Market Summary: March 9 – March 23
The Mammoth MLS is reporting 12 closings in Mammoth Lakes for the period ranging from a low of $135,000 to a high of $730,000. This is same volume as the previous two week period. The local market is slow but steady. Of the 12 closings, all 12 were financeable properties (well, maybe one “iffy” one) and nine (9) of the 12 were financed with conventional loans. During the period there were NO REO/bank owned property closings and NO short sale closing. Three single-family homes with hundreds of days on the market closed escrow.
At the period’s end there are 101 condominiums listed for sale in Mammoth Lakes, that is up four (4) from the last period. The total number of condos on the market has been remaining fairly constant the past few months. But now is the time we would normally see these properties come to the market. Summer appears to be coming fast.
Single Family Inventory
The inventory of single-family homes moved up 10 to 55! Some are homes we have seen before and some are new to the market. While out on broker open house this past Thursday morning, a couple of the agents attending these new listings said they already had offers. Judging by how few people are in town, these would appear to be “blind” offers being made. With transaction volume down there are certainly motivated agents. With the past low inventory of homes there are motivated buyers. Shades of 2004…
The total number of properties in “pending” (under contract) in Mammoth Lakes is up another three (3) to 41 for the end of the period. Of the 41 properties in “pending,” six (6) are “contingent short sales” (the same six again) and 24 are in “back-up” status. The total number of pendings in the aggregate Mammoth MLS (which includes outlying areas) is up one (1) to 71. Sales activity has ticked up slightly but this is normally the time of year the Mammoth market sees a surge of sales activity. Now if we only had relatively normal snow conditions we could make a better judgement about the market
Market Updates and News
The ski conditions turned to “hard and fast” very quickly; great for racing but recreational skiers will find it hard to edge and control their turns. Older skiers will find it abusive to their bodies. The Ski Area and town should be packed on a late March weekend, but it wasn’t. The winter of 2014 is a complete bust. Now we have to deal with the downstream ramifications of this drought.
A few days ago MMSA CEO Rusty Gregory sent out his email announcing the Mammoth Value Pass (MVP) deal for next year. There will be no change in price. There will be some sort of small discount for early purchasers. Many had expected some sort of real discount based on the current season. This will be very interesting to watch. I expect a major fall-off of MVP purchasers. Sure, there is a die-hard crowd that wouldn’t think of not purchasing (like myself).
But thousands simply never even made it to Mammoth this year. And they won’t renew. Others may hedge and wait for the fall offering. Many local residents are flat broke. The Ski Area may be in a no-win situation with this pricing. But many people will be watching what happens.
The Mammoth Community Water District (MCWD) is already pushing strict water regulations and restrictions. This past week the local maintenance crews were already raking out lawns and landscape. This is two months too early. Normally, this time of year it is under solid snowpack and ice with fresh snow on top. But now the landscape will be begging for water two months early for water we don’t have. MCWD says the local surface water will be gone before summer hits and the local wells are low.
The slate of Mammoth Lakes Town Council candidates is set with no incumbents and eight completely new faces. They vie for three seats on the Council. We will also be electing two County supervisor spots (with one incumbent) from the Mammoth region, County Sheriff and Assessor. Plenty of change coming. And it is needed. It is a challenging time to jump into elected office.
The real estate front is a bit sleepy; the usual spring sales push is rather sedate. Who knows how much is weather/snow dependent? Insiders and the media have a variety of messages; California foreclosure filings going up, mortgage applications going down, year-over-year sales going down, cash buyers and “investors” leaving the market, Fannie Mae tightening qualifying, and on and on. Meanwhile, properties in limbo are still out there. I pulled up to a property the other day that was foreclosed on two years ago (the owner had left two years before that). Quite frankly, I had lost track of it.
There it was, more postings on the front door and winterization stickers on the windows, been sitting idle for two plus years. The asset manager is probably in India (and not on vacation). And eventually they will try to sell it on an online auction site… The recent inventory increase in single-family homes might indicate the start of something. Many potential sellers have been hoping for more upstroke in the market to maximize their gain or minimize their loss. The timing might have arrived; it is time to sell. But we’ll see if the buyers want to pay their prices.
And lastly, it is always interesting living in a real estate microcosm like Mammoth. Transaction volume is down and the local velocity of money is substantially down due to the drought. So what do I see? Younger agents driving around in new (and expensive) leased vehicles. And spending big $$$ on advertising. It’s deja vu all over again. I expect some hard selling this summer, gotta pay the piper. And please don’t miss my last blog post along the same lines.
Pure investment properties are not foreign to me but I rarely represent buyers. The return-on-investment dynamics in the Mammoth are not easy. There is often what is today referred to as “mal-investment” in this part of the Mammoth market. I have written about this from time-to-time but I see the mistakes made again and again. Cap rates are often overstated by sellers and listing brokers. Why? Mammoth is a transient community. And seasonal.
The experienced and long-term landlords keep their rents lower and seek a tenant with a profile of very long term rental potential. They don’t rent to seasonal employees or people who just moved to town. They like tenants who have rather stable employment, live below their means, and appear committed to the Mammoth lifestyle. I have one client/landlord who has had a tenant in the same apartment for 16 years.
With that said the sale of 1801 Old Mammoth Road is a classic. The same broker represented the seller on the purchase a couple of years ago and the seller and the buyer (dual agent) on the recent close. He also supervised (as general contractor) many of the repairs. This 6-plex sold for $577,000. This property has been traded several times in the past 15 years. It is an old motel from the motel days (1940s and 50s) of Old Mammoth.
At one time Mammoth Hospital owned the property for employed housing. This seller, who purchased it as a foreclosure, was dying to get rid of this property. The problem; this is a typical property that no tenants stays in long-term. They move out in spring and only in the fall when the demand is so high does it return to full occupancy. The cap rate is pretended. Good luck to the new owner.
Two 1 bedroom / 1 bath condos sold at Discovery Four, $135,000 and $155,000. The disparity was in condition.
Three homes sold in the $430,000 to $625,000 range that had various and LONG days-on-market. One has been off-and-on every summer for the past few years. Another one on the mark for well over a year. Two had serious incurable defects. Buyers appear to be settling for anything, just as the single-family inventory is rising.
Oddly, none of the closings in the period offered an upward trend in the market except for the income property.
Other Real Estate News
An article in last week’s Mammoth Times was truly priceless. I would link the article but it doesn’t appear to be on their website. The article is about the Sierra Center Mall (think Shogun, Mammoth Sporting Goods) on Old Mammoth Road. Mono County has numerous offices in the mall but the County Supervisors believe they have reason to void the leases because of the horrible conditions in the mall. Apparently the elevator hasn’t worked in some time and there is general deterioration. The owner of the mall is long time (and now retired) Mammoth attorney Paul Rudder. He also owns the outlet mall on Main St.
In the article Mr. Rudder is quoted “We had no idea of how expensive all this was going to be when we bought the building. Every time you turn around, there’s another little thing that turns into a big thing.”
Now that sounds like land lording. But what is so ironic is that Mr. Rudder has owned this property before. He owned it for many years. He purchased it in the 1990’s for a song and made some improvements. He sold it in the early 2000’s for nearly $20 million. The property under that ownership ultimately went into receivership. It sat on the market for a couple of years. But Mr. Rudder couldn’t help going back to the well again. The further irony is that the building has a long history of problems, all of which are well known in the community. And of course, as the previous owner he was quite aware of the problems. But he “had no idea.”
Go back and read the quote again. Priceless indeed.
Thanks for reading!
** Closed sales data is compiled from in-house files and public records.