. They have a tough act to follow because Intrawest (the old Intrawest) were the geniuses of this play and they have left the building. But the facts remain; the land is being purchased at wholesale prices, development fees are sky-high in Mammoth but will likely be significantly waived, construction costs are still high, and demand for certain real estate products is solid. But this time around we have a functioning airport. Maybe that will make the difference. And we apparently still have a solid base of ~30,000 MVPs, come rain or shine.
But a development cycle like we experienced from 1998 to 2006? As one prominent local said to me the other day, “”I’d like to see a good five-year run, then I could retire.”… Not me, I think I will have to work forever.
I detest the era of mal-investment that this country is in. The entire financial system is chasing returns because of the low (no) interest rate policy. People are being sold and are purchasing crap in the hopes of good returns. This could end poorly. Where we see it locally is in the purchase of old, poor quality income properties. But I have beat this drum before.
The sale of two “A” frames (on one lot) in the “the Ghetto” for $330,000. Yes, the rent projections look nice. The problem? This is not where stable local residents end up calling home. What a landlord gets in this type of property are transient and seasonal employees who might be away from mom-and-dad for the first time. The economics are unpaid rent, property damage and leftover trash, months of vacancy until the next crush of desperate renters and some migraines in between. Expenses like water and trash and insurance continue to climb. Okay, I’ll step off the soap box. Good luck with that acquisition.
The sale of two Westin Monache 2 bedroom / 2 bath units signify a clear upward trend for these popular units. Unit #140 sold for $479,000. This first floor unit is right across from the conference rooms and had extra high ceilings. The deck is a step-right-over into the forest. Considering the Westin is a dog friendly property this is a potentially interesting amenity. Unit #546 sold for $560,000. This is the corner 2 bedroom floor plan overlooking the Village. This is a move-up in price.
The sale of White Mountain Lodge #2410 for $820,000. This is a 3 bedroom / 3 bath top floor unit overlooking the interior plaza area. Even though on the top floor, this unit is right above Lakanuki which is noise central at night in the Village. The unit had some pretty good rental numbers on a VRBO style rental program.
A nice little clean house with a garage sold to some locals for $448,000. Congratulations. A crummy lot on Davison (that had been on the market for years) sold for $180,000. Sorry. The buyer could have spent another $20-30,000 and bought a good/decent lot. The rest were <$200,000 condos and nothing really noteworthy. The demand for decent low-end condos remains strong.
Other Real Estate News
Speaking of Mammoth development, the local media has discussed two local (and established) business enterprises who are thwarted in the their expansion efforts because they don’t conform to the North Village Specific Plan (NVSP). This is pure BS. I was deeply involved as a Planning Commissioner in the 1991 and 1994 versions of the NVSP. It is a specific plan covering the 38 parcels where the Village and Westin are today and the periphery parcels down to Sierra Star. The NVSP is antiquated today. A Whistler type build-out as envisioned will never happen. To think so is simply delusional.
For the Town to stifle quality local business folks by nitpicking is foolish. The Town let Intrawest and the Ski Area bend and break every part of the NVSP during the 2000’s. I could go on for hours. The NVSP has become mostly irrelevant because the big-money interests will make a shambles of it through fist pounding negotiations and threats to take their money some place else. Just watch, the height limitations will be soon be relaxed to accommodate the next developer. But Mammoth Brewing Company has to adhere to the letter of the NVSP to make a minor expansion in the old Whiskey Creek building. Once again, the local business people are screwed, the local residents and second homeowners and visitors lose out. But the big development interests will get what they want.
Thanks for reading!