The Last of the Mammoth Real Estate Bubble Heads

I’ve been having strange encounters. I go to VONS and see people I haven’t seen in a long time. If I’m in or near local government offices I see even more of these people. Where have they been? I ask them if they moved away and came back. No. Then I see more––and some ask me if I still live in town! This is really strange. These are people it’s great to see, people that were the fabric of the Mammoth community in the 80’s and 90’s. So I reflect on what’s going on here. I checked my meds and assessed my libations inventory. Then it hit me. These people, just like me, have been here all along. We just lost touch (and sight) of each other.

That started me thinking about the flood of people who came through Mammoth the past ten years during the illustrious real estate and development bubble. Thinking about all of this coming–and-going, these people started to fall into certain categories; real estate industry types, the developers and their representatives, the market players (buyers and sellers), and people in the community who got caught up in it all (including many who forgot the lessons of the past). The more I thought about it the more I marveled at the volume of people who came and went. (I wondered if they skied this week?) I also realized we’ve witnessed their attrition and we’re coming to the end of their presence in Mammoth. And now there’s a whole new group coming.

Nowhere did the bubble mentality exist more than in the real estate industry. I’ll admit I even caught some of the bug. But being a fiscal conservative and a closet contrarian probably saved me. In all deference to the Mammoth real estate agents who practiced during this era and who are still around, the bubble business became “delivering pizzas”––answer the phone, take the order and complete the transaction. The business was never like that before and probably won’t be that way ever again. But many princes and princesses arrived and thought the business was just grand. Some actually thought living in Mammoth was quite perfect except for that annoying volume of snow that piles up. Many of us did transactions with agents in the last ten years and we have no idea what their names are today, they certainly aren’t in the business anymore, and they certainly don’t live in town anymore. They told us it was “so easy.” Many were simply modern day carpetbaggers. Some even sold their “clients” resort properties in other places––birds of a feather…But hey, they had nice photos of themselves on their websites.

And next were/are the developers and their representatives. My clearest recollection of them is how sincere they were at the podium in front of the Town Council, how they truly had the town’s best interests at heart (and some of the Council actually believed them). It was all about win-win. So where are they now? Are they at the podium trying to help the Council solve today’s problems? No, most are at some bar, or perhaps behind bars. Intrawest was the master of this game. They classically moved representatives in and out of the community. There was no value (for them) in continuity of thought or accountability for what the last guy promised. The great comics like Jackie Mason or Rodney Dangerfield made good jokes about this kind of stuff. The joke is on us. Some developers even followed the Intrawest momentum and model, much to their chagrin. And who really knows what Starwood was thinking? At least one so-dubbed developer has resigned to remodeling his 60’s built properties and put them to good use. And the “astute” buyers of commercial and residential income properties (who professed rents were too low) are simply destined to foreclosure, with prudent vultures waiting in the wings. Like I said, where are all of these podium masterminds now?

The era was also marked by a whole host of “remodel and design services” who opened their doors to display their brilliance and unique flair. Today, they’ve left plenty vacancies in the local malls. Who were all those people? They delivered lots of pretty brochures and dropped lots of fancy names, but…Before that, remodel and design was left to a handful of reliable people. And guess what, they’re still here. The general contractors and subcontractors are the same way. The pre-bubble people are the post-bubble people, and vise-a-versa. Sometimes I wonder why they haven’t retired comfortably to the tropics, but they like what they do and love where they live.

And now to the market players. Most of these “investors” bought-in believing Mammoth was going to be rapidly transformed into the “next Aspen” (whatever that means). Many were “sold” that condo hotel units were true income properties with attractive capitalization rates. These people didn’t know the difference between hyperbole and reality. They thought they were on Sesame Street and got pushed into Hangman’s. They couldn’t comprehend the real value of owning a property in Mammoth––that whether it goes up in value or down in value, it doesn’t really matter as long a you get to spend quality time in it. Many years ago we used to call a remarkable and memorable day on the snow “the great equalizer” because it made up for being poor and mostly unemployed.

These “investors” were the majority of the foreclosures the past two-and-a-half years. They weren’t here to recreate, they were here to gamble, and the financial markets let them. From what I’m observing we’ve just about worked our way through most of them. But now may come the real pain. The next wave is the group I refer to as “the ski boat crowd.” They’re sprinkled throughout the community both as local residents and second homeowners. They just got caught up in the all the equity and easy money and spent on toys and other extravagances. Now it’s defaults, liens and bankruptcies. But most of them will survive. It’s the slow unwinding that the talking heads call de-leveraging. The “good news” is that it isn’t happening all at once. And the yin and yang of it is that there are vultures circling to pick at the carcasses; today they’re known as cash buyers looking for deals. And they’re rapidly becoming educated to what price a property is a deal. The best part is these vultures aren’t “investors,” many are multi-generational families who want to enjoy Mammoth for what it is, not something “proposed” or on a drawing board.

It’s ironic that traditional bubbles are circular, because we’ve come full circle. Mammoth is really better than ever. Intrawest said it would be amazing. Well, it was amazing before Intrawest came and it is more amazing after they’re gone. But it wasn’t amazing enough for the bubble-heads.

There is more pain to come. Many property owners are still underwater. Some of the surviving businesses will fail. The Town itself got caught up in the bubble. It will take years for the development engine to crank back up. But opportunity will abound. I know I’m looking for it, both for my clients and myself. (Lately we’re hearing the occasional “If it’s such a good buy why don’t you buy it yourself?” from potential buyers. That’s always good for a laugh. With an attitude like that, is an agent really going to bring you the best deals?) The best opportunities continue to be found after education and scrutiny. Today, the things that are happening are for real, and things are happening. There is plenty of demand. Any shadow inventory is matched with shadow demand. I can’t quantify either, but I see it every day.

Meanwhile, the bubble-heads are almost gone. It’s great to see old friends who are still here, and meet new ones who believe in Mammoth for what it is. Now, where’s my shovel?