Market Summary: August 3 – August 17
The Mammoth MLS is reporting 10 closings in Mammoth Lakes for the two week period ranging from a low of $220,000 to a high of $1,150,000. This is one more closing than the previous four week period. During the period there were (again) no REO/bank owned property closings and no short sale closings. Clearly, “distressed” properties are having less affect on the market. Of the 10 real estate sales, eight (8) were financeable properties and seven (7) were purchased with conventional loans. Well, sort of… see the Noteworthy Sales for further discussion. For comparison sake, this newsletter last year reported 19 closings for the similar period.
At the period’s end there are 138 condominiums listed for sale in Mammoth Lakes, an increase of four (4) for the period. The low-end of the condo market remains very difficult, and buyers looking in the ~$200K range are stuck with almost all 1-bedroom units to look at. This is totally unlike the past years where decent two and three sleeping area condos and town homes could be found in this price range. Today, the buyers don’t appear ready for this new reality. So far they are (for the most part) resisting this new low-end price inventory.
But as winter looms on the horizon and the Mammoth “selling season” is fully realized, the better properties are certainly going to get purchased. Some already are. And there is increasing evidence that the new threshold for “tolerable” properties with more than one sleeping area is heading into the upper $200K range and beyond. How this ends is anybody’s guess. And again for comparison’s sake, this time last year there was 119 condos on the market.
Single Family Inventory
The inventory of single-family homes is down two (2) at 72. But the low-end of the residential market (like condos) remains dismal. But the next step up the inventory ladder is just the opposite; too many overpriced listings and some really marginalized properties too. In negotiating an offer this past week in this segment of the market, I pointed out that there were 34 homes on the market between $500K and $1M. And only two (2) in that price range in escrow and one was a new under-construction Hooper home.
Traditionally, single-family home buyers don’t feel the same pressure to “close before winter” like condo buyers do. This part of the market will be interesting to watch in the coming months. And once again, for comparison sake, there were 53 home on the market this time last year…
Residential Lot Inventory
There are currently 40 residential lots listed for sale in Mammoth ranging from $135,500 to $1,995,000. There are still some attractive residential lots under $200K. Figure $250 per square foot for good quality construction plus permits.
The total number of properties in “pending” (under contract) in Mammoth Lakes is up one (1) to 58 at period’s end. Of the 58 properties in “pending,” seven (7) are “contingent short sales” and 31 are in “back-up” status. The total number of pendings in the aggregate Mammoth MLS (which includes outlying areas) is up one (1) to 87. So no major selling movement in the market during the past two weeks. And for comparison; last year at this time there were 64 properties pending in Mammoth and 97 in the aggregate… News reports this past week indicate that the Mammoth market is similar to most markets in California; increased YOY inventory and decreased YOY sales. But again, winter is coming and that always drives sales in this market.
Market Updates and News
Recent rainstorms and cooler temperatures have kept Mammoth from burning up; literally and figuratively. Nearby forest fires have been contained and Mammoth has been thankfully smoke free the past two weeks. The gentle rains have allowed local property managers to keep the lawns and landscape green and healthy. The warm spring had us concerned about what August would bring, but so far Mammoth is getting a much needed break.
Mammoth’s summer slowly winds down as kids go back to school. But the “empty nest” crowd brings quality business through now and the “Fall colors” period. There are still plenty of events on the calendar but the the summer crush is over. The next couple of months is normally some of the best time of year to be in the Mammoth region. The lakes and creeks are very low but the crowds are light and the weather is gorgeous.
The nightly rentals in single family neighborhoods topic is coming to the top of the list again. Town council member Michael Raimondo (who lives in a lovely single family home in the Slopes neighborhood) appears to be leading the charge. His argument seems to be purely one of economics; the potential TOT (bed tax) is just too enticing. Now he just needs two more Council members to go along. And two of the new ones might be all he needs.
Speaking of vacation rental income, the Owner Relations department at The Village recently released rental revenue statistics for 2013. The numbers are average gross revenues for January through December. There are some interesting comparisons to 2012 also. Studio units (there aren’t that many of them) oddly outpace the 1-bedroom units. The Studio units were consistent for both years at just above $51,000 in gross revenue. The 1-bedroom units rose by $8K in 2013 to an average of $45,000.
And here is what is counter-intuitive; the 2-bedroom units rose significantly (almost $10K) but were still less than the 1-bedroom units at slightly less than $45,000. The 3-bedroom income rose over the two years but the “deluxe” 3-bedroom units rose substantially to almost $79,000 for the year… Of course the report comes with all of the disclaimers, and prospective investors have to remember these are gross numbers. So what does the “net” look like?? By the time Mammoth Hospitality (the “front desk” arm of the Ski Area) is done the owner should net 45 to 50% of the gross figures, but mileage varies.
Speaking of “deluxe” 3-bedroom units in the Village, Grand Sierra Lodge #1511 could be nicest location of them all; top floor and south facing overlooking the pool and lagoon. It sold during the period for $1,050,000 and it was a financed transaction. Based on my experience financing these units the buyer would have to be super qualified and likely put 30+% down. Based on the numbers above the unit should produce about $3,000 per month in net income. And the common area fee is $850 per month.
The sale of MeadowRidge #46 for $345,000. It wasn’t too long ago that we were marketing a similar REO property in perhaps a better location in the project and we couldn’t give it away in the mid-$200k range. Now this unit came to the market and sold immediately… like I said above, new thresholds in the low-end of the condo market. We’ll see how long the buyers continue with this new mind-set.
The first Hooper “spec” home (Lot #6) in the Greystone closed at $1,150,000. These are good values in the market with the extra bonus of being legal to rent on a nightly basis (based on zoning). These have been so well received that Hooper is working on 12 more lots in the Sierra Star area… more to come next summer for sure.
The sales of Viewpoint #137 (1 bedroom / 1 bath) for $220,000 and Mammoth Ski & Racquet #63 (2 bedroom / 2 bath) for $280,000 are indicative of buyers willing to pay at the next level for Mammoth condos. If this trend continues, there won’t be any decent condos available under $300K by spring.
Other Real Estate News
The Mono County Assessor recently announced that the county’s tax roll for 2014/15 has gone positive for the first time since 2009. This is good news for our cash strapped county. With foreclosures and short sales decreasing the current transactions are considered “true marketplace” transactions and therefore easier to appraise and assess (and more difficult to appeal).
We recently scheduled the calendar for Tax Appeals in the next year and the major ones will be more appeals from the Ski Area, and the geothermal plant (Ormat) appeals are likely to come. These are always fun; lots of detail and high-powered appraisers and attorneys arguing over values. I can’t wait.
But here are a couple of things I see; as I peruse the tax rolls I see many property owners who are still assessed too high. Obviously, they have never appealed or even challenged their assessment. And likewise for some, because they are over assessed, their values on Zillow and Trulia are higher than in market reality… so maybe there is no problem in keeping the delusion alive…
And also, some owners who purchased during the peak valuation period and have enjoyed some property tax relief (known as Prop. 8 reductions) in the past few yeas are now likely to see significant jumps in their property tax bills. They will be shocked thinking that their property tax is capped at a 2% annual increase under Prop. 13. But their current assessed values are significantly below their original base values so the 2% doesn’t apply. And trust me, the Assessor will be looking to recoup those higher assessed values. There will be sticker shock.
The past ten years have been a most interesting period for property taxes.
Thanks for reading!
** Closed sales data is compiled from in-house files and public records.