Mammoth Lakes CA Real Estate Blog

Mammoth Mountain ski area officially closed for the season on Memorial Day weekend.  After a below average snowfall year, this marks one of the earliest closings in several years.  The much anticipated flood of properties hitting the market in the early to late Spring, just haven’t materialized (yet).  This poses an interesting outlook for the micro resort real estate market, which the resort town of Mammoth Lakes represents.  Although many Mammoth Lakes condo owners rely on a good snow year to attract tourism and the subsequent rental income it provides, it appears as though many may have weathered the storm, or lack of storms.

Mammoth Lakes Real Estate Trends show that properties are trickling onto the Multiple Listing Service (MLS), but at a very slow rate, and at significantly higher prices than recent sales comps would support.  If our supply continues to remain somewhat low heading into the busy summer selling season of mid-July through September, and demand is steady, the Mammoth real estate market could see property values stabilize.  This is one possibility.

However, those of us who follow what is going on behind the scenes realize that there is a glut of distressed properties that haven’t yet surfaced.  There are countless properties in Mammoth Lakes that are in default, but the foreclosure process has clearly slowed.  It’s hard to anticipate what type of government bail-out scenarios or incentives for homeowners who are upside down or under water on their properties, will take place over the next few months.  It is my opinion that simultaneously flushing out all distressed properties sooner, rather than later, and letting the market finally correct and recover would allow for a healthy rebound...

Typically, this is the time of year when we begin to see an increase (usually pretty significant) in the number of properties hitting the market. Most property owners who contemplate selling will usually wait until after ski season, which is especially true for condo owners. For most complexes, since the bulk of rental income is generated during the months of November through April, once Canyon Lodge and Eagle Express close for the season, traditionally, our inventory increases.

One would think that after the lack of snow Mammoth has seen during the 2011/2012 ski season, there would be a glut of properties hitting the market. However, this has not yet happened. Because we experienced such limited snowfall this past ski season, our skier visits were down substantially compared with the past few years. In turn, our overall ski season tourism numbers were down as well. For those property owners who depend on the stream of rental income that the past few record-breaking snow years have brought, probably have felt the impact of the reduced rental income this year.

However, in answer to the question posed above, the answer appears to be “no”, at least not yet. Our Mammoth Lakes spring real estate inventory continues to be lower than it’s been in previous years, and demand appears to be healthy for attractive and attractively-priced properties.

As of April 29, 2012, there are only 162 active condos and 57 active single-family homes on the market. During this time of year, previous stats have been anywhere from 220 to 290 active condos, and 70 to 95 active homes on the market. Our Mammoth real estate market sales data for year-to-date is as follows: 134 closed transactions 1/1/2012 to 4/29/2012, of which 30 were single-family homes, and 90 were condos. Out of the 30 closed single-family home sales, 5 were REOs (Real Estate Owned – bank foreclosures), 10 were short sales, 1 probate, and the balance of 14 being traditional re-sales....

This question comes up time and time again. Most buyers looking for property in Mammoth usually want to invest in a property that they will not only enjoy, but will also generate decent rental income, and appreciate in value when the market rebounds. When clients ask what the best property investments are, I always recommend: Location: At or adjacent to the amenities (ski slopes and golf), high rental-producing complexes, and/or newer construction.

Location is still the most important factor when looking to invest in real estate. Those properties that are located within walking distance or are “ski-in, ski-out” (The Bridges, Eagle Run, Sunstone, Juniper Springs Lodge, 1849, Sierra Megeve, etc.), golf course properties (Snowcreek 5 & Lodges, Timbers, Woodwinds, Solstice, Mammoth Green, The Cabins at Crooked Pines, etc.), or creekside/meadow area of Mammoth (Snowcreek 1-4, Creekhouse, Mammoth Creek, Snowflower, Sunrise) will be more attractive to investors and have greater resale potential.

If rental income or return on investment is important, buyers should consider well-managed complexes, such as the “condo hotels”, which have the highest rental income figures. Some of these complexes include Juniper Springs Lodge, Sunstone, Eagle Run, Lincoln House, White Mountain Lodge, Grand Sierra Lodge, and The Westin. Units within these complexes will receive the most exposure through a sophisticated advertising campaign to draw in the Mammoth visitor with attractive flight and lodging packages. Currently, cash is required to purchase within a condo hotel. Once financing is available at these complexes, the demand will most certainly increase.

When looking at the various property options, it’s obvious that newer construction will have the...

Over the past couple of years, we’ve seen an increase in successful and closed short sale transactions. Short sales used to take an indefinite amount of time before having a negotiator assigned, and often times, the process took so many months that buyers lost interest and walked away, resulting in foreclosure for the seller.

A short sale, by definition, is when the seller’s lender accepts a sale price on the property for less than what the seller owes on the mortgage. Sometimes the seller has multiple notes on the property (a 1^st, 2^nd, and sometimes a 3^rd trust deed). Usually, if there is a 2^nd or 3^rd on the property, this will make the approval process on the short sale very complicated, and much more challenging since there are many moving parts to juggle in order to satisfy the various lien holders. In the recent past, short sales have been very difficult for borrowers with more than one trust deed on their property, since the sale of the property typically only paid for the first mortgage. HAFA is now offering up to $3,000 for second lien holders. Re/Max International Chairman and Co-Founder, David Liniger states: “Second trust lien holders are often owed five or ten times that of the $3,000 payment, but if the property goes to foreclosure, the second trust holder is not likely to get any money at all. This, at least, guarantees something.”

Due to recent streamlined short sale incentives and rules, which allow borrowers and lenders to work together in order to avoid foreclosure, 2012 will see a much higher rate of short sale transactions going through compared to previous years. These rules and incentives have been established by the Home Affordable Foreclosure Alternatives (HAFA) program to speed up the short sale process....

Most savvy buyers in today’s real estate market want to know the details on closed sales, type of sale, increase or decrease, etc. Here is a brief summary of sales activity in the Mammoth real estate market from 2008 to present (year to date 2012, March 25). The trend for closed sales in 2012 shows a significant increase in the number of closed short sales at the same time in previous years. We should see a record-breaking number of closed short sales by the end of 2012.

Recently, I’ve heard a few people comment on the “Zestimates” they received on their estimated property value from Zillow.com. One person in the L.A. area stated that Zillow used a nearby condo complex, which had several closed sales to determine an estimate of value for his house, a single family residence. It’s basic real estate knowledge that a closed condo sale cannot be used to determine an estimate of value for a single family residence. After having a licensed appraiser perform an appraisal on her property, another property owner discovered that Zillow was quoting her estimate of value at $150,000 below appraised value.

This prompted me to do my own research on the topic. What I discovered specific to the Mammoth real estate market is that Zillow was estimating property values at least $100K to $175K under market value (for single family residence). Because Mammoth is such a small area of only 4 square miles and is also a resort market, the generalized formulas that Zillow uses to determine value estimates proves to be significantly off base. Taking a property that recently sold on Monterey Pine, which backed right up to Chair 15 (ski-in, ski-out), Zillow’s estimate was $875,000 in November of 2011. This home, which was listed at $1,149,000, just sold last week for $1,000,000. In researching other Mammoth properties, and in comparing estimated values from Zillow versus actual closed sales, I discovered a similar trend.

In some cases, the Zillow estimates can “coincidentally” be correct, but it appears to be more of a mere coincidence rather than any real credible formula used to determine property value estimates. Anyone who is looking to find out what their property value is should not...

By now, we’ve all heard about the $30 Million judgment (which is now worth $40 Million) that was awarded in favor of the Mammoth Lakes Land Acquisition (MLLA) for breach of contract by the Town of Mammoth Lakes.

Recently, I’ve had many clients ask me how this judgment will impact general Town services, the property owner, and the visitor. It’s difficult to pin down concrete facts on what we can expect going forward, but a few things, we know to be true.

Essential Town services will continue as always. This includes fire protection, police and road maintenance. It is unlawful for the public to be endangered by eliminating essential services. With regards to increased property taxes, the State and the County mandate taxes set by Prop 13 at 1% of the assessed property value. However, it is possible that the Town could initiate a voter-approved special assessment to pay for the judgment, but this scenario would be highly unlikely. With regards to the recent rumors and speculation that the Town may liquidate assets (such as the much talked about Bell parcel located at the corner of Minaret and Meridian) to help pay for the judgment, my sources say that the Town cannot liquidate or sell assets, which are held in a public trust.

In the event that the Town cannot generate sufficient additional revenues to satisfy the judgment, then municipal bankruptcy is an option that the Town is currently entertaining. Through Chapter 9, Municipal Bankruptcy, the threat of bankruptcy could substantially lower the judgment amount, and extend the payment period over many years. However, the biggest problem of filing for bankruptcy is the stigma in the bond market. This is because the municipality has to pay higher interest rates or because it can’t obtain any credit in the market. This could impact future...

In the late 1990s, the Town of Mammoth Lakes entered into a development agreement with Terrence Ballas to build a condo hotel style development and to make improvements at the Mammoth Lakes airport. The land would initially be leased with an option to purchase at a later date. The Mammoth Lakes Land Acquisition, LLC (MLLA), developer, later acquired the right to build the condo hotel project from Terrence Ballas.

Eventually, the Town of Mammoth Lakes pursued the airport expansion to add commercial flight service to and from the area. The Town approached the Federal Aviation Administration (FAA) for help on eliminating the Developer’s ability to build the project. Because of safety issues with the proposed development being too close to the runway, the FAA objected to the project being built at that location, and as a result, threatened to cut off federal funding for the airport expansion project, which would bring in commercial flight service.

Meanwhile, the developer demanded that the project move forward per the development agreement. The Town of Mammoth did not want to move forward until all parties could resolve the FAA’s objections and safety concerns. The developer then sued the Town of Mammoth Lakes based on “Anticipatory Breach of Contract”. A jury found the Town to be at fault in breaching the development agreement and awarded the developer $30 Million in damages.

See next blog post regarding current status and possible future ramifications facing Town of Mammoth Lakes.

Feel free to post your comments, or contact me for more information.

Verena Robinson, Broker/Owner
Mammoth Lakes Resort Realty
CA BRE License #01512209
verena@mammothlakesresortrealty.com...