Broker’s Report, December 3, 2007

Broker’s Report Dec.3––At this point in time Mammoth’s real estate market can only be diagnosed as having some sort of split personality/schizophrenic disorder. But October and November did witness a slight uptick (from almost nothing) in activity and sales, and that wouldn’t be including the closings at the Westin. What is the evidence of all this disorder?

First, the big news-and-noise makers are the Westin Monache project (including a ribbon cutting this last week) and right next door the Staubach/Cypress Equities group announcing a deal signed with Ritz-Carlton. Normally trumpets would blare and the local real estate community would be busy putting transactions on the board. But from what I’m observing, many of the Westin buyers are grudgingly closing (some early closers were offered incentives/credits), some units that close immediately come back on the market in the Mammoth MLS at a price just enough to cover costs, and the developer (Intrawest) is placing units back on the market that appeared to be previously sold. And some of the under-contract buyers are no longer able to qualify for and finalize their loans. The undercurrent is beginning to resemble a riptide.

Meanwhile, Roger Staubach and Cypress Equities appear to be full throttle on developing the Ritz-Carlton Residences on the nearly seven acres right next door to the Westin. They plan to be open in two years. Sounds great to me. The only problem I see is they are forecasting entry-level prices at $2 million. The comparable units at the Westin are sucking wind at $500,000. And comparable units in the Village will sink below $400,000 if it doesn’t snow soon. And this trend isn’t just Mammoth. Check out the Trump-labeled projects in places like Chicago and Baja. Or condo hotel projects in Florida. Am I really missing the pent up demand for an “ultra-luxury and lavish spa” condo hotel project in Mammoth??

The high-end home market has the same split personality. High quality homes are under construction all over Mammoth. Only a couple are being built on speculation. I count ten new high-end homes under construction just in the Bluffs. And check out the monster homes under construction in Juniper Ridge and Grawhawk. These are some seriously expensive homes. And yet there is an inventory of high-end homes for sale––some of them brand new––that have sat on the market for years. (Who is servicing that debt??) My company is marketing a high-end “government surrendered” home in Grayhawk. The attention it is receiving from potential buyers is significant. It’s basically a real nice $4 million dollar fixer-upper. Personally, I like the home right down the street at just a little more, and it is brand new and has much better finish work. But it doesn’t have a bowling alley and an indoor lap pool.

The buyers and sellers continue in a bipolar state. There really are buyers out there, but few have a sense of urgency. Most want to throw out low-ball offers to see who moves and who doesn’t. Some are going to contract with steep discounts. And some are just waiting for quality properties/locations and are willing to pay a little more. (Buying on price in Mammoth doesn’t make sense over buying quality and location––no matter how low the price is, especially in the condo market. That only worked when the game was on tilt.) But the sellers, for the most part, have no sense of urgency either. “Oh let the listing expire, we’ll try next year.” or “We’ll just keep it and give it to the kids.” The other out is foreclosure, and we only have a handful so far.

Developers are sitting on substantial amounts of new-but-unsold inventory all over town. From Snowcreek Lodges to Stonegate to Gateway Village to Tallus to 80/50. So the mindset is to build more. The “Berner parcel” just closed escrow in the Village. This is a smaller parcel on the corner of Forest Trail and the newly aligned Berner Street (the realignment created the new parcel where the “1” was going to be built.) According to the agents involved, the buyer did “considerable due diligence” and is anxious to move forward. (I hope they did the Environmental studies––that used to be part of the old County and Town mechanical yard––back in the days when they use to dispose of stuff like oil and brake fluid right into the ground.) Of course, the village at Whistler was built on the old garbage dump. Maybe we’re on to something.

And now we have local brokers who have little experience, and who have never been through a market cycle, calling the bottom of the market (March 2008?) And east coast and now Texas money poised to make Mammoth an “ultra-luxury” resort. And more long-delayed improvements like the airport and ski-back trail stuck in legally contentious and seemingly nebulous/endless environmental review. (If the Creator had to produce an EIR for the earth would the evolution of man been acceptable to environmentalists?) And based on casual financial information from the past few years––is the Ski Area more profitable in a drought year? (ahhh…the law of diminishing returns.) And more and more folks really questioning the destiny of Mammoth as a resort (ahhh….schizophrenia.) If only it would snow.

But just the other day my confusion cleared while talking to an old friend who was once the editor of the Mammoth Times and also served as a Mono County Supervisor. He departed Mammoth over ten years ago and today he works for the Governator and travels all over the state. He reminded me again why Mammoth is so special. While all the beautiful (and not so beautiful) places in California are overrun with roads and people and strip malls, Mammoth remains a wide open and relatively pristine place, one destined to remain that way because of the very “environment” energies we butt heads with. Throw in all the scenic beauty, the endless recreational opportunities, and the temperate climate, and what else matters? “These east coasters and Texans really do know something,” he said.

And there are some very good things coming to fruition. The late snow has allowed the Lake Mary Road construction improvements to continue and once this is all completed it will be a major change for the better. The sidewalk improvements (including much needed storm drains) to upper Canyon Blvd. look great too. Next year when it runs from Canyon Lodge all the way down to the Village, this will stand as a major upgrade to the “Slopes” neighborhood. It certainly can’t hurt the property values. Similar improvements are slated for Meridian Blvd. in the near future. The new library is just about completed and the new ice rink facility behind it is coming along nicely. Improvements at the airport are slated for this summer, but lets not jinx it.

The site improvements at Snowcreek Phase 8, known as CreekHouse, are impressive too. Now that the initial roads and structures are up, the site that we always believed would be one of the finest in Mammoth is proving to be just that. I think acquiring a unit overlooking the Mammoth Creek drainage will be about as good as it gets in Mammoth––unless you really need to ski to your front door. And with the Snowcreek Athletic Club now heading in a new, very positive direction under new ownership and partnered with the Double Eagle Resort and Spa in June Lake, the CreekHouse location looks even better. Now just get the back nine constructed.

The real estate inventory is stable––but plenty of expired listings and most of the condo inventory was either built or bought in the last three years. Now if it would just snow. Or turn back to summer.