Summertime in Mammoth provides some humorous glimpses of human nature. And after all who really cares––––these people are on vacation. The first location, of all places, is in VONS. Sometimes I think I frequent there just for the entertainment. In summer there seems to an especially large number of folks who are obviously not regular visitors to supermarkets. Often they are middle-aged men (I imagine them having to work in three piece suits, the poor souls) but also families as a group. The clue is that they’re standing around in the middle of the isles looking bewildered or lost (and usually oblivious to the fact other people are shopping). Then there’s the looks of amazement—you can read that “they really make this” look on their face, or the “why doesn’t she buy this for me” look. Yeah, pal they really do make….. And I’d probably be just as out-of-place entering a 50-story building or shopping for a tie.
A second source of entertainment is people who haven’t ridden a bicycle in years who decide to enjoy one of Mammoth’s greatest pleasures. The phrase “just like riding a bike” isn’t so true when the bike has modern technology like sensitive hand-initiated brakes and 21 gears with thumb shifters. And then people forget they’re at 8,000 feet of air-starved elevation and those seemingly mild rises in the road aren’t as easy as they appear, or that unexpected breeze is now a significant headwind. And that poor youngster on a little pink bike can’t keep up with dad on his high-tech mountainbike (and dad’s usually yelling).
So what does all of this have to do with real estate?? Plenty. People who don’t shop for certain products on a frequent basis can easily get lost. The selection and variety at a major supermarket is almost as confusing as the selection and variety of condos in Mammoth. And if you haven’t purchased a piece of real estate in the last five or ten years, then utilizing those 21 gears to your best advantage can be perplexing too. Today, when people walk in the front door of the office looking for “a list” or some “magazines” it seems archaic, but it was only a few years ago that it signified that someone might have real interest.
So now to the real story. Down markets like we’ve experienced the past couple of years are notorious for exposing poor real estate decisions. This last cycle was especially marred by too much debt, too much speculation, and too much expectation of rental income. Along the wayside many also forgot some basic real estate theories like the importance of location, due diligence, and the concepts of incurable defects and property progression and regression. Many long-time investors and real estate “professionals” made plenty of mistakes. Some cut their losses early and others will hang on to the end. But we can always learn from the past.
Buyer’s markets in real estate (like now) are not times for buyers to forget the characteristics of a quality investment, or to be in a hurry. But recently I’m seeing it all over again. Today’s foreclosures and distressed owners are often a result of reckless buying (and financing) or simply hastened or impulsive purchases. The values (prices) of yesteryear and the values of today have only made things worse. But with values down, and down so quickly, we’re seeing some buyers returning to their impulsive ways, or believing agents who don’t know the difference themselves.
One of my competitors is touting the marketing slogan “Smart Buyers are Buying Now.”
And plenty of smart people are in the market and many are buying. But how smart are they? I see that some are just non-discerning vultures swooping in looking for low prices. Most of them think they’re smart. Others are unhurried and taking the time to become educated. Education can mean many things. And the Internet makes information plentiful. (In fact, due to the rapid evolution of real estate marketing in the past ten years here in Mammoth, the volume of websites and information available to the consumer is staggering for just our little market, especially when compared to other resort towns or even metropolitan areas.)
One of the beautiful aspects of Mammoth’s condo market is the supply and variety. I call it the 31 Flavors. But there are plenty of things for buyers to be aware of and take into careful consideration. Many of the older projects are deteriorating and some have taken on massive and expensive improvement programs. Some are just pecking away, piece-by-piece at their problems. Potential buyers are always questioning the apparent high common area fees. Many buyers think that being close to the lifts on a summer day means close to the lifts on a winter day. Winter oriented buyers typically underrate the value of being close to the shuttle. Others just want to be close enough to their favorite restaurant or bar. And some just like chasing shiny objects until they’re hooked (I just love fishing analogies).
The condo hotel market becomes more interesting all the time. I see closings on ho-hum units and really scratch my head. Are these the same people buying random repos in the Inland Empire thinking that “just anything” will be a good investment because prices are low? Could be. (Is inflation a given?) A view of the dumpsters is not that desirable. But with prices low and cash required it seems like everything, and I mean everything, is selling. And there is some saving grace: even under the most favorable conditions it will be years before another condo hotel project is built (completed), so go ahead and buy the junky units, they’re almost bound to go up in value especially if air service from all these far away places succeeds.
I’m watching the single-family home market firm up (finally) and most buyers are making serious tradeoffs and concessions in the lower end. But that is now indicative of the market trend. As buyers look in the higher reaches of the market (which is $700K to 900K) they should be more discerning until they can’t be. The problem is the older homes are usually in the better locations and have owners who think their property is “perfect.” Time to shop for a discounted price and a hungry general contractor. Just pay attention to the defects of the property––a contractor can only do so much. The good news is there is still quite a variety available to fit many needs and tastes, even Swiss Alpine pink.
If this level of activity continues there is bound to be some local agent who announces the market is skyrocketing back up. Perfect!! That means it is the time to buy anything and everything just like 2004-06. Now we just need those stated income loans back. But this time around we hopefully won’t be listening to the grandiose illusions of carpetbagging developers
Remember, good brokers don’t let their clients buy junk.