Early Week Storm Leads To A Big Pre-Thanksgiving Weekend!
Market Summary – October 30 to November 13
Single-Family Home Inventory
Market Updates and News
A beautiful Election Day snow dump turned the originally proposed Ski Area opening weekend into a spectacular ski weekend. The Mountain couldn’t get the lifts and runs open quick enough. As it was they got quite a bit of terrain open for the hungry crowd. The weather was brisk and sunny and a dusting of new snow this morning. Just what the entire region needed. The Nov. 1 storm had already killed most of the fire danger but the subsequent storm has left piles of snow in town and well down valley. The snow and this weekend’s crowd bodes well for the upcoming winter season. The forecast through Thanksgiving weekend looks wintry but mostly clear. Let’s hope it all continues.
The Mammoth Town Council election had interesting results with no outstanding majority going to any one candidate. The winner was the local newcomer who has education and experience. Second was the candidate who wants to limit STR to help the workforce housing shortage. Third was the incumbent but it was a squeaker. The angry candidate was last but still garnered considerable votes. We should be okay but can’t wait to see if they push any real agendas forward. The Town will be looking to recruit a new Manager who will be retiring after a ~10 year stint. He might be the longest standing Town Manager we have ever had. But a change would be refreshing. The Council now has a female majority. I think this is a first.
The snow of the week has stalled the major construction projects. The Limelight almost looks like it might be going into a holding pattern. The Ice Rink opening is now proposed as “late winter or early spring.” Maybe. The construction “stacking” at The Parcel has continued strong –– the foundations are quite elevated. The “boxes” are constantly being delivered from the Idaho construction facility to the Airport staging lot. The early, substantial storm is why experienced Mammoth contractors like to have projects “buttoned” up by this time of year. Construction and fresh snow (and wind) gets messy and is excessively time consuming.
Speaking of construction, lumber futures are back down to pre-Covid levels. Global shippers are marking a major slowdown including backlogs at ports. All of this should help some of the construction happening in Mammoth. The market conditions have changed quickly and hopefully it will all trickle down to actual construction costs. But oil remains high as well as wage and general inflation. High replacement costs have also been a driver of higher insurance premiums. Maybe the craziness will subside. At least I can be optimistic.
From my Tax Appeal agenda this past week there was a withdrawal of an original appeal. It happens quite frequently. But I later looked the property up because it somehow sounded familiar. And yes, I had some involvement with it in the past. The subject property is at the end of the hairpin turn on John Muir Road (most people have never been up there). Interestingly, this property has probably increased in value more than any other property in Mammoth Lakes. Incredibly so (I should have bought it when I had the chance). In the late 1990s I listed this vacant lot for sale. As I recall there were reasonable comparable sales. I listed the lot for $17,500. After some time on the market one of my associates who had an interest in building “spec” homes decided to purchase it. He paid full price. About three years later the lot had gone up in value and he decide to float it out there and see if he could sell it. He listed it for $89,000 and it sold after a little time on the market. A nice little profit. But that buyer turned around and sold it a few short years later in 2005 for an outrageous $945,000. (As an interesting comparison the land where the Limelight is being built sold in 2005 for $58M. Limelight paid $7.5M in 2019.) This John Muir Road lot eventually saw a large home built on it. Today it is assessed at $4,659,000.
I have personal and particular concerns about EMF (electromagnetic field) pollution and radio frequency radiation. This is the stuff emanating from mobile phones, cell towers, smart meters, wifi routers, transformers, and more. I recently purchased an EMF meter and have tested my home and office but also take it out into the field to test different locations. So far most of Mammoth is pretty low level but I intend to keep testing different locations and properties. I have found that it is probably good advice not to sit too close (like a couple of inches) to a 27″ Mac if you can help it and as far away from the modem router as possible. I can see this as part of regular property inspections in the future. If any of my readers want to borrow the meter and check out their own Mammoth properties they are more than welcome.
While the early snow is great, the recent low temperatures could be pipe freezing weather. Today we did not come above freezing here in Mammoth. Local property owners should make sure they have a little heat on or be taking other precautions. A break and subsequent flood is not what an owner wants as we head towards the holidays. I often tell people I got my master’s degree in frozen plumbing in the winter of 1984-85. I had three fantastic but surly professors who each had their own ways of dealing with frozen plumbing. It was great learning experience (and memories) but the damage they left behind was best to be avoided.
A modestly upgraded 2 bedroom + loft / 2 bath at Mammoth Ski & Racquet Club closed for $664,000. The buyer was represented by an out-of-town broker.
A 2 bedroom / 2 bath at St. Anton closed for $743,000 which was $23,000 over asking price. But the seller paid $44,000 in discount points and for the new 2-1 buy down loan program. I spent some time in this property and it has plenty of redeeming qualities. With the new snow and the ski location of this property the seller could have probably got his price with out all of the extra credits.
Favorite New Listing for the Period
This is a floorplan that I owned and lived-in a long time ago. This is the early Snowcreek 2 bedroom + loft / 2 bath townhome. This one is located in the heart of the excellent Phase II. This is in original condition but these units can be nicely upgraded and made comfortable without spending a ton of money. Lots of natural wood paneling. These can make good STRs or second homes.The bedrooms are on the ground level. The primary bedroom spills out to a nice greenbelt area. Great sun and views. A small brook runs by the front in the summer. Very close to the large common area spa.
Listing courtesy The Snowcreek Property Company
Other Real Estate News
After my most recent newsletter I had some inquiries about the last foreclosure/REO cycle here in Mammoth (REO is an old banking term that stands for Real Estate Owned –– they own the property via foreclosure and they want to liquidate it). Readers namely wanted to know what it looked like and what I considered the important “lessons learned” and/or specific highlights. Reflecting back was a brain exercise, but the things that stick-out are a worthwhile discussion.
We are talking about a period roughly from 2009 to about 2016. The Great Recession that was triggered in 2008 started this market cycle. The period evolved from traditional REO processing to Internet-based auction platforms taking a more substantial role in the end. These platforms are still quite active and they will certainly play a major role in liquidating foreclosures in the future. Whether this new process is best for the beneficiary remains to be seen (further discussion below).
Interestingly, the majority of REOs the past few years have been from reverse mortgages where property owners took very generous reverse mortgages on their properties in the 2000s. Most of these took place in the outlying areas like Chalfant Valley, Big Pine, etc.. I’m certainly no reverse mortgage expert but many of these elderly owners actually made exceptional financial moves based on the terms that were offered at the time. Today’s reverse mortgages aren’t as appealing as back then. The risk has been re-evaluated.
Many of the mortgages that were foreclosed on in the last cycle were what the industry came to call “liar loans.” These were stated-income loans, 125% loan-to-value loans, negative amortization loans, etc.. The Dodd-Frank laws (2010) were enacted early in the cycle to make sure none of these types of loans could ever happened again. We’ll see. But many Mammoth buyers were using these dubious loan products to speculate in the local market. The speculative nature of the mid-2000s market was quite different from what we experienced in the past 2.5 years.
In reflection of the period, one of the things that stands out is how property owners who were in the foreclosure process handled their predicament. It was really an A to Z experience. And being one of the first persons to access the property after the actual foreclosure gave us incredible insight. People did all sorts of crazy things. Others didn’t. And there were some interesting opportunities. One tactic for a distressed property owner in this typically second home and investor market was to lease the property out and collect rent (but not make any property related expenses including paying property tax). Often it became a win for the tenants who ultimately figured out they could stop paying rent and could eventually collected a “cash-for-keys” payment for moving out. I also remember one large luxury home in the Slopes where the tenant had used the basement for a substantial “‘grow” operation.
And some owners lost their minds. Some went to great efforts to strip the property of appliances and other things of “value.” This often included doing substantial damage to the property “on their way out.” And the opposite happened too. I remember one duplex in the Ghetto that had been meticulously cleaned and abandoned prior to foreclosure.
The system became so overwhelmed that there were almost bizarre opportunities. I had one client who had completed a major cash-out refinance prior to the crash. They stopped making payments and lived in the house for over three before a Notice of Default appeared on their front door. They immediately called me to see if I knew of any rentals. I told them to stay put and squat. The actual foreclosure took another two years and then they were compensated for leaving (aka cash-for-keys or “relocation assistance”).
And in the midst of today’s Mammoth’s housing crisis, I can think back to numerous local residents who were foreclosed on. They could make the payments but they quit because they had no equity. It was simply psychological. Ironically, if they had stuck it out, they would have substantial equity today. And trust me, many long-time local residents sold out in the last two years and took what they considered to be windfalls. Most have moved to greener (and snow free) pastures.
As the last foreclosure cycle progressed the popularity of short sales expanded. It was good for the beneficiaries because they didn’t have to go through the expensive foreclosure process including preparing the property for marketing. In retrospect it was good for upholding values in the market. These short sales could have easily become foreclosures which would have continued the serious downward spiral of values. The proliferation of short sales essentially put the bottom in the market.
Another interesting aspect; we discovered that many Mammoth property owners simply can’t have a foreclosure or short sale on their credit as a condition of their employment. Or maintaining good credit is imperative for their businesses. These owners had to stick it out. There were other owners who actually sold on the open market and brought substantial amounts of cash to escrow to close the transaction. That is painful.
During the most active part of the last foreclosure cycle it was common for buyers to make “blind” offers; offers without actually seeing the property in person. We soon discovered that an important criteria to relay to the asset manager representing the beneficiary was “the buyer has stood in the property.” It was an important issue because so many buyers made rushed offers and after acceptance visited the property and decided it wasn’t right for them. It wasted an incredible amount of time. This concept of the importance of a buyer actually “standing in the property” was tossed aside in this recent post-lockdown market. A FaceTime showing or video sufficed.
The last foreclosure cycle did not spare the luxury end of the market either. Today as I drive through the small Greyhawk subdivision I remember three separate properties up there that we handled as REOs. Now they are all multimillion dollar homes in the $3-5M range. But back then it was all about speculation. Time will tell if the huge volume of luxury sales the last 2.5 years will produce similar results.
One thing we experienced near the end of the last cycle was the liquidation of foreclosed properties via online bidding platforms like auction.com and Hubzu.com. This process continues today but buyers and investors are beginning to realize the added expenses (“buyer premiums” of ~5%) in their transactions and the concept of bidding against yourself and bidding against the house. Many buyers aren’t comfortable with the process. These transactions can also be very impersonal. There are those in the industry (like myself) who argue that without a “sales” aspect to the process that the highest and best value isn’t attained for the seller. If the industry gets into a major foreclosure cycle it will be interesting to see how these processes evolve (or devolve). Tech is not the solution to all problems.
And lastly, with the value of hindsight we can say that many Mammoth property owners who gave-up their properties to foreclosure or short sale since 2008 should have tried a little harder to stick it through. Especially with the appreciation of the past 2.5 years. Ultimately, a future foreclosure cycle in the Mammoth market will be driven by serious distress in the local market. We’ll be watching for the indicators.