Snow!!

Market Summary: November 18 – December 12

The  Mammoth Lakes MLS is reporting 12 real estate closings for the period ranging from a low of $199,000 to a high of $1,550,000. Of the 12 escrow closings, 10 were financeable properties and eight (8) were conventionally financed. The mix was once again familiar; six (6) low-end condos and two homes in the $1.5M range. The 10-year Treasury slipped again and closed the week at 3.03%. Mortgage rates didn’t necessarily follow. The reports that foreign countries are dumping US Treasuries have many thinking interest rates will be on an upward trajectory once again.

Condominium Inventory

At the period’s end the condominium inventory rose five (5) to 102. From a historical perspective this is a curious time of year to see the condo inventory rising. But if the new and legitimate snow creates buyer demand (the phone is ringing) then having more units available is a bonus to buyers and the local agents.  There were 15 new condo listings in the period, and none to contract. The potential buyers sitting on the fence now know that the winter revenue is almost a guarantee. But sellers on rental programs will want to push escrow closings past the holidays to capture the revenue from “prime time.”

Single Family Inventory

The inventory of single-family homes is down another three (3) to 37. There are four (4) homes listed under $600,000. There were four new home listings during the period. Again, with the snow, some of these home listings that are in better condition are likely to sell in the next two months.

Pending Transactions

The total number of properties in “pending” (under contract) in Mammoth Lakes is down three (3) to 37 at period’s end. Of the 37 properties in “pending,” there are 13 in “Active Under Contract” status (formerly “back-up”). The total number of pendings in the aggregate Mammoth MLS (which includes outlying areas) is down 11 to 57.

Market Updates and News

Three waves of snowstorms have flowed through the Mammoth region in the past week. The progressively colder storms have deposited considerable snow in town (no heavy rain storms this year) and have covered Mammoth Mountain with a solid base. There are colder temperatures and more snow in the long range forecast. So the oh-so valuable holiday season appears to be a guarantee. And any smoldering fires and the fire danger are long gone. Yesterday while it was snowing the high temperature barely rose above 25 degrees. Today, the high in town was barely 30 degrees.

Nothing ignites the tourism base and the local business people’s attitudes like real snow events this time of year. For some local business people, they now know they will be able to pay their accounts payable in January. That is the nature of “snow farming.” Owners of nightly rental condos (both old and new) are now confident about their stream of income. And all of the So Cal based Ikon Pass holders know they will be riding at Mammoth very soon. There was absolute gridlock this morning (Sunday) on the road to the Main Lodge, reminiscent of the 405 on a Friday evening. Nothing like spending an hour or two on a shuttle bus to get to the Main Lodge.

Ironically, less than 30 days ago, two well known media people in Mammoth were seriously depressed about the lack of snow. I know because they expressed it to me. They should be happy now. Everyone who wants to enjoy a real Mammoth winter should be happy (I am). But be careful what you ask for…. 

While the snow and colder temperatures are great for most, there are significant “open” construction projects around town. Most contractors prefer to have their projects “buttoned-up” by now but that certainly isn’t the case at the projects under construction adjacent to Canyon Lodge and the Village. It only adds cost, hassle and delay. Meanwhile, property owners need to be sure their properties are ready, this is pipe freezing weather and it is forecasted to continue. 

As of this weekend Alaska Airlines is out at Mammoth Airport and United Airlines is in. We’ll see how this works out. There are now United daily flights from Los Angeles. Daily flights (presumably winter flights) from Denver and San Francisco start Dec. 19. And Jet SuiteX flights from Burbank and Orange County start Dec. 20. Hopefully the new jet aircraft prove to be more reliable than the turbo prop aircraft.

For those looking for a review of the current affordable/workforce housing status in Mammoth you can check out last week’s Real Estate Q&Athat appeared in The Sheet. I was in the post office last week and several long-time local residents thanked me for writing this column.

In two weeks the Town will be holding public workshops pertaining to the Old Mammoth Road Assessment District and the “beautification of Old Mammoth Road.” My business has been on Old Mammoth Road for 29 years and I’ve been paying into the District since the inception in 2002. The sidewalks (and their clearing), lighting, and landscape were sorely needed. Up until then everybody had to basically walk in the street and street lights were few and far between. It was certainly dangerous, especially on icy roads and crazy drivers. It certainly wasn’t inviting.

Now the Town wants the public’s opinion about the improvements. The original planners had stars in their eyes and no grasp of Mammoth reality. They thought the red concrete sidewalks would be special, until they failed and are unaffordable to replace. They thought the 16″ landscape strips would be aesthetic until drought. And forget they were trampled on by everyone and horrendously expensive to maintain. I know, I’ve had a front row seat.

So now they want the public’s input. The problem is they haven’t been willing to consider the input in the past or we wouldn’t have these problems now. The Town’s public works division is too busy trying to develop Taj Mahals and can’t be concerned with things like road crack sealing (Meridian Blvd is a mess and it is only a few years old). At least the architectural/engineering firm they hired has an office in North Lake Tahoe, so maybe we have a chance. But my guess is they will just waste more of the District’s money….

A couple of months ago one of my residential listings was in escrow and I was anxiously anticipating a call from the appraiser. There were some specific minor issues that I was concerned about. Next thing I know the loan was funding and escrow was about to close. What? The appraiser would have had to contact me to get in the property. So I made some calls. The lender told me they did a “desk top” appraisal and we were all good.  

Now I just reviewed new Fannie Mae guidelines for appraisal waivers and I also  see that the FDIC,  Federal Reserve and US Treasury are pushing for appraisal waivers on all properties sold under $400,000 in value. These waivers include re-finances and some cash-out re-finances. This is rather unbelievable. 

Following the last “economic crisis” ten years ago and the subsequent Dodd-Frank regulations, appraisals came under great scrutiny. A whole new “third party” appraisal system was established causing greater expense for buyers and causing many headaches for even the most seasoned appraisers. But it was all to “save the consumer” because so many dubious appraisals had been used to justify values leading up to and likely causing the last housing bubble. The Fannie Mae guidelines have plenty of LTV (loan to value) criteria but I’m wondering how the value is going to be established without an appraisal? Are they going to use Zillow Zestimates®?… It will only be a matter of time before this gets abused. And if there are true price declines in the future it most certainly will be. 

Noteworthy Sales

The sale of Helios North 2 bedroom / 3 bath townhome for $562,100. This came on the market and closed fast. The unit was nicely remodeled including dark granite counter tops. But it had a special corner location with side windows looking right at the Westin Monache. Close to the gondola and all the action. Interestingly, that is about the same value as a 2 bedroom / 2 bath at the Westin. I know which one I would prefer to have.

Speaking of the Village, a smaller vacant parcel in the North Village Specific Plan closed for $662,500. The lot is less than a half acre. A small boutique lodge would be cool.

A small A-frame on Alpine Circle closed for $505,000. We represented this property just four years ago as a bank owned REO. These sellers did a wonderful job fixing the place up and it was not an intentional flip. They definitely got their money out but it took plenty of work. And the new owners have a fun and exceptional piece of Mammoth history.

Favorite New Listing for the Period!

My readers know I like the Westin Monache. It is the finest condo hotel structure in all of Mammoth. The Alterra Mountain Company now owns the “front desk” operation and is committed to keeping the facility as the finest place to stay in Mammoth. They need their first-time visitor Ikon Pass holders to have a true luxury experience. But many owners are concerned by a potential improvement assessment that is being discussed. The interior of the units need some upgrading (the couches are 10 years old!) And they want to make other common area improvements and upgrades. But HOA documents show the HOA has about $3 million in the bank. And many of the units also have replacement reserves that are held back by the front desk management. Theoretically, as the facility is improved the nightly rates should go up. And although YotelPad is threatening development, it may be a long time before the Westin Monache has any real competition in the luxury segment.

The favorite; #308. The “08” stack is a unique Studio floor plan that is triangular and the kitchen actually has a peninsula making for a real kitchen feel. The unit itself has more square footage. Spacious and not so boxy. 

Listed at $329,00

Courtesy Resort Property Realty

Other Real Estate News

I’ve complained about the campaign efforts on the recent Prop. 5 referendum. It was sponsored by California Association of Realtors (CAR). They simply spent no money campaigning. But the bigger strategy has now become clear. And commercial property owners better pay attention. It appears CAR is joining forces with the “Schools and Community First” organization who wish to overturn Prop. 13 for commercial properties. That is known as creating a “spilt roll.” A split roll scenario means that Prop. 13 would apply to residential properties but would notapply to commercial properties.

And under this split roll scenario commercial properties would be re-assessed every three years to current market values. This is a similar to how many state’s property taxes work (in many cases they are re-assessed every year). Prop. 13 did away with that in 1978, there is only a potential  2% annual increase cap. (As an aside, I can see this split roll scenario as a complete nightmare for tax appeal boards. On commercial appeals the burden of proof is with the tax payer — they would bring heavy hitter attorney/appraisers in and overwhelm the assessor’s office and the board. Standard operating procedure already. Assessors would be forced to negotiate and stipulate constantly.)

The “First” organization already has enough signatures to get on the 2020 ballot. But it looks like they have another strategy. They may join with CAR and others and bundle this and potentially other items as a major tax reform package. But there appears to be another strategy. The groups know that the commercial property owners in the state would rally and raise major dollars. Each side has plenty of scare tactics (like; Is this the first step towards repealing Prop. 13 all together?) 

The new strategy is to avoid all of that hullabaloo and work the proposals into something the California legislature and governor will approve. Insiders believe that to make the whole thing palatable, the split roll may only apply to really major commercial properties like high-rise office buildings, industrial properties, high tech campuses, shopping centers, etc.. But where is that limit on that?? Or maybe they also go after legacy commercial properties that have very low tax basis?

One thing is clear, major factions are ganging up to attack the Prop. 13 status of commercial properties in California. They are moving towards referendums but are now looking to the legislature and governor to really make it happen. And obviously the government people see the grossly under taxed commercial property owners as a perfect place to get the money they desperately need. A stew pot of tax reform will be the answer. There are endless special interests including the tenants large and small. And interestingly, many Silicon Valley entities are backing the “First” group. They clearly want higher property taxes on their commercial enterprises. 

This is just the beginning. Welcome to California!

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