Market Summary: March 25 – April 8
The Mammoth MLS reports 15 sales/closings in Mammoth Lakes for the period ranging from a low of $26,000 (mobile home) to a high of $1,650,000 (luxury home). The sales data reports that three (3) were REO/bank owned properties and four (4) were short sales (there seems to be a consistent pattern here; approx. 50% of all sales are either REOs or short sales). As opposed to the last two newsletters, there were no closings that this broker would consider to be on the “inflated” side–more like some downright good buys.
At the period’s end there are 158 condominiums listed for sale, a decline of eleven (11) from two weeks ago. That decline is most likely a function of condo listings expiring at the end of March that have not been re-listed. There are now 55 single-family homes on the market in Mammoth Lakes proper, an increase of seven (7) from the last period. The single-family inventory has bumped up and with the dry winter this may be an indication that the seasonal increase in inventory may come early this year. There are 34 residential lots listed for sale, including some new price reductions on good lots. This segment of the market remains very soft with some excellent buying opportunities. One very high-end lot closed escrow and another has gone to escrow. Obviously, some wealthy types think Mammoth dirt is again a respectable place to park cash.
The total number of properties in “pending” (under contract) in Mammoth Lakes is 63, another decrease. Of the 63 properties in “pending,” 33 (now more than half) are “contingent short sales” which means they are pending short sale transactions. (Again, these properties show as active listings to anyone looking at IDX MLS information.) The total number of pendings in the Mammoth MLS (which includes outlying areas) decreased to 87.
Market Updates and News
The “controlled burn” real estate market continues but with mixed messages the last two weeks. At a recent REO industry conference the word was that foreclosures were slowing down and that short sales would be picking up. But last Wednesday’s (April 4) article from Reuters received substantial national attention and the thrust of the article was “brace for another wave of foreclosures.” They implied it would be a big wave. We’ve been pondering what the “Robosigning” settlement would bring as far as foreclosure activity.
If this article is to be believed, it will be 2009-11 all over again. Quite frankly, the REO business has been very busy the last eight months, but this office is seeing a slowdown in properties coming through the pipeline. It has allowed us to catch-up. But it may be the calm before the storm. We know there is still a significant volume of distressed properties in the local market.
By slowing the foreclosure and short sale process down, whether deliberately or not, the banks have successfully stabilized the bottom of the market (will it stick?). Many real estate markets are reporting low inventory (including Mammoth) and frustrated buyers. So this might be the right time to bring more REO inventory to the market. Or encourage and incentivize more short sales. None of this may happen fast, after all it is an election year.
In assessing property valuations for both private and institutional sellers I find myself increasingly describing the tiers in the local market. Right now, the lower tier of the market, say the condos under $225,000 and homes under $400,000, is a strong market for sellers and thin for buyers. It is easy to underprice a property in this segment of the market. The upper tier of the market is very soft and definitely a buyer’s market. Without some “wow” factor the property has to be priced aggressively or be very negotiable. But the middle tier of the market is where I see the real change, especially in the condo segment.
Condo sellers who just six months ago could have reasonably expected valuations in the $300K range are now looking well below that. The biggest problem for these property valuations is the presence multiple listings within one project that compete against each other; a motivated seller with equity, then a REO or short sale, and the decline begins. I have watched this repeatedly in the past few months within certain condo projects. I see more of it evolving. The end result is new price discovery for sellers and an increasing number of good condo buys in the middle tier of the market. We’ll see what the next six months brings.
The sale of the REO at 1465 Majestic Pines for $360,000. This is a 3 bedroom / 2 bath, 1-car garage home in the nice neighborhood just north of Eagle Base. This property was relatively clean and had an approx. 5-year old metal roof. Two of the pluses here were a flat lot and straight walls (not a gambrel). I showed this property to so many people both before and after it was officially listed. Everybody turned their noses up at it. But once it was sold there was another round of potential buyers remorsefully wanting a similar opportunity. Finding a home with good qualities at this price point is not easy in this market.
There were three (3) condo sales between $251,000 and $280,000 that are perfect examples of what I’m talking about above; good projects, good units, good buys and probably would have supported values 20-30% higher this time last year.
The REO sale of a 2 bedroom / 2 bath at the Westin Monache for $437,500. In the last few months there have been two short sale 2-bedroom units listed around $350,000. Buyers were thinking the values had cratered to that point, but that was a short sale head-fake. With short sales the lender has to approve the sales price, and $350k would be a real steal. They ended up selling for $405K and $415K. So this sale would indicate that the winter demand for this product has pushed the values up a bit.
The successful closing of a short sale in The Trails for $465,000. Now this is a large 4 bedroom / 3.5 bath home with a 3-car garage. This is a clear example of middle-tier value destruction.
And lastly, an original high-end “spec” home in the Bluffs that everybody has looked at (whether personally or on the Internet) over the past few years finally closed as a short sale at $1,650,000. Probably a screaming deal. Maybe the most ridiculous leftover from the Goldilocks era; terrible floor plan, weird mixture of wood finishes and materials, etc. and a strange divergence from a fine builder, and originally brought to the market for something like $6M. And built on speculation (and hype) and ending up as a successful short sale. What a world we live in!
Other Real Estate News
I keep being asked about the likely outcome of the Town’s potential bankruptcy (I really don’t know). And there’s plenty of sidebar discussion around town. One of the most interesting (and growing) topics of late has been; Why doesn’t the Town just un-incorporate and go back to the way it was prior to 1984 (pre-incorporation)? Many are arguing that there is too much “duplication of services” between the County and the Town (there is).
Mono County is a small County by population (13,000) but rather diverse in land and communities. But the core of the voting block (and Supervisor districts) is based in Mammoth and the southern county. That concentration is a big change from 1984; the southern county has grown but the north hasn’t. Nobody knows if the egos involved could ever let it happen but it may end up as a referendum when all the dust settles.
Thanks for reading!
** Closed sales data is compiled from in-house files and public records.