Lending Restrictions for Resort Area Condo Loans

As of Sunday, May 3, 2015, the Mammoth Lakes real estate market has a total of 165 condos, 60 homes and 49 vacant land active listings.  There are only 41 properties under contract (in escrow) for all property types combined within Mammoth Lakes.  This is relatively low even for this time of year.  Although there is serious demand for the right property, many buyers are waiting on the sidelines for their ideal property to come on the market.  Mainly, the single-family homes sector of the market is in high demand, but with a very limited selection of attractive or quality homes at market value.  There have been some new listings over the past few weeks, but everything seems to be listing at higher prices, and buyers are willing to be patient to see what the summer months will bring in terms of expanded inventory. 

Because it is so QUIET in town at the moment following a very early closing of most of the ski area, it is my assumption that sellers who are contemplating putting their property on the market are waiting until tourism increases.   Memorial Day weekend typically kicks off the summer season in Mammoth, but it doesn’t really get going until middle of June, and the momentum continues to build until it “peaks out” at around middle to late August (for real estate inventory and sales activity).  This would be the only explanation for the limited number of properties that are trickling onto the market following a record drought year with below average rental occupancy figures for the 2014/2015 ski season. 

Grand Sierra Lodge Condo Hotel at Village at MammothThe lending climate in Mammoth Lakes continues to be difficult for out of area lenders to tackle.  Since...

Financing for Mammoth Lakes Condo Hotels

After the house of cards came crashing down in 2008, there has been a standstill for financing on all condos located within complexes that are considered “condo hotels”. Many prospective buyers who have come to Mammoth in search of the right vacation home (which they can also rent out to help offset the costs of ownership) have had to come in with cash to purchase.

Not only did the lending industry tighten up requirements for those looking to qualify for a loan on a primary residence, but the first to go was the “investment property” or “condo hotel” from most portfolio lenders’ pool of funds, and eventually, all lenders. Why did this happen? Or, what caused lenders to stop financing most condo purchases in resort areas? Well, from what I understand, this restriction was due in large part to the Las Vegas condo hotel boom, and buyers flooding in to purchase based on the speculation to make rental income. This eventually led to the classification for any and all resort condos (new or old) that had a rental office onsite to be blacklisted in the lending industry. Both Bank of America and Chase will not loan on any condo purchases in Mammoth Lakes. Wells Fargo Home Mortgage, Mammoth Lakes is the only lending institution that has been successful in funding loans for condos that were once included in the “condo hotel” classification.

This lending restriction has impacted property values negatively as purchases for these types of properties are limited to cash buyers. However, there has been no shortage of cash buyers flooding in to buy these discounted “condo hotel” type units. If the price is right, there are usually multiple offers on bank-owned properties or “REOs” (Real Estate Owned) that drive the price up over the asking.

The classic “...

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