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Peaks and Valleys by Mickey Brown |
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Thursday, 14 May 2009 |
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How's Business?
Being a longtime real estate professional, I am often asked: How’s business?
I originally named this column Peaks and Valleys because the of cyclical nature of the real estate business. But if I were to name the column today, I might change the name to “Great Plains,” you know that great flat expanse of prairie that lies west of the Mississippi River and east of the Rocky Mountains. Because business isn’t good or bad, it is just business. Or like I said a few months back, the new normal is almost predictably flat.
It reviewing the quarterly market statistics for the first six months of this year, it was amazing how similar 2nd Quarter 2010 was compared to 1st Quarter 2010 for residential sales activity reported to the Mammoth Lakes Board of Realtors.
For both quarters the number of closed condominium, single family homes and residential lot sales were identical at 117. And the total dollar volume was also nearly equal. During the first quarter the total dollar volume for closed escrows was $55 million and during second quarter the total dollar volume was $54 million, which is only a 2 percent variance.
And just like how the Great Plains are really not flat but have subtle elevation changes so does our marketplace. For reasons that I cannot explain, this year sales between $750,000 and $1 million are sluggish compared to 2009. And the over $1 million market is stronger. Already, for the first six months of 2010 there have been 19 closings over $1 million compared with 16 closings for the entire year in 2009. Additionally, this year the sales of single family homes in Mammoth Lakes are out-pacing the 2009 closed sales. Year-to-date there have been 40 sales versus 61 for the previous year.
What is dramatically different this year is the number of sales that are now “short sales” or bank-owned properties “REO’s.” (A short sale is when the homeowner owes more money to the bank(s) than what the property can currently sell for.) In order to sell the property and possibly avoid foreclosure the bank agrees to accept less than what is currently owned on the property.
Last year at this time, approximately 19 percent of all sales were either short sales or bank-owned properties. Now nearly 33 percent of all sales are either short sales or bank owned with the biggest portion of these sales being our lower-end condominiums. In practical terms, this means that everyone associated with the real estate process (agents, buyers, sellers, lenders) has had to learn a new way of doing business with the operative word being patience. At the height of the market it was almost guaranteed that if you opened escrow that sale would close; in 2010 it is no longer the case. This is largely due to the major lenders and banks being unprepared for the huge influx of these types of transactions. Consequently, they are just now writing procedures for handling which often do not follow traditional real estate practices.
Both the number and median price of active listings continue to drop. At June 30, 2009 the total number of active listings was 615 compared to 542 for the same period this year, which is a 12 percent decrease. At June 30, 2010 there were 223 active condominium listings with a median list price of $355,000. The median list price for the 161 single family homes was $629,000. Additionally, there were 152 residential lot listings at a median price of $218,000. These listings are for all of Mono County including Mammoth Lakes, June Lake and Crowley Lake.
Another statistic that I have started tracking is the Notice of Defaults and Notice of Trustee Sales for the Town of Mammoth Lakes. A Notice of Default is filed by the lender in the county where the home is located and usually gives the borrower 2-3 months to bring current any delinquent amount or the lender may start the foreclosure process. A Notice of Trustee Sale states the date that a lender will put the property up for auction if all delinquent amounts are not paid. If a third party does not purchase the property at auction, usually the case, the property reverts back to the lender and becomes bank owned (REO).
Tracking these recorded notices gives an indication of the overall health of the local real estate market. At March 31, 2010 there were 73 recorded Notices of Defaults and 94 recorded Notices of Trustee Sales. At the end of the second quarter these numbers had dropped to 57 Notices of Defaults and 76 Notices of Trustee Sales which is approximately a 20 percent decline.
In summary, the number of transactions and dollar volume between first quarter and second quarter are the same. More and more transactions are complicated by the short sale factor. Overall the listing inventory is dropping and there are fewer pending foreclosures. It is not a Peak market or a Valley market; it is just a good market for those discriminating buyers looking to make a lifestyle decision in what I believe is one of the most beautiful places in the world!
The opinions expressed in this column are strictly those of Madeleine “Mickey” Brown. Her blended professional career of real estate and finance provides her a practical and pragmatic approach regarding real estate market cycles. She is the founder of The Resort Property Experts ® based in Mammoth Lakes along with being a co-owner of Resort Property Realty, Inc. Mickey has a degree in Business Economics from the University of California Santa Barbara. She is a licensed California Real Estate Broker and Certified Public Accountant (inactive). She can be reached a
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or 760.914.0199 and would love to hear from you!
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Last Updated ( Saturday, 24 July 2010 )
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At Home In The Sierra by Robin Stater |
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Thursday, 14 May 2009 |
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Landscaping in the Sierra
Last month I talked about planting flowers so they can survive and flourish in our harsh environment.
Many of the same issues affect planting trees and shrubs. The main concern with any of the plants in the Eastern Sierra (that are not native) is the intense sun, lack of moisture and severe wind. All of these elements present challenges to successful planting.
First of all, you must amend the soil so that it can hold moisture. Our pumice soil drains very quickly and will dry out soon after watering. There are many products available that can be used when planting, such as Gro Mulch or other soil product that help to hold moisture and add more nutrients to the sandy soil.
The planting is very important as well as how the hole is prepared before planting. A general rule of thumb is to dig the hole twice as big and deep as the root ball. After digging the hole, place the soil conditioner in the bottom of the hole several inches deep. This way the roots have a nice layer to establish their new growth. When the root ball is settled into the bottom of the hole, fill the sides with a mixture of soil and soil amendment. Pack the soil gently around the roots and press it down while filling the hole. Try to keep from damaging the roots as much as possible.
Once the soil is in place, water generously several times while pressing the soil down with a tool such as the end of a rake. Pressing the soil while watering removes air pockets that can prevent the roots from establishing correctly. After watering thoroughly, mix a solution with vitamin B-1 to help with root shock and to stimulate root growth. This technique is used for trees and shrubs. Check with local nurseries for what trees and shrubs are “known” to grow in the area. It is frustrating to see a beautiful tree or shrub that has a marginal application in this zone die after people have gone to the trouble of planting and nurturing it.
Another very important part of the process is to stake trees correctly. With the severe wind, snow and sometimes rain, a securely staked tree is the only way it will survive. Trees such as aspen, poplar, willow or cottonwood are all flexible but are also delicate. Two to three staking poles buried in the ground securely and tied to the tree with rubber tree holds nailed to the stack will keep your newly planted tree from being blown over or crushed by a pile of snow, which happens frequently here in the Sierra.
Even when the trees have been in the ground for several seasons, they still need to be staked to protect them from all the elements.
Evergreens are sturdier and can handle heavy snow and high winds. They make a nice wind break and are also nice as a privacy screen.
Don’t plant trees too close to the house as they will grow and cause problems such as their roots lifting the ground to being a fire hazard.
When it comes to deciding on shrubs for your home there are several things to consider. The first thing is the exposure and whether or not the plant is appropriate for sun or shade.
Another big factor is if the snow sheds onto the plants. Very few shrubs can survive a big heavy load of snow on them, but some can with some expected breakage. Junipers are strong and can withstand lots of abuse. There is a wide variety of Junipers so the experts at local nurseries can help in selecting the right plant for the location.
Shrub branches can be tied up to keep them from breaking. In the fall you will see twine-wrapped bushes around town, preparing them for the coming winter.
With special care and thoughtful preparation, a high-altitude garden can be a success. It’s a lovely sight to see a beautiful garden set against the majestic mountains.
Enjoy the summer and happy planting!
Robin Stater is the owner/designer of Sierra Design Studio, Inc. Visit www.sierradesignstudio.com or call (760) 937-4122 for more information. Stater also does landscape design.
The views expressed are those of the author and do not necessarily represent policies and opinions of the staff or owners of the Mammoth Times. Reader response is encouraged.
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Last Updated ( Saturday, 24 July 2010 )
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Money Talks by Doug Magit |
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Thursday, 14 May 2009 |
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Financial Regulation Reform
The Financial Regulation Reform, or FIN REG, has been approved by the House and sent to the Senate for approval. This is the financial overhaul bill of some 2,000-plus pages that will affect a myriad of financial sectors. More specific to home loans are some good items and some other items.
Restriction on prepayment penalties lenders can charge
For example, some of the lenders who are no longer in business had offered unsuspecting borrowers a low teaser rate loan for two years with a prepayment for five years. So their rate would jump in year three but they could not refinance to a lower rate until year five or be subject to a huge penalty. This is one of the types of loans Wall Street was buying based on projected income stream that was based on the higher rate the borrower would have to pay in years three to five. What they didn’t bet on was some of these borrowers would not pay the higher rate and go into default.
Preventing brokers from making a higher commission for more profitable loans at the borrower’s expense
The bill also states lenders cannot pay higher commissions to brokers who steer their borrowers into loans that are more profitable for the lender and broker but not for the consumer. Another example is the once largest lender in the country who was reportedly paying commissions three times more for one of those Neg Am Option ARM loans than for a short or long term fixed rate loan. Hmm, how do you think one exec could make hundreds of millions of dollars more than anyone else making home loans? I don’t think they will be doing loans like these again. Oh, but wait, they are no longer in business anyway.
Lenders must verify a borrower’s ability to repay their loan
This one is a little more complex and could be up for interpretation. We all know loans got too easy with the “fog the mirror, get a loan” mentality. But before that we have always had some type of “stated income” loans available to those self-employed borrowers with extensive or complex tax returns. I am not talking about those so-called “liar loans” but for those with the income, assets and credit to support the mortgage loan. So we will have to see how lenders will interpret the “verifying a borrower’s ability to pay” language.
It looks like the Financial Reform is trying to prevent this (financial meltdown) from happening all over again.
We have been through business and real estate cycles about every 10 years. In the 1980s we had the S&L Crisis and in the 1990s Long Term Capital bailout. And each time the pendulum swings back and forth from too-loose credit to then too-tight credit. After each recovery, amnesia sets in and everyone’s long-term memory is wiped out.
Right now, the pendulum is on the too-tight side, and I just hope the financial regulators don’t base all their regulations on yesterday’s problems and instead find a middle ground. Some have said this is like closing the barn door after all the hogs have already run out. I guess they know there will be another barn full of hogs some day down the road and want to keep the door closed. If they are wrong, I suppose they can always reform the financial reform.
In the meantime, get out and enjoy the beautiful summer weather!
Doug Magit is a home mortgage consultant at Wells Fargo Home Mortgage, serving his clients nationwide for over 20 years. He can be reached locally at 760-924-2270 or toll free nationwide at 800-520-2050.
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; www.wfhm.com/douglas-magit
Information in this report is the personal view of writer and does not necessarily reflect the views of Wells Fargo Home Mortgage or the Mammoth Times. It is for your personal use.
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Last Updated ( Saturday, 24 July 2010 )
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