Mammoth Real Estate Sales, October 21, 2018

Fabulous Fall Weather With Warmer Days Forecasted For Next Week!

Market Summary:   October 7 – October 21

The  Mammoth Lakes MLS is reporting 25 real estate closings for the period ranging from a low of $250,000 to a high of $815,000. Of the 25 escrow closings, 21 were financeable properties and 20 were conventionally financed and one (1) owner financed. Fourteen of 25 sales were condos selling under $500,000. The sales included three vacant lots, two (2) in Old Mammoth and one in The Bluffs. The 10-year Treasury closed the period just under 3.2%. With the preponderance of closings in the period financed, it would appear that either buyers are trying to get in before rates climb any further or the higher interest rates don’t really matter.

Condominium Inventory

At the period’s end the condominium inventory is down four (4) to 97. There were 11 new condo listings in the period and none have gone to contract so far. That includes one foreclosure/bank owned property. Almost all of the condos I showed in early September have sold and many have closed escrow. This time last year there were 51 condos on the market, two years ago; 129.

Single Family Inventory

The inventory of single-family homes is down two (2) to 54. The under $1M inventory is clearly in a stall. There were more price reductions and many sellers are trying to figure out what to do (move to seasonal rental?). This segment of the market is in a true “price discovery” phase. There are currently eight (8) Mammoth homes in escrow and only one of them has a listing price under $949,000. That is quite interesting. What do these high-end second home buyers know? This time last year there were 40 single-family homes on the market. Two years ago; 61.

Pending Transactions

The total number of properties in “pending” (under contract) in Mammoth Lakes is down 16 to 44 at period’s end. Of the 44 properties in “pending,” there are 17 in “Active Under Contract” status (formerly “back-up”). The total number of pendings in the aggregate Mammoth MLS (which includes outlying areas) is down 21 to 86. This time last year the respective numbers were 67 and 117. Obviously the fall selling season has flatlined here in Mammoth.

Market Updates and News

The reason for the slowdown isn’t exactly clear but there are likely culprits; the California and national real estate markets have all reported slowing, there arehigher interest rates, we might be in an “election funk” much like the fall of 2016 (our old friend uncertainty), and the strong sales activity of early 2018 may have brought local demand forward. Or maybe potential buyers are just waiting for it to snow. The delivery of new Ikon Passes hasn’t sparked any activity. Mammoth can be a fickle market.

This time of year the weather can certainly dominate the conversation because Mammoth is inhabited by plenty of “snow farmers.” But the anxiety for snow isn’t as bad today as it was decades ago. The biggest weather news right now is that it has been absolutely gorgeous and the weather is expected to warm over the next week. The fall colors have been one long slow turn and there is plenty of color left. For second homeowners and frequent guests, next weekend looks optimal to come and play. We’ll be praying for snow soon enough.

The town is quiet and the perfect weather makes it even more enjoyable. The past week was full of snow stakes being pounded into the ground and irrigation lines being blown out. I was out with clients who wanted to go to dinner and many of the popular spots were closed for a fall respite and scheduled maintenance. It makes sense. When I moved to town that was referred to as “the Sun Valley attitude.” That came from Roger Egan who owned Roget’s (which morphed into Nevados). The idea was to work (and play) really hard all winter and summer and close for business in spring and fall when tourism disappeared. Mammoth’s spring business has grown so much that it is a hard decision, but the fall is prime time to close and go play. The end-of-the-year holidays will be here soon enough.

There is nothing new to note about the Ice Rink or the Bishop Airport. The Town’s focus has moved towards housing and more specifically the “how and what” to do at The Parcel (formerly Shady Rest). It appears the “how” is becoming the real challenge. Mammoth Lakes is lacking the experienced personnel to spearhead the enterprise. And relying on consultants can be dicey. This weekend (Saturday) the Town gave small walking tours of the ~25 acre parcel in the middle of town. Despite my various involvement over the years, it was the most time I had spent on the parcel in my life. It is a beautiful piece of real estate. The tours were designed to introduce local residents to the basic “lay of the land” and to essentially begin the public process.

From here the Town plans to engage the public in various workshops to get public input. They say the project is a blank slate and “nothing is decided.” There have been various site plans drawn in the past and the one I like to refer to is from the early 1990’s. The parcel has access to/from Main St. via Center St. The access from Old Mammoth Road is via Tavern Road (Bleu). There is another access from the Chaparral Road neighborhood, but that is likely to be secondary access.

Based on the questions from the public, the site tours were a great place to start. There was really no new information for me but I have most of the background. My specific tour guide was quite emphatic that the project won’t be built all at one time. He referred to the loss of specifically-built deed restricted housing units at San Joaquin Villas as a primary example. Units, whether for ownership or for rent, need to be phased into the market. It was also implied that the Town believes there will be multiple developers over time. The workforce housing group of 2017 was hopeful the housing could be completed in five years. Today, that seems ambitious, or impossible.

And apparently the current financing for these affordable/workforce housing projects is a moving target. Some of it comes from State and Federal grant programs which are ever changing. The federal corporate tax reform of last year has apparently removed many of the incentives to be involved in affordable housing. Conversely there were major California legislative bills passed at the end of 2017 pushing affordable housing. It is unclear whether the Town has identified the opportunities these State bills have created. It is also unclear how the Town will organize the personnel to drive the project(s). Engaging the public input phase will buy the Town some time to figure it out. Bring on the consultants. But maybe the Town should be considering hiring a real Planning Director like we have had through many critical phases in the past….

The coverage of the upcoming Proposition ballots has increased but reading the State produced Official Voter Information Guide hasn’t helped me. I read the arguments for and against and the rebuttals on Prop. 5.  I now know that reading the Guide is basically a waste of time. The rebuttal of the againstprobably has the best information but I still find it seriously lacking. I have been involved on the periphery of this ballot measure for almost a year both as a member of the bill’s sponsor (CAR) and as a public taxation official. The arguments were simply more self-serving propaganda and nobody has any reliable estimate of the fiscal impacts. I’ll be looking for better information. And so far, I haven’t seen CAR produce it.

As for Prop. 10 and rent control?? Rent control in Mammoth has the potential for disaster. It sounds good but many of the units would likely convert to nightly rentals (where zoning would allow). Then there would be even fewer units for workforce housing.  

And by now most of the new Ikon Pass holders have received their physical passes in the mail. I’ve been a MMSA pass holder since ’81-’82 and we have never been adorned with such fancy packaging! But recently I’ve seen Alterra pushing the Utah opportunity to access “10,000 acres of the Greatest Snow on Earth.” I have to say it is enticing. A road trip to Alta, Snowbird, Deer Valley, Solitude and Brighton is now a possibility. For many southern California skiers and snowboarders a quick flight to Salt Lake City and a rental car could be VERY attractive. Especially if you don’t have to buy lift tickets. That is the synergy of the Ikon Pass. Maybe it will make Mammoth a little less crowded.

Noteworthy Sales

Condo closings at low end projects like Bigwood, Sierra Manors, Forest Meadows, La Residence, Conestoga, Krystal Villa, and Sierra Valley are evidence of continued upward values in the older and affordable condo market. These units are being purchased by local residents, by “crashpad” seekers, and Airbnb-type entrepreneurs. 

The sale of a very nice 2 bedroom + loft / 3 bath bath south facing corner unit at Mountainback. Great top-of-the project location with close(r) proximity to Canyon Lodge. This property came to the market just before Labor Day weekend and sold quickly. It was originally listed at $575,000 and closed for $605,000. 

A 2 bedroom corner unit at the Westin Monache closed for $575,000.

A ~2,000 square foot home with a 2-car garage on Crystal Lane above the Village closed for $650,000. It was originally listed for $739,000 and was on the market for 228 days.


Favorite New Listing For The Period!

The new Grey Bear residential neighborhoods located in the Sierra Star golf course have been incredibly popular the last few years. The subdivisions and homes are built by John Hooper who has been doing this type of work for 40 years in Mammoth. It is a cohesive neighborhood of “modern mountain craftsman” homes. The added value is that the neighborhoods are in a “Resort” zone so they can be rented on a nightly basis.
  
Here is the the first resale in the neighborhood and it has an amazing location overlooking Bear Lake and the 8th hole and views to the Sherwin Range. Tons of sun. Reasonable walk to the Village. It is 5 bedrooms + large den / 4.5 baths. It has been on a nightly rental program and the rental revenue numbers are strong. The property is being sold in “turn-key” condition so a new owner can just keep generating rental income, or not.
 
Listed at $2,100,000​​​​​​​

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Other Real Estate News

I have no big theme in the “Other” section but some odds-and-ends observations;

• Many sellers in the current Mammoth market are expressing the need for “net proceeds.” I’m seeing it in both representing buyers and sellers. “Net proceeds” would be the amount a seller would receive at the end of a transaction. That would be the selling price minus any loan amounts, commissions, escrow related fees, any other liens or obligations due, etc.. It is fairly easy to calculate net proceeds but the best way is to ask an escrow officer to produce an estimated settlement statement (or “HUD” in some real estate lingo circles) on the proposed transaction. But these sellers seem to be ignoring the concept of “what the market will bear.”

Many times sellers want a certain net proceed amount because they want to use the proceeds for some other purchase and need a certain amount. And sometimes it is psychological. But the net proceeds amount may be unrealistic. Based on the changing market conditions, or where the market may be going, it may be more important for sellers to get ahead of the changing market than be set on their “net proceeds.” We may be in or heading towards market equilibrium or even a true buyer’s market. It has been awhile. Each market and different segments within markets are always changing. Sales data including days on market and price reductions can be enlightening. Serious market changes can happen in a matter of months.

What “the market will bear” will be the theme for the balance of 2018 and most likely much of 2019. Wind and weather permitting.

• I have experienced an interesting and growingtrend in Mammoth; raising chickens on residential properties. I first saw chickens in a Mammoth backyard about five years ago. Now it appears to be a necessity for many local residents. The trend is certainly amongst the younger generations; it seems to be hip, and the chickens are considered “pets” by the parents and kids, and the  “organic” concept is part of the program. There are challenges to raising and maintaining chickens in Mammoth; the winter cold and snow pack, predators, and neighbors…..I can’t wait for the proposals for common area coops in condo HOAs. It is just a matter of time.

• The bank foreclosure/REO properties have become almost non-existent (there is currently one in the Mammoth market). But an interesting trend is the increasing trickle of reverse mortgage REO properties. We are handling more of them and they are notin Mammoth. They are in the outlying areas in and around Bishop, up in Bridgeport, etc.. I must admit I know very little about the details of reverse mortgages. It is definitely not part of the Mammoth real estate market.

But some of these reverse mortgage REOs paint some interesting pictures. A reverse mortgage essentially gets foreclosed on when the owner “leaves the home.” It can take the bank a year or two to figure out that the owner has moved or is deceased. But there is one thing we have noticed about some of these reverse mortgage REOs; many of the owners took cash-out reverse mortgages for the full appraised value of their homes. And many did it at peak or near-peak values. Some of the properties eventually resell for a fraction of what the cash-out loan amount was just a number of years ago. And no mortgage payments were made in the interim. In hindsight they appear to be rather shrewd financial moves.

Again, reverse mortgages aren’t really part of the Mammoth real estate market. But for some out there in the balance of the real estate world, it could be a great move. I wouldn’t rely on Tom Selleck for advise, but comparing reverse mortgage opportunities may be in an increasingly prudent thing to do. Especially if you can time the market. After all, none of us are getting any younger.

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Thanks for reading!

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