Mammoth Lakes, CA

Well Mammoth has officially been dumped on. We now have a base of 64-100" and lots of powder!! There are many nice places to stay and if want to look around at some real estate while you are here give us a call! If you are an agent with clients looking in Mammoth-send them our way and get a referral fee. Visit our website today for lots of local info and listings in Mammoth. Go to www.mammothsoldsisters.com

<!--StartFragment-->

Q: So Paul, does everybody, including us, think they can pick the bottom of the real estate market in Mammoth? We think that with all of the information now available on the Internet, including your blog, we will be able to do that. But c’mon, what’s your best take on when the bottom will be and can we time it perfectly?

A: In the last few months the questions and comments about “the bottom” have become more frequent and more entertaining. Many owners or wish-to-be sellers are in the
“we’re there-we’re there, or…we’re close, aren’t we?” state of mind. Or they’re convinced that the start of regular air service (Dec. 18) will be the bottom. Meanwhile, bottom feeding buyers are trying to predict the specific quarter, like “2^nd quarter 2010, 2013” or based on some other event such as, ”when Starwood sells to Vail” or “when Main St. is redeveloped” or…(well, I’ll save that for later). At least the bottom feeders aren’t talking about earthquakes, volcanoes and hantavirus. The only thing I know for sure is that we’re heading towards the bottom. I know, genius of me to have that figured out.

Everybody wants to predict the bottom of every market. But cycles are never perfectly predictable. This picking the bottom stuff (at least here in Mammoth) is more psychological than financial. In fact, I’ve had people get upset with me because I would not proclaim “the bottom” or predict its soon arrival. Read any good financial book and you’ll discover that you’re lucky if you bat .500 at anything. Your odds of getting perfect skiing are about the same, but that doesn’t stop most people, especially not fanatics.

The one thing most people don’t realize about “bottoms” (or tops for that matter) is that you don’t know you were there until months, or years, after they occurred. No algorithm or statistical modeling will help, especially in Mammoth where emotion and “life’s clock” are such huge drivers in the market. True bottoms can only be seen in the rear view mirror. And losing your youthfulness, or squandering the opportunity for precious years with your children and grandchildren, while waiting for some “bottom” no longer makes any sense for most.

My regular readers will know there are far more important concepts to consider than nailing the absolute bottom. First, they know I watch the foreclosure market intensely because that will prove to be the best barometer of the market for a multitude of reasons (previously discussed ad nauseam). But secondly, they know that hitting the bottom isn’t as important as purchasing a quality property, and this type of market provides the buyer the patience to do that. Back in the goldilocks market I would gasp when sales would come through the MLS and people were buying dog-meat properties for high prices. The 80’s and 90’s taught us there were locations that simply didn’t resell when the market got soft. When the market got hot there wasn’t much discretion. Non-discerning agents and their buyers had little insight, and after all, real estate only goes up. In today’s market buyers should simply get screaming deals or great properties. Preferably both, but buying an outstanding property is far more important in the long run.

The third thing my readers know I watch closely is the inventory. The total inventory is really so small that it is relatively easy to watch. (I have found that many potential buyers know the inventory better than many local agents.) Right now there is a growing number of wait and hold sellers/owners. Personal knowledge and the files on my desk show this. The inventory also reflects it. Many listings expire and don’t reappear. Mammoth really has an unknown supply of sellers. Most of these people aren’t necessarily delusional, they just fall into the “don’t have to sell” category, and most likely there is great emotion tied to the property. (Adult children who rarely come to Mammoth seem to have a strong influence over their parents when it comes to selling “the Mammoth cabin”.) Others are just waiting for the “adjusted basis”. And many that didn’t sell in the past year are now happy they didn’t because they likely would have put those proceeds into mutual funds. So much for batting .500.

On the other side of the pendulum swing, some of the current listings and “short sales” are going to end up as foreclosures. And some heading to foreclosure aren’t listed, they aren’t even going to try to sell. (And pay attention, banks are getting hungry for cash.) But overall the inventory is remaining stable, there are no staggering or alarming numbers. A good percentage of that inventory would probably sell if the prices were cut by another 10-30%.

The other thing about real estate bottoms is that they aren’t “V” shaped bottoms, they are “U” shaped bottoms. And with all the wonderful economic news out there today, I would expect the U to be rather wide. That is unless some black swans come to the party. But what that really means to me is that this bottom period that we are in, or are about to enter, or is somewhere in our future, will be a period for buyers to make quality purchases in the local marketplace. And please don’t come looking for “cash flow”.

One thing I’m also observing, and should remain so, is that not all segments of the market will bottom at the same time. For instance, the values in the condo hotel segment of the market have declined substantially off of the peak(s) (the rear view mirror is a little fuzzy). I’m seeing numbers (recent sales) off as high, or greater, than 50%. There are buyers at these discounted prices, but I think there will be some additional minor declines in value, especially in the less than best locations. It all depends on how strong the winter rental income is and how many more foreclosures we will see in the next 12 months––and there are some in the pipeline. On the other hand the single-family home market between $700K and $1M remains stubborn. If the sellers cut their prices by 50% off the peak in this segment the inventory would vanish in a few days. Foreclosures aren’t impacting this segment of the market. Decent homes in the $500K range sell quickly. We may see the bottom of that segment in the next 12 months. But would could be close now. Not all segments are created equal.

" The Good with The Bad "

My post before this one is quite sad so I wanted to follow it up with something nice.

This is Beautiful Mammoth Lakes in California around a 5 hour drive from Las Vegas, Nevada and not far from San Fransisco and Los Angeles.

It is a very beautiful place to vacation, boating, fishing and enjoying the fresh air and beauty in the Summer and snow skiing approx. 5 months out of the year because of the high elevation.

Mammoth Lakes is about 1 hour away from Yosemite National Park, so you could kill two birds with one stone (just an expression) if you were to visit one, visit them both.

The photo below is of part of my new family and me, and they really love me for who I am!

Story and photos by: Robert Swetz

All photographs by: Robert Swetz and copyrighted/ trademarked by Robert Swetz - Any duplication in any form with out the permission of Robert Swetz will be in violation of a minimum of $5,000 to a maximum of $20,000 dollars - For permission please call Robert direct at: 702-443-7156 or email him at: swetz444@yahoo.com

We are now almost 3 years into this real estate market down turn and there is no sign of rebound just yet. However, several well respected economists are making predictions of when they think our market will bottom out and then recover.

Former U.S. Federal Reserve Chairman Alan Greenspan wrote in an article for Emerging Markets newspaper that the U.S. housing market will recover in the first half of 2009. “The recent slowing in the rate of decline in U.S. home prices is the first positive note in this now year-long trauma. More conclusive signs of pending home price stability are likely to become visible in the first half of 2009.” --

“ Greenspan Sees Housing Recovery in First Half of 2009,” by Jake Lee, Bloomberg, Oct. 10, 2008

Respected economist and Mercer University professor Roger Tutterow predicts the nation's housing market will return to near normal conditions by mid-2009. “I think we will move sideways for a couple of more quarters, and hopefully by the time we get into the middle part of 2009, we will have had inventory levels come back down to levels where it starts to make sense to clear land, drive nails and start new home construction again.” --

“ Mercer Economist: Housing Market Crisis Over by Mid-'09,” by Marcus E. Howard, Marrietta Daily Journal, Oct. 23, 2008.

In addition, most of us know that the problem is not necessarilythat the real estate prices are not yet low enough for the hoards of buyers to jump in, but rather it is a problem with available mortgages. This is especially true in higher end markets such as Mammoth Lakes California because although conforming mortgages can still be tough to get, it's not as bad as the jumbo market. In Mammoth CA, we have a unique problem with conforming limits. We are only about 4 square miles of the entire county so, when computing the limits, the very low end that surrounds the outerlying areas of the county brings down the average for us dramatically.

In Mammoth where a studio just big enough for 1 or 2 people for weekend trips is in the neighborhood of $200,000 (and that is about 20-25% off of peak prices), larger properties easily exceed our conforming limit of $472,000. Our average price is just over the $500,000 range.

Like many others, I'm hoping that the mortgage crisis gets better when the government can figure how to effectively execute the bail out program.

How about a little good news for a change?

Recent Quotes & Excerpts about the Positive Signs in the Real Estate Market:

Statistics Reveal Housing Market Bottom is Close How close are we to a bottom in the housing market? If The PMI Group is right, we're closer than you might think. PMI, a mortgage insurance firm, looks at trends in home prices, local wages and employment, and other factors to calculate the likelihood that home prices in a given city will be lower two years from now than they are today. Based on their calculations, about 65% of the nation's housing markets have less than a 10% chance of falling, and 38 of the top 100 have a less than 1% chance.

• In October 2005, near the peak of the boom, the median sales price for a U.S. home reached 7.3 times per capita income; by this May it had fallen to 5.7, in line with historical norms.
  
• Nationally, the rate of decline in sales is slowing, and in some regions sales numbers have actually perked up. “The indicators are starting to look better,” says Adam York, an economic analyst with Wachovia.
  
• The national sales figures that get so much attention … are brought down by boom-and-bust markets like Las Vegas, Miami and Phoenix. If hard-hit states like California, Arizona, Nevada and Florida are taken out of the statistical mix, the picture is much more promising.
  
• The government’s sweeping bailout of the financial sector could boost the housing market by making borrowing easier for buyers. --
  

“ Home Prices: Now for the Good News,” by Brad Reagan and Elizabeth O'Brien, Smart Money Magazine, Oct. 17, 2008.

<!--StartFragment-->

Broker’s Report, Oct 25––This time last year I returned from a fishing trip and reported cold water in the Pacific Ocean along the Baja coast (my conjecture back then––La Nina). This year it is completely different. Water temperatures in the same locations are 10-15 degrees hotter this year. We can only hope this is an El Nino type pattern and will result in a wet winter. Mammoth is currently experiencing a fabulous “Indian summer”­­––warm days perfect for recreation and brisk nights worthy of a fire in the fireplace.

Upon my return I realized I owed my readers a Broker’s Report more than a fishing report, so here goes…Being away from my desk for two weeks seems like a year but it doesn’t take me long to get back to speed when all the characters pour into my office begging for fish. Besides all of the national news events, I come back to local reports, rumors, and information of all sorts to process (I’m glad I missed the fist fight!). Mammoth is truly (once again) experiencing the pre-winter, no-snow-on-the-ground, stressed-out, recession blues. Lots of us have been through this in the 80’s and 90’s so it’s really no big deal. Go chop some wood, go for a bike ride or a hike, try to go fool a big brown, or simply leave town.

Two weeks of play means a week of serious catch-up, and I came back to five new REO properties on the escrow board. So what is the market really doing? There is certainly REO craziness; multiple offers, “highest and best” counteroffers from banks, pissed off potential buyers, posers and losers, and all sorts of hot water for those who can’t read, listen, or comprehend the rules of buying a REO (does your agent have a clue?). And the preponderance of the foreclosed properties continues to be condos, new and old.

The balance of the market has some activity, but for the most part listings now have to be competitively priced with the REOs. The recent stock market fall has queered a few transactions––buyers with falling net worth’s just get a little nervous (and you can’t blame them). And the concept of “wealth redistribution” isn’t going to help our market. Other transactions have come apart at the last minute due to financing glitches, and most likely other financing could have been attained through another lender but the buyers are walking away frustrated, or simply hesitant.

Reality is the local market needs the election over, the financial markets to stabilize (somewhat) and a few big snowstorms. In Mammoth, there is nothing like a good day of skiing to push buyers off the fence. Deep discounts in list prices don’t hurt either. Right now the condo inventory is down (with still plenty of Westins to choose from), single-family inventory is up slightly with the only real price reductions coming in the $1-1.3M range and $2-2.4M range, and lots aren’t selling at all except in the Bluffs at significant price reductions.

Meanwhile, Mammoth is heating up over the upcoming local election. Measure “K” is an $85M school bond initiative, mostly allocated to rebuild the high school. The whole thing is becoming more divisive than I though it would. For people with kids it is a slam dunk vote. Renters are probably indifferent. Jerks like me with who own property but don’t have kids scratch our heads and try to figure out what’s best for the community. (Anybody got a real cost/benefit analysis?) And locals who have been around know how poorly the last school bond funds were managed by transient, “where are they today”, school officials. But what I really wonder is how all the second home owners feel about it, after all they will be paying a large chunk of the bill and receive dubious benefit. It’s a tough one, maybe it would be more palatable if the dollar amount wasn’t so high, or maybe if they were tying to solve the housing issues for quality teachers, or simply admitting that fancy buildings themselves don’t equate to a better education. I usually vote against such smugness. Do they even teach reading, writing and arithmetic anymore?

On the topic of property taxes, you just received your new bill. The forms for Prop. 8 requests for assessment reductions can be obtained at the Mono County Assessor’s office at 760.932.5510.

The next area of hot water to report is for residential landlords. Vacancies are at an almost historic high. Nobody keeps records for this here in Mammoth––just my own empirical observation, which can sometimes (ha, ha) be more accurate than raw data. This is all the cumulative effect of the affordable/employee housing built over the last few years, the disappearance of large construction crews in town, more locals’ home ownership, more specu-vestors in long-term rental pool to generate cash, and the general economy. This could be a great season to be a ski-bum, so for all you unemployed boomers or unmotivated GenXer’s, here’s your perfect chance. Be careful though, it can be intoxicating.

For those buyers who walked and defaulted on their Westin Monache deposits (10%) in the last year, the answer to the correctness of your decision came through late this last week. The first two re-sales in the project are recorded––one at a 15% haircut, the other at 25%. Both were cash purchases and likely the same buyer. (Financing is only available for billionaires.) Add up the carrying costs, the selling costs of another 6-8%, and add back in a trickle of income, and you have your answer. Sellers may even be lucky enough to get a supplemental tax bill after the close!

While I was gone they had a nice ribbon cutting at the Mammoth Airport terminal and a Horizon Bombardier made a flight from LAX to Mammoth for good will. Let’s hope this all goes well starting Dec. 18. And for a select few of you I may be available to come down in my truck and pick you up––it’s a long walk. And the drop in gas prices may end up being Mammoth’s salvation this winter.

That’s all I can take for now­­––my head is still somewhat in the tropics. I need to get back to work before I’m in more hot water with my clients. My next post should be something new, a new feature that I hope will add even more value to this blog. Stay tuned. Damn, fresh wahoo tacos sounds good for lunch.