Market Summary: June 1 – June 22
Always nice to go on vacation, and always nice to come home to Mammoth, especially as summer begins… The Mammoth MLS is reporting 21 closings in Mammoth Lakes for the three week period ranging from a low of $24,000 to a high of $3,250,000 (residential). Two of the closing were manufactured homes under $56,000 (I normally don’t count these because they really aren’t real estate in my book). During the period there was one (1) REO/bank owned property closing and NO short sale closings. Of the 19 real estate sales, 17 were financeable properties and nine (9) were purchased with cash. The market continues to move along at a reasonable pace.
At the period’s end there are 125 condominiums listed for sale in Mammoth Lakes, an increase of 14. The newly listed condos clearly have higher asking prices. The “prices are going up” mantra is being beaten into the sellers and the sellers are increasingly heading out on fishing expeditions. We’ll see if the buyers bite, and certainly some will. Many Mammoth owners who are pondering selling their property believe it is critical to have their properties on the market by the Fourth of July. But that isn’t necessarily so.
Better to have the property well-presented than rushed to the market. And priced within reason. The Fourth is a very busy (and packed) holiday with some potential buyers poking around but normally there aren’t many deals done. Everybody is focused on having a good time with family and friends. And the weather and activities are just too good. The real buying push normally won’t come for another couple of months. But what happens between now and then will be telling for the market and values.
Single Family Inventory
The inventory of single-family homes is up nine (9) to 62. But don’t look for any bargains in these new offerings. There is now plenty of residential inventory in the $550,000 to $800,000 range that have plenty of undesirable curable and incurable defects. Most agents and buyers can’t tell the difference, and will grossly underestimate the true cost to repair the curable ones. This segment of the market may have to sit. There are 12 homes listed between $1M and $2M. There are only four (4) homes listed above $2M.
The total number of properties in “pending” (under contract) in Mammoth Lakes is down (again) 15 to 46 at period’s end. Of the 46 properties in “pending,” seven (7) are “contingent short sales” and 20 are in “back-up” status. The drop of over 30% in properties in escrow in a little over a month could certainly be seasonal (especially after a poor winter) or could be foretelling other stories about the local market. These dynamics will be worth watching in the months ahead. Time will tell. The total number of pendings in the aggregate Mammoth MLS (which includes outlying areas) is down 16 to 68. So the decline is focused in Mammoth.
Market Updates and News
Mammoth’s summer kicks off and that means the professional motocross crowd and all of their followers are here for the next week. The group is aging gracefully; nicer motorhomes, rigs and trailers. And less noise. And more kids and grandkids. I’m sure the world-class track is pristine. The Ski Area is all aces at this type of preparation (like snowmaking). And with the Fourth of July falling on a Friday, we can only imagine the crowds will be massive after that.
The Mammoth and Mono County election provided some surprises. None of the women running for Town Council were elected but one got fourth. Stacey Corless won District 5 County Supervisor (against two others) without the need for a run-off. Impressive. The Mammoth Town Council now has a mix of developer backed members and assorted others. They were seated this past week but I don’t expect anything earth-shattering at first. But it is likely we will see a ban on plastic carry-out bags not only in Mammoth Lakes but possibly all of Mono County…
The really big surprise was the landslide election of Ingrid Braun as Mono County sheriff. This truly ends the “Wild West”/good-old-boy lock on the Sheriffs’s department that has probably existed since the mid-1800’s. The message sent (among others); the populous of Mono County doesn’t approve the indiscriminate harassment of visitors to our County based on traveling to Burning Man or having Grateful Dead stickers on their cars. But now we’ll have an LAPD protege (and woman!) as Sheriff.
This will be interesting… And long time Mono County appraiser and “good guy” Barry Beck won County Assessor over the incumbent. I certainly look forward to working with him as the new Assessor. Plenty of fundamental change after this election. But they will all have their BIG challenges.
Back to real estate… I see some continuing trends in the market; Inventory is up and so are asking prices. Asking prices are up for even mediocre properties. The local market has clearly bounced off the bottom of the busy REO/short sale cycle of the past six years. But now the market is trying to achieve significant price increases. Will the buyers play and pay?? We’ll see. But we are likely in the discovery time for the new “higher range.” Meanwhile, with transaction volume down the local agents will be hustling.
There were more agents holding open house this weekend than I have seen in years, very telling… More curiosity; more and more truly wealthy property owners attempting short sales. Mammoth is a small town and these are affluent multiple second-homeowners. And the short sales appear to be getting approved. So the “hardship” requirement of a short sale has become another big lie… And there are more and more defaulted properties mired in “title defects” including some for years. This could take years to clear. (Remember, “markets hate uncertainty.”)
And even more curiosity; scrutinizing the new listings since I have returned from vacation are a number of listings that were only purchased in the last couple of years. These are purchases from 2011 through even 2013. Some of these are actually some of the better priced properties coming to the market, especially since the current owners have made some improvements (like new fireplaces)… There are always questionable details (at least for me) in the “churn” of Mammoth real estate. They can’t all be move-up sellers or divorces.
And while on vacation I had the chance to finally read a friend’s recently published book and I highly recommend it. Jim Reed has an amazing personal resume and grew up in remote Nevada. The book spins the true story of one of the first big train robberies (between Truckee and Reno) to the shoot-out at Convict Lake (how it got it’s name). The story gives the reader a great idea about what the Eastern Sierra was like 150 years ago. This book belongs on the bookshelf of any Mammoth home or visitor-oriented rental property. It does remind us that this area was once part of the real Wild West.
Two of the new Creekhouse (Snowcreek Phase 7) units closed during the period at the developer’s price. That leaves only two units left for sale. There are foundations poured waiting for additional units to be built but the word is that it won’t happen this summer. Apparently the developer (Chadmar) doesn’t have the same mindset of John Hooper who is selling all of the new product he can build. Even during the worst of the 1990s Tom Dempsey built some units in Snowcreek Phase 5 during the summer to “keep the momentum going” and keep his crews employed. Hmmmm…
Two units, Timberline #19 and Courchevel #6 (a REO) sold for $170,000 and $186,600 cash respectively. These are both indicative of buyers “losing their minds” for fixer-upper properties. Both are in need of complete gutting (down to the studs and new plumbing, electrical and windows) and full remodels. Neither had any exceptional qualities like big views, great access, etc. In fact, both have relatively poor locations and access within their projects. While remodeling older condos is VERY popular right now, remodeling in Mammoth is expensive and time consuming, even if you are a contractor (just figure the time on the road).
The time, effort, and expense can be worth it but the key is to start with a quality property; one that has a wonderful view or setting or location. Not just some ho-hum unit. I wrote an offer on the Couchevel unit for the manager at Courchevel who has been on-site for over 25 years and is an active general contractor (and a long-time real estate broker). He knew the unit well. He said it needed “well over $100,000 in repairs” and remodel. Based on sales in the project he thought the market value in the as-is condition was in the $110,000 range. The Timberline was no better.
The sale of Solstice #8 for $339,000. The values of these 2 bedroom / 2 bath condos has rebounded. This project represented what was probably the deepest loss of value in the recent real estate decline. It was built and pre-sold by Intrawest at the height of the market. It declined in value by ~60%. The project experienced numerous foreclosures and short sales. The bottom was in the in the low $200K range.
A residential sale for over $3M in The Bluffs is certainly noteworthy. A spectacular home both architecturally and setting/view. Rumor is the buyers sold for a huge sum in So Cal and are moving to Mammoth, and downsizing.
Other Real Estate News
I’ve been a critic of the move by the REO servicing companies to the online auction process. Since we’ve handled hundreds of REOs in the past few years “the old fashioned way” and are now facilitating these online auctions for the servicers, I think I’m a qualified critic. I have argued that the auction process diminishes or eliminates the valuable role of a valued salesperson moving a buyer through the process. I also don’t believe the seller “nets” the highest return from the property; the expenses are greater and the time frames are protracted.
But recently, I’m hearing a new problem. Because of their poor experiences with these online auction formats, the buyers and the agents “no longer trust the process” and have no further interest in being involved. The opportunity to make a solid purchase/sale isn’t worth the hassle and aggravation. I have clear examples of it here in the files… FYI, you can buy stock in these servicing companies. But I prefer the old adage “if it ain’t broke, don’t fix it.”
Some interesting stats from the vacation home industry that simply validate what we already know; Fannie Mae’s Economic & Strategic Research group recently examined second home data and found that second home mortgages tend to be safer loans, with lower delinquency and default rates than other purchase mortgages. For lenders, “if safe loans are the goal, second home mortgages are the way to go.”
Also, according to a recent Kiplinger’s newsletter, sales of vacation homes are expected to grow another 10% this year after a 30% bump last year. “With prices up significantly and interest rates likely to rise, a home in the mountains or by the shore may not pay for an investor seeking a quick gain. Many buyers will seek a retreat for themselves.”
Thanks for reading!