Market Summary: November 23 – December 7
The Mammoth MLS is reporting 10 closings in Mammoth Lakes for the two week period ranging from a low of $210,000 to a high of $565,000. That is down seven (7) from the period before. There were two (2) REO/bank owned property closings and no short sale closings. Of the 10 real estate sales, five were technically financeable properties and all five (5) were purchased with conventional financing.
The “financeable” criteria may get somewhat distorted in the future; one of the closings this period was a Lincoln House condo hotel unit and Wells Fargo provided the financing (a first around here). The borrower had to put 35% down, have excellent credit and income, and have six month “reserves” in cash available (this might make a decent hedge on inflation as opposed to just paying all cash)… And again the bulk of the sales were low-end condos with six of the ten closings being condos under $310,000. This time last year there were 15 closings in this period.
Condominium Inventory
At the period’s end the condominium inventory was up one (1) to 134. Again, this is normally when inventory is dropping in Mammoth. The condo inventory a year ago was at 93. In this little market that is a significant difference. Back in the 80’s and 90’s a big drop would be to about 210 or 220 units, and there’s been a thousand plus units built since then. There are 13 new condo listings during the period including several condo hotel properties; this is a bit strange because they are heading into their prime rental generation period. The inventory is spread out through town but the largest cluster is nine (9) units for sale at Aspen Creek. And now that the lawsuit is settled at Eagle Run we are seeing more units there coming to the market.
One interesting segment of the condo hotel market is a small surge of listing and sales of 1-bedroom units at Juniper Springs Lodge. I always check to see when the owners/sellers purchased the property and lately it seems that a good number are original owners from 1999. Their original purchase prices are just slightly lower than their current values. Considering transaction costs, the values have gone nowhere in 15 years. Too bad we’ll never know what they would be worth if there was a fine base lodge at Eagle (as promised) instead of a couple of plastic tents.
Single Family Inventory
The inventory of single-family homes settled down three (3) to 54. This time last year there were 38 homes on the Mammoth market. So the increased percentage of homes on the market is almost identical to that of condos. Most of the inventory is just sitting. There are some price reductions but they are minor; a one percent (1%) price reduction for a property that has sat on the market all summer and fall isn’t going to excite anybody. The six (6) remaining Starwood listings continue to compete with each other.
Residential Lot Inventory
There are 38 vacant residential lots for sale ranging from $135,000 to $1,995,000. But there are now 10 lots for sale in the Bluffs which is a weird anomaly. The owners/sellers must be trying to capitalize on the mini-boom in mid-level luxury homes. There are still some attractive lots (and easy “builds”) in the area above the Village in the ~$220K range. The plunge in oil prices may bring the hard costs of construction down. We’ll see…
Pending Transactions
The total number of properties in “pending” (under contract) in Mammoth Lakes is up one (1) to 54 at period’s end. This time last year there were 45 properties pending in Mammoth. Of the 54 properties in “pending,” six (6) are “contingent short sales” and 27 are in “back-up” status. The total number of pendings in the aggregate Mammoth MLS (which includes outlying areas) is up 10 to 81. Thirteen of those are in Bishop. This time last year there were 72 properties pending.
Market Updates and News
Mammoth received a wet little storm this past week and it helped get some additional ski runs open but it really wasn’t enough. Canyon Lodge still has thin snowpack. There was a small crowd in town this weekend and another storm is slated for the next weekend. Meanwhile the snowmaking crews will face warm temperatures again this week. The clock for quality holiday ski conditions is ticking…
The Thanksgiving weekend crowd was on the light side but plenty of owners were up for extended stays. They seemed content to be relaxing. The Christmas to New Year’s week is booked fairly solid according to the reservation agents. The whole concept of “geotourism” could keep the resort wheels turning. The real estate world winds down as the holidays approach and most of the rush to have properties secured for the holidays is over. But I’m sure there will be some last minute distress on someone’s part…
The Main Lodge land exchange in now tagged on to the National Defense Authorization Act as “pork” and is slated to be voted on by the Senate in the near future. The exchange is promoted as being good for local jobs and the environment. GovTrack gives it a 24% chance of passing. We’ll see how influential the Ski Area’s owners are to get this completed. In the meantime you can read my Q&A that appeared in last weekend’s issue of The Sheet.
In the past weeks I found myself working with a potential buyer who told me she was “old school.” I told her that was fine because I’m plenty old school myself. But as things progressed (or regressed) she apparently wanted to make an offer on a property without even seeing the property. In fact, she has never been to Mammoth. The property she decided she wanted to offer on falls into the “condotel” criteria of Fannie Mae so I told her I would have to do some homework on who might be available to get the financing done (there are lenders out there but all of this has become such a ridiculous case-by-case scenario). Well, that’s when she became incensed that her Florida-based online mortgage company couldn’t do her loan, especially since they already had all of her financial information.
She became even more upset when I told her it was unlikely that we could get it closed before Christmas. And even worse was the thought that the seller might not be real flexible on price with a pre-Christmas closing (after all, that is the biggest rental demand week of true year). So much for old school thinking!
But here is what I know. Transactions that DO come together “blind” and really blind (never been to Mammoth) have a very high likelihood of canceling so it is all a waste of energy. AND THEN the seller and their agent are pissed because you wasted their time and energy. And in the small percentage of time that this type of buyer actually closes on a property THEN there are always ugly repercussions (and usually letters from attorneys, etc.). Bottom line: buyers need to have a reasonable education about the market and all the variables before they can make sound decisions. Of course, that is just the old school in me.
The Wall St. Journal ran a story this past week “Dodgy Home Appraisals Are Making a Comeback“. Apparently the lending industry sees parallels to the pre-crisis era when appraised values were inflated to keep loan officers and real estate agents happy. But wasn’t all of the new government regulation (Dodd-Frank) and the added expenses to the borrower suppose to cure that? According to the article and data provided, “An estimated one in seven appraisals conducted between 2011 through early 2014 inflated values by 20% or more.” My bet is the percentage would be much higher if the data was for just the past 18 months.
In the past couple of years I have shook my head at some of the sales here in Mammoth that were financed. The prices seemed high (really high in some instances) and I wondered what they used for comparable sales (being in the REO business requires you stay apprised of “comps”). But Mammoth can be tricky. Some buyers who finance make large down payments in the neighborhood of 40-70%. So if the appraisal comes in lower than the selling price there is no issue for the loan for these high down payment buyers. Except that they are paying more than the appraised value for the property. And…
The Journal article points out that under the new government regulations the lenders are more accountable for future loses. I see more bailouts in the future. And buyer beware.
Noteworthy Sales
With 10 closings I don’t see much that is truly noteworthy.
Values remain strong at Lincoln House in the Village with 2 2-bedroom / 2-bath units closing in the ~$440K range. These really remain some of the best units in the Village–they are on the quiet side (lagoon and pool) and have easy access to the gondola…
A nice 3-bedroom / 2 bath at Solstice sold for a big price relative to recent 2-bedroom / 2-bath sales, but it was financed. A $200,000+ price difference for an additional bedroom is a lot in a historical perspective…
An REO house with real defects sold for $341,000 continuing the buyer insanity in that segment of the market… Westin 1-bedroom units continue to get good prices… A couple of units at Mammoth Ski & Racquet closed which is so typical for this time of year (gotta have the ski condo!).
Other Real Estate News
Conway Ranch was back in the news this week as Mono County completed a complicated real estate transaction that hopefully meets the needs of all the parties. Probably most important is the newly created conservation easement that will preserve the land in a relative natural state but also ensures that the fish hatchery operations that were started can now proceed. The potential to augment the State’s hatchery system with a local trophy trout hatchery is a boon to fishing tourism for all of Mono County.
The Conway Ranch property is ~1,000 acres on the north shore of Mono Lake, basically between Mono City and the Conway grade. It is a historic sheep ranch that was purchased and planned for development in the late 1970’s and early 80’s by Arnie Beckman Jr., the son of the famous chemist and inventor. The County approved plan included a hotel, golf course, residential subdivision, fly fishing streams, etc. A few homes were built and some streets improved but the economy put an end to it.
Twenty plus years ago we marketed the development for Mr. Beckman but the recession of the early 1990’s wasn’t a great time for that. The County ended up purchasing the land with the intent to preserve it. It has taken 20 years to work it all out. There is a myriad of government agencies involved that all need appeasement. And of course California environmental law plays a part.
The end result is more beautiful land in Mono County that will never be developed and should serve the public need in positive ways. Let’s hope they get the hatchery back on line and the trophy trout program back producing stockable fish. Maybe the geotourists will even be interested in pulling in a lunker.
Thanks for reading!