Market Summary: August 16 – August 30
The Mammoth MLS is reporting 15 real estate closings in Mammoth Lakes for the two week period ranging from a low of $195,000 to a high of $2,500,000. That is down four (4) closings from the previous period. Astonishingly, of the 15 closings, 14 were financed with new loans. And the only cash purchase might not have been financeable due to the condition of the home. Even the two $1M+ sales were financed. Will this be a trend? There were no REO/bank owned property closings and no short sale closings reported. Of the 15 closings, seven (7) were condos selling under $390,000. This newsletter reported 16 closings for the same period last year.
At the period’s end the condominium inventory is down one (1) to 200. There were 10 new condo listings in the period, and all are truly new to the market. There is still a shortage of the Mammoth “staple” condominiums; the two sleeping area, two bathrooms condo in the ~$200K price range. But the condominium inventory is in good shape for buyers who are looking to purchase in the upcoming Fall selling season. Those buyers who wait too long will suffer disappointment. I’ve seen this story before. This time last year there were 148 condos on the market.
Single Family Inventory
The inventory of single-family homes is down one (1) to 69. Most of this inventory has been around too long. It is time for serious price reductions. As I like to say “the market has spoken.” This time last year there were 67 homes on the market in Mammoth.
The total number of properties in “pending” (under contract) in Mammoth Lakes is down seven (7) to 56 at period’s end. Of the 56 properties in “pending,” three (3) are “contingent short sales” and 34 are in “back-up” status. Five of these pending properties are homes under construction in Grey Bear. The total number of pending in the aggregate Mammoth MLS (which includes outlying areas) is down 12 for the period to 79. One year ago there were 63 properties pending Mammoth and 87 in the total Mammoth MLS.
Market Updates and News
Summer tourism has slowed and rather unpleasant smoky conditions have driven some visitors and local residents out of town. The “Rough Fire” has burned almost 70,000 acres. The location of the fire is east of Fresno and the prevailing winds have blown smoke in and out of the Mammoth region the past 10 days. The smoky conditions have been downright nasty at times. The smaller “Walker Fire” located between June Lake and Lee Vining has been contained. I guess we’ll take the smoke over actual fire, so far Mammoth Lakes has had no serious fire threats. A good snowstorm can solve plenty of problems, and that is one of them.
The Measure Z referendum scheduled for October 6 is starting to heat up. But so far the arguments have been limited to the Letters to the Editor. The Town Council members who are strong “No” advocates are preparing their case. The “Yes” group have placed a few dozen small “Yes on Measure Z” signs around town. I think the real action will start after Labor Day Weekend.
Ted Carleton who publishes The Sheet asked me specifically to write a Q & A on Measure Z. He intends to run it next week in The Sheet. For some reason he likes my columns to run on the big weekends, but so do I. Maybe he just needs filler for his larger issues. For my newsletter and blog readers, you can read it here.
Many of the aspens and other deciduous trees and plants in the area have already started turning. This is about a month early. Clearly they are “stressed” from the lack of water after four years of drought. But is this also a harbinger of an early and heavy winter? We certainly hope so.
Mammoth Mountain Ski Area founder and long-time owner Dave McCoy celebrated his 100th birthday this past week. The man is still lucid and active. He expressed that he would like to live another 100 years. Many of us wished he still owned the Ski Area, for better or for worse. He is a rare human being.
At a new home under construction in the upscale Snowcreek Ranch they are actually drilling to find geothermal resources. These geothermal hot spots (known as siliceous sinters) are usually in the 1600-1800 feet of depth around Mammoth, so significantly deeper than the water table. This has to be an expensive exploration. These hot spots have been found in the town vicinity in the past. There are productive geothermal well heads right behind the ballfields at Shady Rest Park. The owners of the old Swiss Chalet property above Main St. drilled and found hot spots on their property.
But this is the first attempt by a single-family homeowner that I am aware of. And this area hasn’t been known in the past as a prime location for this type of exploration. But it is a big “we’ll see.” A good source of geothermal water should provide plenty of heating potential for a large home including the driveway and walkways. And likely far more than one home could use. If they find a hot spot, I wonder if they will be willing to share with the neighborhood?
Even though the Fall selling season hasn’t kicked into motion, there were a handful of new Canyon Lodge condos put to escrow this past period. It struck me as a little early but these buyers are picking off the best of the Canyon Lodge inventory. It could be a great call for them, especially if they intend to finance their purchase; financed transactions are simply taking longer right now. Buyers shopping in November may not be able to close by the end of the year. I’m usually not a pushy salesman, but I know I’m the one who will be pushed to get deals closed in the coming months.
Three home sales at $362,000 to $415,000 reaffirms the buyer appetite to pay this kind of money for seriously compromised single-family properties. The low sale is a small and very funky A-frame in a mid-range neighborhood. The seller had just purchased the home two years ago for $250,000. They probably made a little profit but obviously they weren’t ecstatic about the property. The high sale has a nice location and view but will need at least $200,000 to make it reasonable. I hope it makes sense for the buyer.
An old six-plex of all 1 bedroom units sold for $675,000. This property is located in a commercial-type district and the units were previously being rented as part of a lodge. The stated rents seem inflated and history will show that stable tenancy will be a challenge. “Investors” just keep chasing these types of income properties in Mammoth. I hope they have the stomach for a few big winters.
Seven at-market condos sales, and a couple will be homes for local residents. The high sale at $2,500,000 is a large and beautiful home in The Bluffs. The seller paid $3,500,000 in 2004.
Other Real Estate News
In my last newsletter I was discussing (in this space) the new, more liberal policies for jumbo lending. I stated that “Sounds like the perfect time for all those recent high-end home buyers in Mammoth to place some financing on their properties.” This last week really brought that to bear.
The ups-and-downs of the stock market the past week, especially the early and significant decline, exposed the vulnerability of what are known as “securities-based loans.” These loans are described as “the vehicle of choice for investors looking to get cash for anything.” That includes real estate like second homes. These loans could be the ready-source of cash for many of the high-end cash buyers in Mammoth we’ve experienced the past two years.
The Wall St. Journal ran a specific article this past week. It stated that “brokers are permitting investors to take out loans of as much as 40% of the value of their portfolio of equities, and up to a terrifying 80% from their bond portfolio. The interest rates are often minuscule, as low as 2%, and since many of these clients are wealthy, the loans are often used to purchase boats and real estate.”
Basically, this is like a cash-out refinance, but against your investment (stocks and bonds) portfolio. And many of those portfolios have blossomed in the past few years. And this last week we saw that they could also decline in value. It’s deja vu all over again. So yes it is a good time for some of the recent high-end home buyers to contemplate putting a mortgage on the property. Especially if they have borrowed against their portfolio.
The article also stated that earlier this week some banks were making “margin calls” (or requiring further monies to be deposited into the account) on these loans because the collateral had declined in value below the appropriate ratios.
…..With the two high-end home purchases in Mammoth this last period purchased with new loans, this may become the new trend. We’ll just have to see where all these markets go from here….
Thanks for reading!
** Closed sales data is compiled from in-house files and public records.