Mammoth’s real estate market, as well as many other aspects of life in Mammoth, has settled into a rather predictable local version of the “new normal.” Ongoing foreclosures, short sales, developer and investor/ment defaults, pie-in-the-sky planning proposals, restaurants coming and going, etc. have become almost like the change of seasons. There really are no surprises. The only surprise is how fast we got here. And for true Mammoth lovers, the new normal can feel pretty good. Mammoth didn’t grow into what many people expected, but it may have grown into something better. And we may be forced into new directions and changes, and those may be opportunities to make it even better, but only if we seize these opportunities. And now that the election dust has settled, maybe we will be able to see them.
The new normal for the Mammoth real estate market is similar to the past, excluding that era of hyperbolic marketing and ridiculous lending practices. This is the fall so inventories are supposed to decline. And yes they are. Prospective buyers will arrive in the coming months donning their ski and snowboard outfits and ask where all the good deals are. For the most part, we will only be able to point at the sales that occurred in late summer and fall. Of course, some good properties will poke through and buyers may recognize them as such, if they’re not too distracted by holiday festivities or outstanding snow conditions. And yes there will be a foreclosure moratorium––it is called the holidays. The foreclosure industry itself likes to take a breather and they don’t like booting people out of their homes during the end-of-the-year holidays. The big bankers may be heartless, but the people on the ground are human.
The available inventories historically drop this time of year for several reasons, and they are classically Mammoth specific (although I’m sure it happens in other ski resorts). Primarily, the inventory is reduced by actual sales. The sales this time of year are driven by what I refer to as “the anticipation of winter.” It is a strange-but-true phenomenon. Most of the winter oriented buyers forget about Mammoth during the summer when the largest volume of inventory comes on. But once the days get shorter and football starts, everything changes. This fall has been no different. And many of the sellers who have marginal properties or are stuck on high asking prices will turn back to renting, either nightly or long-term, due to the high demand in winter, so many of those properties come off the market. And some owners just don’t like their properties on the market during the winter.
The hottest segment of the market has been condos, especially those under $600K. But that is pretty normal. The upper end of that spectrum is typically newer Snowcreek condos that don’t need much improving. Many are truly in “turn-key” condition. Under the $500K mark is the array of 60’s, 70’s, and 80’s built condos in various states of condition. And the condo hotel units are selling well as buyers anticipate winter and the rental revenue that normally comes with it. Most of the buyers of the older condos are anticipating major renovations, either immediately or in the very near future. Many REO buyers have their contractors in the property at the close of escrow. The other segment of the market showing strength in the past couple of months is the low-end homes (say $300K to $600K). But again, this is pretty normal. And high-end distressed homes are selling, either as REOs or open market sales. (The whole high-end built-on-speculation home strategy just didn’t work. Imagine that. But again, quite normal except in periods of excess.)
So what isn’t selling? Single-family homes in the $700K to $2.0M range. From what I can tell based on my own listings and my own showings to potential buyers, hardly anybody is even looking in this price range. Of course, I know they are looking online, and I see them driving around the neighborhoods with maps (and I can see you while I stand at my kitchen sink!), but they are rarely out with agents looking. This segment of the market is where I sense the vultures are swarming the highest. They know more REOs are coming. They’ve seen values come way down. But they are getting hungry, frustrated and a bit impatient, and they do want to take advantage of low interest rates. Or they are simply bored with where they have their cash stashed. This is part of the “new normal.” And coincidently, the absolute flattest segment of the Mammoth market is vacant residential lots. While there ARE about ten new single-family homes under construction in Mammoth right now (always an interesting market indicator), lot buyers are scarce. Of course they don’t need an agent to show them these, but personally I can tell you that “signs calls” are nearly non-existent and actual sales figures will prove it out. There are some real quality lots on the market at low prices. But buyers must think there is more downward pressure to come. In the past, when prices got this low, there were investors who came in and bought-up several just to hold long term. In a market where there is true scarcity in a segment like this, it can make sense, especially when there continues to be strong price support in the low-end of the residential market. And recently, a buyer who purchased a $1M home in the Snowcreek Crest turned right around a tore it completely down. I can’t wait to see what they build.
Part of the Mammoth new normal is the recent departure of Intrawest as an active participant in the local brokerage community. Now that the remaining Westin units have been sold, the Playground office has been closed. Some of the bodies remain under a new name, but the direct influence of Intrawest is now gone. It is certainly the end of an era in Mammoth real estate. I’m sure their influence will linger in the “sales language” of local agents, and their opulent sales brochures and marketing materials will be pulled from the archives and marveled at like rare antiquities. For those who think I’m just a bash-and-trash on the subject, please don’t be so naïve. Based on my public office at the time and owner of the local RE/MAX franchise (RE/MAX is really big in Canada) I had a rare seat from the start. The Sid & Pete show was a really big show from the beginning. If they were selling ice to Eskimos, the Eskimos would be buying. Despite the personnel changes over the 14-year run, the sales strategies didn’t waver much, all the way down to the last Westin auction and post-auction dump. I know I learned a lot, some of it I want to remember forever, and some I hope to forget. Under the new normal there are still some buyers who bite on all this strategy, but today they’re buying at massive discounts, and most are buying with cash.
So what else do we have to ponder in the new normal? There’s no surprise that the Airport continues to be a center of controversy. Recent news reports about an “icy” reception from the Appeals Court judges has already alerted everybody that the sky is falling, and falling fast. The blaming and finger pointing has begun (again). I’m not sure who I want to blame, but it is between the FAA, the Ski Area, Ballas himself, the Sierra Club, Town Council’s past and present, the Town Attorney, Wall Street, some local sage grouse and tui chub, and perhaps, dare I say, some ravenous attorneys. My flow chart of possibilities on how all of this plays out is large and grows every day. Anything could happen. And forget that Mr. Ballas was likely saved from financial disaster, like so many of his brethren. But while many are blaming there may be some interesting opportunities and outcomes. Some things may come full circle, like dis-incorporation. Aren’t we now mandated to downsize government? But take-it or leave-it, the Airport remains critical to rounding out the winter ebb-and-flow that makes the local economy so dysfunctional. So in the new normal era, including the financial stress that comes with it, we’ll find out how important that is. I just hope the press doesn’t gloss over the real story in the coming months. And jeez, in the last thirty years we’ve survived earthquakes, volcanoes, floods, crushing winters, forest fires, hantavirus, embezzlers, and more. What’s the problem? And anyway, bankruptcy is so in vogue.
With the results of the election in, some of the uncertainty has become less uncertain. Changes with the mortgage interest deduction (and depreciation allowance) are now unlikely and the current capital gains treatment may stick around. Cap-and-trade is probably off the table, although Jerry Brown may threaten. Finding a solution for Fannie and Freddie will likely get lost in gridlock, or maybe Wall St. will “find” an answer. Meanwhile, the more serious market condition for Mammoth and the new normal may be inflation, especially inflation centered on gas prices. We’ll just have to wait and see how that works out.