Market Summary: April 6 – April 20
The Mammoth MLS is reporting only 6 (six) closings in Mammoth Lakes for the period ranging from a low of $95,000 to a high of $661,000. This is five fewer closing than the previous periods. Of the six closings, only four were technically financeable properties and only one was financed, so mostly cash buyers this period. During the period there was one (1) REO/bank owned property closing and NO short sale closings.
At the period’s end the number of condominiums listed for sale in Mammoth Lakes was even at 111. New properties came to the market but others went to escrow. New listings are priced with no definite trend; up, down and sideways. There are 14 condos listed under $200,000; more inventory than recent months but the low-end of the condo market is still attracting plenty of attention.
Single Family Inventory
The inventory of single-family homes is even at 51. Again, some new listings and some to contract. The low-end continues to be scoured out. There are 11 homes listed under $600,000. Some have been on the market forever. And some are new. All are compromised in one way or another.
The total number of properties in “pending” (under contract) in Mammoth Lakes is up again by eight (8) to 67. Of the 67 properties in “pending,” six (6) are “contingent short sales” and 37 are in “back-up” status. The total number of pendings in the aggregate Mammoth MLS (which includes outlying areas) increased by seven (7) to 88. Although the closings for the period were lackluster the properties going under contract the past four weeks has been rather impressive. We’ve had a decent spring sales ride despite the marginal ski conditions.
Market Updates and News
The Ski Area announced $21M in advanced MVP sales (pre-selling closed April 15). That’s approximately 30,000 season passes. I would say that is very impressive, all things considering. Clearly, Mammoth Mountain remains as popular as ever and the consumer sees the “value” in the Mammoth Value Pass. It would also indicate that they didn’t need to discount the pass after the dismal season. It also tells me that there are plenty of southern Californians with discretionary income. We’ll never know how much impact the $200 and $100 credits had on the the sale, but it didn’t hurt. Now let’s pray for some better winters.
Tourism during the spring break period has been decent despite the lack of winter momentum. The most recent snow storms really helped. But the conditions are very spring-like and deteriorating quickly. New season pass holders are utilizing the opportunity to ride the lifts for “free.” Now we roll from spring break right into fishing season. The lakes and streams have rarely been so accessible for an opener. It will probably snow…
The Town Council debates have started and there are no clear standouts. But there are some electable candidates. My early bet is we could end up with at least two women elected which could mean we could have three women out of five Council members. That would be a first. One of the early topics of interest appears to be the nightly renting in single-family neighborhoods (again). But so far it is just a “hot potato.” We’ll see if any one of them comes with a compelling argument, or not…
But while I’m on that topic… A very interesting real estate developer battle is brewing in Mammoth. And it could change Mammoth’s future significantly. Rob Mitchell is quietly the local front man for Chase Merritt, a privately owned commercial and residential real estate asset management and investment firm based in Newport Beach. Interestingly enough, they are the majority owner of Telluride ski resort. They also purchased the Tallus project here in Mammoth out of receivership.
Mitchell is following in the recent steps of John Hooper and trying to acquire property in the Sierra Star golf course (the Lodestar master plan) that is zoned for condos and hotel (condo hotel) and change it to single-family zoning. Hooper has recently proven there is demand for the quality single-family product aligned with Sierra Star. Mitchell found the demand at Tallus; the stand alone homes (at ~$2.5M) were more desirable than the fractional product… And the demand for condo hotel units is far less right now. (One of the attractions of owning a single-family home within the Lodestar plan is that the zoning will allow for nightly rentals.)
Meanwhile, Ski Area CEO Rusty Gregory wants to protect the hotel zoning within Lodestar arguing that it is one of the only locations for a future year-round hotel (a true hotel). According to Gregory, this is critical to Mammoth’s “destination strategy.” Gregory went as far as to express that the Ski Area would shut down the golf course and stop support for air service if the zoning were changed. Clearly, Mr. Gregory is becoming more confused all of the time; he is trying to sell his overlord’s property in the Village for development that air service-critical.
He is also trying to execute a very expensive land trade at the Main Lodge area for a destination resort compound including hotel and condo hotel. But Mammoth may already be near capacity for hotel and condo hotel. There is clear demand for single family and larger town homes… We’ll see if this turns into a battle, or if it more classic “smoke and mirrors” from Gregory… Ultimately, Gregory isn’t interested in developing hotels, just selling the potential.
The recent anecdotal real estate activity is worth discussion. National and State real estate media is working a new buzzword; “normal.” Apparently real estate markets are normalizing (if that is what the So Cal markets are, good luck!) But what is normal anymore? The lack of REO and short sale activity here in Mammoth is presenting a rather normal face to the market. But in the last month there have been numerous “quick-to-contract” new listings; properties selling within a few days of being listed. And these aren’t fabulous properties at wholesale prices…
And out amongst the agents I’ve heard them talk about properties in escrow that are going to benchmark “significantly higher prices.” (Sounds like some good high-pressure buzzwords to me.) But reading an appraisal for a property that is in escrow I see a long-time second generation Mammoth appraiser reporting that the market is “stable to declining.” And I know the Mono County Assessor is working on the “roll” (tax roll) and “Prop. 8 reductions” for many properties are the norm (meaning they are seeing values coming down). Buying and selling real estate in Mammoth becomes more of a crapshoot all of the time. But based on MVP sales and high-end property sales, there remains a strong undercurrent…
Not that many sales to talk about this newsletter but certainly one for me to discuss; the sale of Sierra Megeve #24 for $413,000. This is a 3 bedroom / 3 bath condo adjacent to Canyon Lodge. The property was well worn and very dated. Another obstacle to the marketing was the $898 per month common area fee. Otherwise, the project is sound (despite the monthly), the location good, a spacious floor plan and understructure parking. The unit needs a new fireplace, a new kitchen, new flooring, and new furniture and decor. And while you are at it you might as well redo the bathrooms. The buyer made a good buy, and can justify spending a $100K+ for remodeling.
Now here’s what is important to me. I listed this property last fall. The seller was a legacy owner and wasn’t using the property and was getting only “desperation” rentals. I initially assessed the property to be worth somewhere between $425-435,000 and should list at $439,000. So we listed the property at $439,000 and I started my marketing efforts. Shortly after listing, the seller started telling me that her family was telling her “the listing price is too low.”
So I asked them to provide me the necessary information that would indicate that. And I offered to speak to whomever it was that believed that. Nothing. Within a couple of months we had an offer; a lowball at first and then the buyer came to full price cash. No response from the seller. This was the pre-winter period when buyers get antsy to close. That buyer eventually moved-off and closed on another similar property. Then more non-communication from the seller.
Eventually my listing expired and I knew what would happen. And it did. The property came out listed with another agent at a higher price. Good luck. I know that agent doesn’t market or negotiate half-as-good as I do. So the best they could do is $413,000. That seller had another $10K+ in carrying costs on top of it. So much for “the family’s” valuation.
And one last little lesson I’ve learned over the years in Mammoth; when owners eventually don’t use their properties much anymore (it happens), they shouldn’t listen to those who use it for free for advice on whether they should sell or not. Just get some good counseling from a quality broker and make your own decision…
Other Real Estate News
Ragatz Associates was out this last week with their 2013 annual report on “Shared-Ownership Resort Real Estate” (i.e. fractionals like 80/50, Tallus). Very little new in this report. Sales were up slightly from 2012, which was the worst year since they have been reporting. And 2013 sales were about 22% of the best year ever in 2007. The same factors were quoted as negatively impacting the market; lack of financing for the product, fewer cash-out re-finances (of primary residences) nationwide, lack of marketing funds, excess vacation home inventory to compete with, etc…
Maintenance fees, averaged on a weekly (usage) basis, were $1,045 for fractional units and $2,565 for “residence clubs.” But the report concludes “that the shared-ownership components will strongly rebound in the future” due to “personal use rather than speculation” and the “show up and enjoy” amenity and the growing external exchange opportunities… yeah, sure.
Major class action lawsuits were recently filed in California against two home warranty companies; Old Republic and First American. The suits allege the warranty programs “scam” homeowners by providing very poor service, incompetent service technicians, repair-rather-than-replace policies, etc. These suits may change the way we have done business in Mammoth for many years. Here in Mammoth, a good 95%+ of improved properties are closed with a home warranty policy as part of the transaction. And there is good reason for this. It simply alleviates any downstream problems (within the first year) if something goes awry.
I’ve seen these policies payoff handsomely for some new owners. But I know other owners who never make any claims at all. Almost all of the local policies are with American Home Shield (AHS). The agents get nothing back from AHS (okay, maybe some notepads), just some peace and quiet. But I can see these suits questioning the sense of these policies as part of a real estate transaction. The issue will become more public. Maybe it is just better to credit the buyer the few hundred dollars for “future, unforeseen repairs” instead of a dubious policy. Time will tell…
Thanks for reading!