Market Summary: December 9 – December 23
The Mammoth MLS is reporting 18 closings in Mammoth Lakes for the period ranging from a low of $132,000 to a high of $1,225,000. This is only three (3) additional closing from the previous period. This is certainly not a huge pre-holiday sales push, but a small one nonetheless. The only push that remains is for those looking to close by the end of the year. The sales data reports two (2) REO/bank owned property closings and four (4) short sale closings.
At the period’s end there are 134 condominiums listed for sale, down nine (9) from the previous newsletter. The inventory of single-family homes is stable at 44. Residential lots listed for sale pushed again at 34. There are still only four (4) residential lots listed under $200,000, and there is steep topography on all four.
The total number of properties in “pending” (under contract) in Mammoth Lakes decreased by nine (9) to 65. Of the 65 properties in “pending,” 16 are “contingent short sales” and only six (6) are in “back-up” status. The total number of pendings in the aggregate Mammoth MLS (which includes outlying areas) decreased to 85. This is pretty normal trending for this time of year.
Market Updates and News
The pre-holiday sales push wasn’t huge but it was crazy for many agents (myself included). Last Friday was a substantial day for closings. Now there will be a few “by-the-end-of-the-year” closings and then it will be time to regain some sanity. Meanwhile, Mammoth is back to being a ski resort. Many in the industry are saying Mammoth has the best snow conditions in North America for the holiday period. The demand for last-minute bookings would make it appear that way (good luck).
It looks like the next three weeks will be the financial shot-in-the-arm that many businesses need. The ski conditions on the upper half of the Mountain are in exceptionally good condition for this time of year. And more snow this weekend. I was in Carson City last Thursday and the Tahoe resorts looked like they needed snow badly. They’ve received a much needed blast the last couple of days.
More and more agents calling on my listings inquire about “rental figures.” I’m taking a cynical view of (potential) buyers (and their agents) wanting “rental figures” on listed properties. Here’s the problem; these buyers almost never pan out to be real “Mammoth” buyers. The local agents spend half-a-day driving them around without asking them good questions beforehand. Instead, they discover too late that these are really delusional “investors” scouring the planet for yield and they think they will find it in Mammoth because the property descriptions said “solid rental.”
These (potential) buyers are looking for absolute return-on-investment. They have no interest in skiing or recreating or quality family time. They expect the agents to jump through hoops producing positive cash flow pro formas. Forget it.
I’ve explained this hundreds of times. Mammoth condos can return some rental revenue, but not investor satisfying “cash-on-cash” returns. The expenses are simply too high and the demand too seasonal. My “rule-of-thumb” for condo owners is that a good rental (and there are many variables) can recoup (net) enough to cover common area (HOA) fees and taxes. Some more, some less. More pro-active owners can do better, and that can include a high-quality condition and maintenance level of the property and additional online marketing. Passive owners will get the gravy and not much more.
Renters DO look for the full spectrum of properties to rent; from small to very large and “cheap” to luxury. But owners need to have well presented properties and quality marketing to get past the average revenue generation. But real “Mammoth” buyers want their own time in the property and have reasonable expectations for rental revenues. The hard core “yield chasers” are a waste of everybody’s time in Mammoth.
The Mammoth real estate market displayed strong price support in the single-family home segment in 2012. Much of this is founded on the perceived downsides of condominium ownership; namely the HOA fees and the “common” ownership structure. But here’s two of my observations; Mammoth condominiums offer the “walk-away amenity” that many owners want and need because they don’t have the time to manage a property from afar.
By the time a single-family owner totals up snow removal, insurance, trash expense, water and sewer, maintenance, and all the other expenses related to a property, and some property management too, the numbers can become similar to that of a comparable condo. Most times the difference is less than a couple of hundred dollars per month, if that. And many owners just don’t want to have to think about their property beyond locking the door and driving out of town. Time IS money for many.
And secondly, the HOA experience/culture is quite different in Mammoth Lakes compared to many other areas. The reality is most of the owners simply aren’t around enough to meddle in any of the affairs of the Association. Drive through most condominium projects (like I do all the time) and for all but a couple weeks a year the projects are 95-98% empty. The neighbors aren’t around enough to create or cause conflict. And when they are here they are focused on other things.
Further, most of the Board of Directors have very skilled and experienced executive types on them. I see their email addresses and many are with prominent companies. So at the end-of-the-day, as we close out 2012 there is strong price support in the low end of the single-family market. But some of the middle and upper end of the condominium market remain good values in light of their price-per-square-foot and HOA fees.
The REO closing of 19 Evergreen at $230,000. This 1950’s 3 bedroom / 2 bath home in Old Mammoth is really a bottom-of-the- barrel residential purchase. This sale was financed, but property needed plenty of fix-up. The majority of potential buyers balked at this listing. But the market reality is that this buyer closed at almost $150,000 less than the current least-expensive residential listing in the Mammoth market ($375,000).
The sale of an oversized 1 bedroom / 1 bath at The Westin Monache for $282,000. This 5th floor unit with the premium pool and Mammoth Mountain view commanded a significantly higher price. So interesting price discovery continues at The Monache. An upper floor, extra footage, and premium view looks to be a $100,000 in added value.
The sale of four homes in the $480,000 to $530,000 range. Two of these were short sales. All four of these had been on the market extensively over the past 12-24 months. All conventionally built with acceptable floorplans, good to better locations, +/- 2,000 square feet, etc. This is where the market is. All but one of these buyers will likely put $50K-$100K or more of improvements/remodeling into these homes.
The sale of a 2 bedroom / 2 bath at Grand Sierra Lodge for $384,000. This was a fairly lackluster unit, no special location or condition. But a sale is a sale and there haven’t been too many in the Village the last few months. But good snow and plenty of winter visitors will likely change that. I’ll be watching.
Other Real Estate News
Despite Fannie Mae and Freddie Mac’s holiday moratorium on foreclosures, other institutions (Bank of America, Indy Mac, Chase, etc) have accelerated foreclosures the past two weeks. This is the expected post-election “the party is over” move to start moving these assets off the books (the squatters have voted!). We were assigned 4 new quality assets during the period. Whether deliberate or not, the banks have put a decent “bottom” in the Mammoth real estate market in the past 12 months. We’ll see for how long.
2013 will be a new year. We have no idea how Washington DC will tinker with the Debt Forgiveness Act which could impact short sales. Or how they will tinker with other parts of the tax code; Will they do something profound (and damaging) like they did in 1986?? Or how will Dodd-Frank impact loan qualifying? Interest rates will remain low but qualifying will only get tougher. It shall be an interesting year.
Merry Christmas and Happy New Year and Happy whatever else you might be celebrating!!
Thanks for reading!
** Closed sales data is compiled from in-house files and public records.