Market Summary: February 12 – February 26
The Mammoth MLS reports 13 sales/closings in Mammoth Lakes for the period ranging from a low of $90,000 to a high of $730,000. Four (4) of the closings were REO properties and six (6) were short sales. There are some interesting sales from the period (see below).
At the period’s end there are 170 condominiums listed for sale. This is a relatively large increase from the last period for this time of year. There are 63 single-family homes on the market in Mammoth Lakes proper, which is also an increase. There are 32 residential lots listed for sale.
The total number of properties in “pending” (under contract) in Mammoth Lakes decreased to 71. Total number of pendings in the Mammoth MLS (which includes outlying areas) decreased to 86. (But it is tax time.)
Market Updates and News
This past week was “Ski Week” for many Southern California families. This week following President’s Weekend has become a busy real estate week in the past few years with heightened customer traffic and showings. This week was busy but not like the pace of the past. And it all has to do with the lack of snow…
This drought winter is going to take its toll on Mammoth in many ways. As we approach March, the excitement and momentum for any resemblance of a good ski season is waning quick. Even with a potential “Miracle March” like we had in 1991 (nearly 200 inches after a similar drought), the 2012 season will be a bust. The toll will vary from broad financial stress, to diminished water resources, to increased fire danger, to outrageous wildlife behavior (the bears are already active).
The increased financial distress will impact the real estate sector in many ways. On the commercial side, expect some business failures in the retail and restaurants. Yes, many of these businesses are so frail that this “lack of winter” will force them to close even if they receive significant rent abatement. For property owners and business owners who rely on the premium rental rates and volume of winter rentals to make ends meet, the compromised cash flow will force other moves; more owners may move to long term rentals, some may offer discounts, some may decide to sell, and some may decide to stop making payments altogether. The stress level is evident and growing.
One group that is beginning to show real motivation are the local building contractors. I’ve personally experienced a variety of reactions to the current market conditions. Some are trying to get into the property flipping business (I think they watch too much television). Some are working seriously to drum up a contract build or major remodel in the single-family sector. One is trying to lure investors into purchasing dilapidated (REO) properties for major rehab and has even gone so far as filing fictitious citations with the Town to create opportunity for himself… And some are simply spending more time at their homes in Baja. All of this does make it an opportune time to consider some remodel work-some very good craftsman are hungry for work.
The REO pipeline is on the thinner side at the moment. We’re in the process of closing out numerous transactions from the holiday and post holiday period. I wish the skiing was better, I might even have the opportunity to get a load of skiing in. Or maybe I’ll get to go fishing. But the pipeline will fill again. It is very much a “controlled burn” and the recent settlement between the States and Feds and the banks may increase the foreclosure activity. We’ll see. And short sales continue to become more popular and successful.
The REO sale of 1940 Old Mammoth Road at $230,000 cash. Now I know some people doubt my “price support in certain segments” discussions but here is a prime example. This is worn 3 bedroom / 2 bath cabin from the 1950’s with some recent improvements and a 1-car garage. This has an old fashioned pull-down ladder to access the upstairs. And yes the lot is big and has plenty of sun and view. But it is also in a mixed-use area. The property does have some redeeming qualities, but it is old, small, and needs plenty of work and capital (and your wife probably won’t step inside until you complete all of that). But larger homes in similar condition in more residential neighborhoods are selling upwards of $350,000. And the recent REO sale of a “gambrel in the ghetto” at $233,000 further establishes the price support level. Some of this price support comes from the fact that some buyers just don’t want to own a condominium.
The REO sale of 1849 #304, a 3 bedroom / 3 bath “flat” for $400,000 cash. This is a unique property-a large unit all on one level and with a special view of the ski runs. A pretty good example of price support for a unique and slope side property. This property is in desperate need (and deserving) of a $100-150K remodel.
The sale of a Westin Monache 2 bedroom / 2 bath unit for $405,000. Prices are coming down. This was a short sale originally listed at $350,000. Obviously the appraisal came in a bit higher.
The REO sale of White Mountain Lodge #2209 for $329,000. This 2/2 went out for a low price. A good example of an REO that sat on the market and finally the asset manager said “get it sold!”
The REO sale of 141 Larkspur for $350,000. This is not a Mammoth sale but I think worth mentioning (I did sell it too). This is a 4 bedroom + den / 3 bath home built in 2003. Located at the end of Larkspur and backing up the BLM land. The home was in good condition and great views from almost every window. I say these REO buys in Crowley Lake are the best buys in the Sierra; a spacious modern home for less than the equivalent in Bishop and for the same price as an aging condo or major-fixer home in Mammoth.
Other Real Estate News
The Town of Mammoth’s judgment with the Airport/Hot Creek/MLLA group has been quite newsworthy the past few weeks. Lots of media coverage and discussion at all levels. It certainly appears that all of the Town’s maneuvering is intent upon heading towards a “Chapter 9” bankruptcy. The Town leaders even believe the bankruptcy period could be as short as 90 days. Looks like we all might get a lesson in municipal bankruptcy. Meanwhile, more and more people are beginning to realize that this punishing jury verdict was a anti-Mammoth verdict by the non-Mammoth residents of Mono County. And it will only be a short time before the ramifications will affect the balance of Mono County. Another great “shoot-yourself-in-the-foot” story.
Another wildcard for Mammoth real estate in 2012 will be capital gains. I already have two owners (with equity) who are ready to dispose of property now because of the potential change in the capital gains treatment. The laws are scheduled to change but anything could happen between now and December, especially in light of the election and the growing concern over the deficit. As the year progresses, some of these sellers may be offering the best opportunities for buyers.
And just in the last 48 hours there is some information coming out of the lending industry that at least one major lender (and we know they like to follow) may be further restricting condominium financing, much like the restrictions we are currently dealing with in the condo hotel segment of the market here in Mammoth. I’ll be watching this closely and let’s hope it is not true. Something like this could cause a significant erosion of values in the Mammoth condominium segment of the market.
Thanks for reading!
** Closed sales data is compiled from in-house files and public records.