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Friday, August 28, 2009
Is that a bird? A plane? No it's…
Broker's Report, August 28––Longtime readers here know I'm more realistic than hyperbolic and I fall back on my decades-ago journalism training to report rather than distort. With that said I've been writing a post for the last three weeks that isn't close to being finished but this post is now more important. One of the reasons the post hasn't been finished is because I've been busy––out in the field with buyers and in the office putting out fires. It is a little early for a Broker's Report but the market has shifted gears and I feel this information is noteworthy. And I'm going to write this fast.
There is no doubt that the local real estate market has changed in the last two weeks. The level of interest, property showings, and transactions moving to escrow has increased dramatically. This is a level of activity we haven't seen for probably three years. The market segment I'm most impressed with is the low-end homes, those in the $500k to $700K range. This segment has drifted in the past 18-24 months and is now experiencing significant demand. Buyers are making offers, searching for the seller's bottom line, and heading to contract. In the next few months it will be interesting to see if this activity moves up the line to the $700K to $1M range. And man, there are some old dogs in that price range--––I was just showing them.
Bank owned properties that have sat for months are now experiencing multiple offer situations with some buyers losing out and disappointed. We just scratch our heads and wonder, "where were these people two months ago?" Accusations of wrong doing by the losers are the norm. No pal, the asset manager made the decision, you just thought you could steal this property and somebody out-bid you. Speaking of asset managers, we know they are very busy but the new tendency is to take longer to respond to offers and during that delay more offers come in--––it's working in their favor right now. Well, maybe. Meanwhile there is a steady ebb-and-flow stream in the foreclosure pipeline. And with a potential end of the owner-occupied moratorium on Sept. 15 we'll see if the hammer finally drops on the multitude of them that have been delayed. And we're finally seeing some $1M-3M homes getting foreclosed on. They will ultimately sell well below replacement value and there's plenty of buyer interest.
Another area of change is short sales. The lenders are obviously becoming more favorable to short sales in this resort market place. We've seen a number of them actually closing in the last month. It is still a transaction filled with uncertainty for all parties. Some are joking that short sales are really long sales. But I'm not necessarily seeing any buyers getting any screaming deals. I'm still holding the line that buyers should be seeking quality and not the lowest price, but that doesn't get you bragging rights at the bar, or on the chairlift, so I'll just keep that to myself. There are two dynamics at play here: if the market continues to see activity and experiences an eventual firming up, will buyers want to engage into a short sale that is potentially lengthy and uncertain while other good properties come and go on the market? And will motivated sellers finally realize that a short sale may be no better than a foreclosure for their credit, tax return (especially in the State of California), and self esteem and not bother with the process? I have counseled my agents to steer clear of giving any advice to owners/sellers about the value of a short sale versus foreclosure. Only time will truly tell. But people in that situation shouldn't be relying on the advice of a real estate agent.
The low end of the condo market is almost void of quality properties, and we're just hitting September. I was expecting a rush for crashpads, after all there are 40,000 season pass holders and they're not staying at my house. So has the rush already happened? I don't think so. The fire sale prices at the Westin Monache are looking better all of the time. The higher end quality townhome product—The Timbers, Lodges, Juniper Crest, etc. in the $800-900K range are moving and there are an impressive number of cash buyers. Many of these properties were selling for an additional half million dollars or more just a few years ago. Only a handful of similar properties appear in the REO pipeline. Snowcreek has been a popular target for buyers: older townhomes (mostly 3 bedroom + loft units) on the riparian corridor (rare fabulous settings) in the older phases and well priced 3 bedroom/3 bath/1 car garage townhomes in Phase 5. With plenty of supply, those Phase 5 units may remain good buys for a while. Just get me a shuttle bus out there.
Unlike the earlier years of this decade, today's buyers don't appear concerned (or even interested) in Mammoth's future as a chic resort. They rally for the return of the Yodler (maybe even the Rafters). They appreciate the improvements on Hwy. 395. They hope they can make it up the beautiful new bike path into the Lakes Basin. They would like to see the Village functioning like a Village and they would love a Trader Joes but they are more interested in what is already here rather than what is proposed or promised. And Mammoth real estate is on sale at discount in their minds. The new winter flight options to Reno, San Jose, Portland and Seattle are very interesting indeed. But with Alaska Airlines in charge it seems natural. I think Mammoth locals will be spending more time in Mexico. It should be a very interesting winter.
Where were they five years ago? The pendulum has swung. Now the Feds seem to have their noses in everything, from how appraisals are ordered (nobody is served there), to what condos Fannie Mae will approve/lend on or not, to policies set for bank owned properties. Guaranteed, things will just get more screwed up. I have warned my associates that the only thing to expect is the unexpected. I have now warned you--––an even better reason to work with the right real estate agent.
Recent assessments of the resort and tourism business have shown a clear decline but have also shown the prosperity in drive-to resorts (just when we're finally getting air service in place!). So Mammoth's often-thought drawback has once again become an asset (just like the altitude will be in global warming).
So let the naysayers have their day and their say, but the real estate market in Mammoth has pushed to an almost bizarre level of activity. And we're just beginning (on the calendar) the traditional fall selling season. Pray for snow. Well, not yet. Now back to work.
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