Paul Oster

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The Mammoth REO rodeo continues to ebb and flow. Sometimes we feel on top of things and other times we feel a little buried. My mantra of “expect the unexpected” is worth repeating for buyers, brokers, and casual observers too. The foremost wild card in the mix remains the asset managers who are handling the bank’s portfolios. Not only are they running the show but they are also mired in “policy” that is sometimes arbitrary or unexplainable and may or may not be followed. They’re watching their own performance levels, especially close to the end of the month. And don’t think they aren’t focused on where they plan to cocktail and chill for the weekend. Meanwhile, buyers are chasing these bank owned properties, and they too, based on their behavior, are a cast of characters.

The national media is full of stories about banks delaying the foreclosure process on delinquent borrowers. Some of that may be true and beneficial to the stabilizing some markets, but the beginning-to-end process for just one property is labor intensive and involves all sorts of “specialists.” And even in this electronic age the pile of paperwork is enormous. All the digital files including time and date stamped photos of everything and the scanned multiple offers (and their addendums) have got to be clogging up the web somewhere. And there is no consistency whatsoever. Nobody does anything the same way. Some properties can be turned over from foreclosure to on-the-market in just a few days, while others take months and months. (Some of that is due to bitter and belligerent previous owners.)

“How long is this going to last?” is becoming a question I hear daily. Serious buyers are weighing the deals of today against the possibility of lower prices tomorrow driven by additional foreclosures. I can only respond, “Who knows?” But the facts are this: First, there will be more foreclosures. The pipeline is continually moving properties of all sorts, from 70’s built dumpy one-bedroom condos to new or near new luxury homes and condos. There is no indication of any slowing of properties entering the pipeline. An equal number of properties are exiting the pipeline (via sale). It ebbs and flows, but it all remains fairly consistent. The second fact: We’re finding price support in almost all segments of the market. And much of the price support is at 50 to 60% off of the peak of the market. Now, buyers shouldn’t try to apply any strict rules here because every segment is a little different. And every property scenario is different. Some segments are actually seeing multiple offers and prices bid up.

So at what price levels is this support? The most impressive price support is in the condo market between $250K and $350K. Typically the classic early 80’s built townhomes––properties with more than one sleeping area, most of the projects and Associations are in respectable financial and physical shape, units usable by families in all seasons and rentable for some modest returns. But the non bank-owned inventory in this segment is thin too. The other impressive segment is the $2M home. Most of these were $4-5M in the heyday. The buyers for these have cash, and currently there are more of these potential buyers coming out of the woodwork and availability is scarce. The bank owned properties have also helped the local market find the bottom of the single-family home market––about $470K and up. Absent of any serious defects, this is a consistent price support level. And as for those 70’s built one-bedroom condos, about $100K, give or take.

The condo-hotel properties remain a challenging segment of the market. The buyers are predominantly cash buyers with a few of the big down/high interest rate types getting loans. But there are buyers. Most of these are selling at 60% off of the peak. And the pipeline is seeing more of these units coming. There are Westin Monache units that closed less than two years ago in the pipeline. Today, it is not unusual for owners to go 12 months or more without making payments before anybody even notices. So how many of these will end up in default is anybody’s guesstimate. The developer continues to try to unload units before it gets any worse. Meanwhile, the coming foreclosures in the balance of the Village and Juniper Springs will probably be good buying opportunities.

The buyers for these bank-owned properties are coming in all flavors. Many are new season pass MVP holders (New Woolys?). Many are cash buyers and their all-cash offers are looked upon more favorably by the asset managers. After all, there is no loan contingency or appraisal contingency (usually not an issue) and most all-cash buyers can close more quickly. And we’re seeing an increasing amount of “cash bullies” in the market. The cash bully typically lets you (and everybody else) know he has cash. They also expect their cash to get them really huge discounts, but it doesn’t. We see many low cash offers beaten out by qualified buyers with higher offers. Typically banks and investors aren’t ready to jump on low offers in the first 30-60 days. So cash bullies get lots of disappointment, but most like attention more than the buying.

Other buyers looking to low-ball bank owned properties are experiencing what is known as “the market educating them.” After losing out two or three times on popular properties they learn that making offers at 20-30% less than asking isn’t going to cut it. For a while we had an out-of-town broker who made the same $100K all-cash offer on every REO that came to the market. I’m still not sure if he was just a bully or became educated. Ultimately, the time to consider making a lowball offer is after a property has sat on the market for 90 days or more, but in this market these aren’t the properties most buyers are looking for.

Many negotiations are ending up in a “give us your highest and best” response from the asset manager. Potential buyers respond in many ways. Some just stay with their original offer, some go a thousand more, others go ten thousand more. And then there’s always the “I would have gone higher” response from a buyer who lost out. We’ve even had mad buyers who lost out insist that we give them the name and phone number of the asset manager so they can re-enter negotiations. (Not going to happen, it violates the confidentiality agreement we have with them and it is a sure way we will never to do business with them again.)

The buyer, and his strategy, who “wins” the negotiation is not always the same. This is where the asset manager wildcard plays out. Sometimes it is a horse race––the first one in with a reasonable offer. Sometimes it is a simple bidding war, but the clock still ticks. Sometimes the buyer and buyer’s agent who are the nicest (and follow the instructions) get the deal. Lately, we are seeing more properties priced aggressively but with “cooling off periods” of five to ten days, meaning the seller won’t respond until the property has had significant exposure to the market. But buyers can’t assume they should wait, we’ve seen asset managers accept an offer during the cooling off period. (Again, expect the unexpected.)

Then there is the buyer (or their agent) who actually does get to escrow and doesn’t under the concept of “as-is, where-is” in an REO transaction. Asset managers don’t like nit-picking buyers. They like buyers who move towards closing. Oh, there are rare instances when they will approve some repairs, but again it can really depend on arbitrary variables. And most times buyers just acquiesce anyway.

The latest scam in the REO industry (not Mammoth) are crooks taking the photos and details from a bank-owned listing on the Internet and posting them on Craigslist as an available rental. Potential tenants are forwarding fees and deposits only to find out they’ve been scammed. I wonder how long before this starts happening in Mammoth. Think about it, anybody could take the photos and descriptions off any listing and rent the property to unsuspecting vacationers. Talk about expecting the unexpected. So much for happy holidays.

Okay, so what is the current take-away from the present Mammoth real estate market and foreclosed properties? Buyers are buying and getting great deals relative to just a few years ago. The bank-owned properties are some of the best deals and are definitely setting the pace of the market, especially in the sub-$400K condo market and a handful of high-end homes. Buyers looking to buy will be rewarded with patience and persistence. Right now the demand is solid and consistent. But we need to move through the holiday and post-holiday (decompression) period. That is historically a slower sales periods in this market. Somewhere in spring we’ll have a better idea of how firm the market is. I’m thinking this interim period will be a good time to pay attention. A little luck and good timing never hurt a real estate transaction. And coming to look at a few new listings is the perfect excuse to get in a couple of days of skiing. Who knows, you might even get the unexpected perfect ski day.<!--EndFragment-->

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Some things just torture me. And a recent article in the Mammoth Times about a new business for sale just irked me. I just really have to ask myself how this came about? This was a gross disservice to these owners and potential sellers. What were the editors thinking? I’m criticized for being candid to a fault, but this was abusive. And where was the broker who represents them? Why didn’t he take control? In a small town, this is almost irresponsible journalism. In the era of Wally Hofmann this article would have been re-written because the flaws so glaring.

Every couple of years the subject of business and businesses for sale in mammoth is a worthy topic for a column. I’ve had my share of business listings over the years and thankfully my professional insurance (known as Errors & Omissions) now prohibits me from listing them unless there is real estate involved. That makes me happy for my sake, and the sake of my associates. Quite frankly, small business listings are a pain in the ass for many reasons. But trying to help someone who is miserable is an honorable duty, at least for the first year.

So now to the subject. A couple of weeks ago the aforementioned publication runs an article about a new business for sale. I had seen the sign in the window and received a flyer from the broker (who isn’t a member of the local MLS). The event was no surprise and actually quite predictable. How many times have I seen this before and eventually been part of it? But here comes the obligatory press release in the local paper. The seller boldly announces, “I’ve had enough” immediately after the who, what, when and where paragraph. Reminds me of Roberto Duran uttering “no mas” in the boxing ring with Sugar Ray. The beating has obviously been had.

Now I can just imagine marketing a piece of property for one of my sellers this way. For Sale, this nice 3 bedroom and 2 bath home. The seller has “had enough” of frozen and broken pipes, the leaking roof and the bear invasions. But you Mr. Buyer should take great interest in it, and in fact should grossly overpay for it.

The article says the current owners hope the new owners (by-the-way, hope is not a good business strategy) keep the business “much as it is.”

“We’re going to encourage whomever buys it to not really change it. Because it’s not broken, it doesn’t need fixing…” Damn, I’m going to use that strategy with my buyers. Look Mr. Buyer, the current owner has “had enough” with all the problems but you should buy the property, and even better, you really shouldn’t even bother fixing any of these concerns because you can live with it until you’ve “had enough.”

The article goes even further to extol the features and benefits of owning this business: “In the past…she has been challenged in finding employees who are willing to work, and thus has experienced frustrating turnover…and quote ‘they don’t want to work for their paycheck.’”

And even more appealing, everyone was recently laid off because there is no money to “pay employee salaries and pay the lease, the utilities, taxes, worker’s compensation, the liability­­––all the things that go with owning a business.”

Further the owner states that these aren’t the real reason for wanting to sell, it’s now about “restructuring her life to create more free time and not work six or seven days a week.” Wow, these are just more great selling points. I’m surprised there isn’t a long line of ready, willing, and able buyers just fighting with one another to buy this business.

I feel really bad for these owners/sellers. The Mammoth Times really kicked them to the gutter. Hopefully the article is not online where some potential buyer gets a look at it. This is not the way to start the marketing campaign. The article is a classic WTF moment. Did anybody have a clue here? I wonder if anybody thought it was a good idea to make re-prints of the article for marketing purposes? I hope not. Time, and the market, will speak to whether there is a buyer and at what price––and how motivated the seller becomes to walk away. After all, she’s “had enough.” When I first moved to Mammoth I was told there was an 11^th Commandment in Mammoth: Don’t Set Yourself Up For Disappointment. True for life in general, but a very important one when trying to sell a business.

Sometimes I’ve had to tell people their business has no value, or close to no value. In the early 90’s I marketed a very popular restaurant here in Mammoth and after enough time and effort the seller settled for a price around the cost of a new Honda Accord. The buyer changed the whole concept and became a seller just two years later and eventually just folded. There isn’t even a restaurant in that lease space today. In 2003 I was fired from the listing of a famous sports bar. I was telling the owner the asking price was far too high. He told me that he needed another broker, one “who could think outside the box.” The for sale sign is still out in front and I’m reminded every day when I drive by. And over 20 years ago I had a firewood company listed for sale. The work was too hard according to the owner. Well, now the company is bigger than ever and he’s married to one of my real estate competitors.

I hate to tell these new “sellers” of Mammoth Times infamy that just because they put the for sale sign in the window doesn’t mean there is a buyer, and definitely not with such a great marketing strategy. I think somebody has given them false hope. My bet is that if someone were looking, they simply plan to negotiate with the landlord. They’re called vultures, and vultures don’t pay for blue sky.

As a sidebar, recent property tax appeal hearings here in Mono County have highlighted the taxing cost of improvements, especially interior improvements, on a business. These can impact both owner occupied and leasehold properties. These taxes can rapidly erode a profit margin and few business owners consider them in a business planning. For example, one restaurant and bar in the Village has almost two million dollars in interior improvements. The personal property tax on those improvements runs about $1500 per month. That is above and beyond rent, common area charges, utilities, etc. My junky old office furniture that depreciated out years ago looks better all the time.

The precipitation of the last 36 hours here in Mammoth bodes for a wonderful winter ahead. So when you come to Mammoth this winter, please spend a little money in town at your favorite spot. It will be a small insurance payment that it will still be business the next time you come to town. Now back to business.<!--EndFragment-->

Mammoth Foreclosures 4.0––Walk-Aways and Weasels This column has been delayed several times by work duties, showing property, great ski conditions, and my ongoing attempt to understand how the Stimulus and Housing Bills and foreclosure intervention by the government will ultimately affect the Mammoth real estate market. My summation at present: the artificial delay of many foreclosures that began early last fall will now only further postpone the inevitable and will prolong and flatten the downward slide of real estate values. Many can argue the virtue in these actions, but I’m more of the Tea Party mindset. But all these delays are much to the chagrin of many would-be buyers in the local market who are regularly scrutinizing the inventory online and are trying to somewhat time the bottom and who are getting impatient because they want to “set themselves up” before they’re too old. Maybe the Ski Area can bring back the senior citizen pass especially for them. Very little of the Washington salvation packages directly apply to Mammoth. We have a small percentage of owner-occupied properties. Conforming loan limits eliminate another large percentage. And those owner-occupied locals that are in trouble can’t qualify for much because they already have late payments and few, if any, can meet the “affordable” criteria (that is unless they already live in “affordable” housing). Even the Ski Area appears to be having they’re own stimulus epiphany (like every other local resident, at least those not lost in denial, has been experiencing for at least the past year.) The revelation is that survival now means discounting EVERYTHING, getting volume up, cutting costs, and becoming more humble and proficient at what you do. The good news: air service is working and we’ll have water this summer. Despite the government intervention efforts, Mammoth foreclosures continue at a slow but steady pace. My projection is that we’ll be at a similar pace for 2009 as we were in 2008, or maybe a little more. (One reader suggests that based today’s economic environment that I shouldn’t predict things beyond a few months, but I’m trying to plan fishing trips.) There is no flood of distressed property in the pipeline, no alarming concentrations of stress, and no apparent rush to exits (but that is one of the underlying rationales for the intervention.) But the foreclosures will continue to set the pace for prices in the market. So far they are driving prices down, but they are also finding the levels where there are ready, willing and able buyers. Price support is a good thing and we are clearly seeing it in the low-end of the market. (The foreclosures we are handling in the Bishop area are definitely finding solid price support.) However, I see an insidious hidden indicator in the Mammoth MLS and it is growing. They are called short sale listings, and every agent in town (not me) seems to be taking them on. Regular readers know how I feel about short sales in this market. (My office did recently complete a short sale, but it met the two most important criteria: an owner occupied property and provable hardship.) The volume of new short sale listings could be telling, or maybe not. Stressed owners are thinking it could be the easy way out instead of foreclosure or enduring the pain. “Short sale experts” are popping up all over the place (don’t pre-pay any fees!!) Increasingly desperate (and inexperienced) agents are taking them on not knowing the work and uncertainty involved. The process can take many months and while it is going on an REO (or other real seller) can pop up and make the short sale deal not look so appealing to the buyer (now happening with frequency). And banks are now playing new games with non-hardship short sellers like demanding cash, or cash from credit card cash advance lines, or going after anything of value the seller has before finalizing the transaction. (The short seller is going to have to expose their full financial picture to qualify for the short sale—no more “stated income” shenanigans.) Further, the “bank” may just be servicing the loan for an investor (a non-portfolio loan) and the investor may be distracted or not care for a short sale. But I digress. The REAL issue is how many of these proliferating short sale MLS offerings are future foreclosures. The trend is already clear. Many short sale listings end up as foreclosures. Savvy buyers are beginning to see and understand this trend. But again, the real issue is how many of these new and growing short sale listings will end up as foreclosures. Although there has been some signal from the lenders that they have some appetite for short sales, I see no indication they are moving strongly in this direction. (Part of it is they are overwhelmed.) Which brings me to the title of this column––Walk-Aways and Weasels. That seems to summarize the attitudes I’m observing of these distressed sellers. They seem to fit into one of these two categories. Many of these new aspiring short sellers would like to be Walk-Aways but they don’t want to destroy their credit. But many don’t want to put forth the effort (and disclosure) to facilitate the short sale. Or they don’t want to put anything in (like cash) to make it happen. They want their cake and eat it too. In the Mammoth foreclosure market there have already been many true Walk-Aways. They rolled the dice and lost. They’re not asking the casino for their money back. They’re not whining about being victims. They politely walk away with their dignity (or the appearance thereof). They don’t rob the property. And some of the owners who might even qualify for a short sale don’t even try. We were recently assigned a new REO listing in the Village and you never know what you’re going to find when you walk in the door the first time. So there it was: clean, everything in order outside of a little wear and tear, almost like you would find it if you were a paying guest, except a bit dusty. When we went to put the electricity on we discovered that the service had been off for a year. The owner knew it was over a long time ago and didn’t abuse it, didn’t even use it, didn’t rent it, nothing. Just used their last freebie buffet coupon and left quietly. On the other hand are the Weasels. Here’s the opposite experience––one foreclosed Village owner was still renting (and taking money from renters) a month after he had been foreclosed on. (There’s a nice resort experience for one of our visitors, “ah, well sir, the unit you rented was foreclosed on a month ago and the bank isn’t renting it out and you’ll have to get your money back from the previous owner, but we have some similar units available at $$$ a night.”) While the Walk-Aways are pretty easy to deal with, the Weasels are always something else, and sometimes disgusting and entertaining as well. The banks have a way to keep the Weasels at bay for the most part, it’s called “cash–for-keys.” It’s right out of the old landlord’s handbook––paying undesirable tenants to leave, leave the place in good shape, and sign their rights away. Foreclosed on owners, or their tenants, can get a check for being nice Walk-Aways. And then there’s the weaseliest of the Weasels, and I just can’t help telling you about him because if you met him you just might think he’s a nice guy. But he is a small but prime example of why we are in this global economic pickle today that will cost us for decades to come. I refer to him as Bugs Bunny. See Bugs was a “real estate investor” and he always let you know it. He was a client of one of my former associates. We have subsequently ended up handling a property he was foreclosed on. As all the paperwork flows through my office, the financial damage he created becomes apparent. He bought a small 70’s built condo about 10 years ago. By 2007 he was able to put about $250,000 in his pocket via cash-out refinances. Shortly after putting the biggest loan possible on the property he stopped making payments to everybody––the bank, the Homeowner’s Association that was in the midst of a major (and costly) renovation project, the County (the State), and God only knows who else (little guys often get stiffed by these people). All the while he kept renting the property and generating revenue. Ultimately he gets foreclosed on. So now the bank pays him to remove his personal items and legally abandon the property. Today, we have the property in escrow and my calculations are the bank will lose about another $250,000 by the time they pay off the HOA liens, the taxes and other expenses to liquidate the property. So one little condo puts a $250k in cash in his pocket and the bank will realize about $500K in total loss. Oh, and this bank got bailout money from the Feds. And if that doesn’t put Bugs the Weasel on my poop list, he starts claiming (after he gets his move-out check and signs away his rights) that a couple of Home Depot light fixtures (that were attached to the property) have “sentimental value” and we “stole” them from him. He thinks this is so important that it warrants regular, whiny voice mail messages. Then he tells me that he wants to “pick them up while he’s up in Mammoth skiing next weekend” and that if I don’t he’s going to file a police report. He was “greatly offended” when I called him a Weasel. Man, this is a great country. And we wonder why we’re in such deep doo doo.

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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.

Buying an excellent piece of real estate to share with family and friends should be more satisfying to the ego than being able to brag about buying at the bottom for dirt-cheap. Based on the emails and calls I receive, more and more people are beginning to think this way and are spending the time to educate themselves. There are still plenty of people that want to own in Mammoth, maybe more than real sellers. These buyers still have cash and good credit, and there are simple reasons why they do. Now if they can just get that perfect property and time the pricing bottom too. Just don’t ask me how to do that. As for the bottoms of our skis, I’m still amazed at how the crews on the Mountain can make such good skiing with such little snow. Enjoy! And Happy Thanksgiving!<!--EndFragment-->

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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.

Thanks to all who read and comment here.<!--EndFragment-->