Broker’s Report, March 22––In the past month a good number of things have excited my cynical side, some of it good enough for Saturday Night Live or The Daily Show, and I’ll get to that. But the snow and skiing have been so excellent and the Sierra and the surrounding vistas so full of white that being negative is a difficult thing to be. And the weather has been classic Mammoth––going from a series of blizzards, powder days, and luscious wind events, to instant spring and all the good that brings. Somehow this seems to be the new definition (and was probably the old definition) of what Mammoth is and destined to be. Forget all the man-made imperfections––the whole country is full of marginal strip centers and malls. Let’s stay focused on all of the natural greatness and open space, and take the time to revel in it.
People who know me recognize that I am grounded in the fundamentals of real estate. I don’t own a skirt and pom-pom and don’t lead any cheers. I don’t have a set of scripts like so many agents. I’ve been fired plenty because I don’t kiss enough ass. People who know me also know I hate to see people make poorly informed, un-educated real estate decisions. But I see it all of the time as I watch the market. And most of time their agents don’t know any better either. Sometime people don’t realize how desperate their agents are to make a sale. I’m always curious to see who represented the buyers and sellers in these transactions. And lately, I’m seeing more agents calling themselves “experts” or having “certifications” when in fact they have little experience. These terms themselves are now considered a liability in the more prudent circles of the industry. Law firms are just waiting for these self-pronounced experts to make mistakes that experts shouldn’t make. As for me, I’m just a cynical dummy who likes to support my skiing and fishing habits by selling real estate. And while the Internet is great resource for consumers to become educated about the market, it is no substitute for being in the field with an experienced and knowledgeable agent. There might be tons of money swirling around the virtual world, but in real estate world people still need to understand the real.
Besides continuing demand and low inventory in the Mammoth market, the big real estate news is the recently re-launched sales efforts at 80/50. Me personally, the only thing worse than trying to sell resort fractional property would be trying to sell something with the Trump name attached to it. But the 80/50 project is as sweet as Mammoth has ever seen, or maybe will ever see. Too bad it isn’t the flagship “boutique hotel” that a wacky faction of Mammoth locals thinks is viable here. But from an old-school real estate mind like mine, owning a product like this seems more like a liability than anything else. Kind of like a pricey lease on a yellow Lamborghini. But then again that works for some. One of my old friends who is a very successful Mammoth businessman remarks, “Yeah, I’ll split it with you 80-50.” That just about describes the arrangement in my book, but he said it, not me. I have no doubt the sales will be successful. This sales effort is the next (and maybe last) iteration of the well-proven Intrawest sales program here in Mammoth, and most of us know what that’s all about. I wonder if they’re showing “On the Shoulders of Giants” to anyone? Actually, I’m just jealous of all the leads they will generate at this beautiful property and Village location and the freedom they have to sell those prospects properties in the balance of the Mammoth market. That’s a very nice opportunity for the agents sitting the property.
The next source of potential cynicism is MMSA bumping the price of the MVP to $639. This does impact real estate because so many of today’s real estate buyers are MVP holders. I would love to have sat in those meetings, assuming they just didn’t throw a dart at the board. The data has to be fascinating information about Mammoth skiers and visitors. But I think based on riding the chairlifts I could predict the conclusions within 10 percent. In business school there was this thing called pricing function. Somewhere there is a magic equation based on MVPs, tickets sold at COSTCO, and those sold as part of packaging. Oh, and the number of people who just walk up and pay $92. There are plenty of people who won’t balk at $639 for a MVP. I paid $1140 for my season pass 12 years ago. I’m in, as long as my knees hold out. The greatest thing about having a pass is the MOTIVATION TO USE IT––no excuses.
The red flag was the MVP offer for “the all-new two-year deal on the MVP for $609 per year.” This is a first and causes some concern for me. Normally I’d jump on that kind of deal but in an era of Ponzi economics I’ll wait. That type of offer is a cute marketing ploy, but today it may imply a bold statement of “WE NEED CASH.” Wall St. calls it financial innovation. I can only imagine that the fine print states that if the MMSA debt is sold from one of Barry’s entities to another of Barry’s entities the deal is modified somehow, obviously to the detriment of the pass holder. And right out of the Intrawest sales manual (I’m para-phrasing) “there is only a limited number of these special opportunities available” to purchase the two year pass at $609/yr. Please. What happens if only 20,000 MVPs re-up at $639? The economy could do that. Pissing customers off could do it too. The following year’s price could be $589 and opened back up. The $609 might be better at the sportsbook in Reno.
Meanwhile, one of the major shopping centers in Mammoth is in receivership. No surprise (in fact, what took so long?). The knowledgeable saw this coming almost as soon as the deal was completed. Receivership is a nice way of saying the bank needs to make sure the property doesn’t go to hell. Forget the payments, time to protect the asset. What’s so funny to me is that about a year ago the Town of Mammoth Lakes was negotiating its future office space lease and was seriously considering becoming a “partner” in this mall. Did they think that their current landlord wasn’t aware of the stress at the competitor? What is it about this huge debt/lousy management scenario people don’t get? Oh, sounds like Sacramento and D.C., sorry. But good skiing can overcome cynicism.
The next good laugh happened this last week. Units built and sold by the Mammoth Lakes Housing Authority to “certified” owners as moderate-income housing now appear as short sales. Ah, the almost bizarre convergence of two of my pet peeves. Now, the older I get the more impatient I become with time wasters (shrinks say that happens with those in remission of cancer––31 years for me this week). In the mid-90’s I spent soooooo much time working out low-income and affordable housing policy and direction for the Town. Most of the elders didn’t like my opinions, I think they thought I was too young to know anything. I’m now convinced this was all a big waste of time. It’s like some bad real estate LSD trip. I guess many of my readers would need a better understanding of it all, but having deed-restricted properties with certified owners now marketing short sales in those properties is just beyond belief. I need to go skiing. Or get drunk. Maybe someday I’ll have the patience to write a post to explain it all in a way the common man can understand. Government has failed us once again. We all better get use to it.
For those looking for more specific market information, refer to my last blog post MF6.0. The market continues to be active and sellers are beginning to get an upper hand in the condo and home segments, but my bet is the buyers won’t let it go to their heads. We may get back to another stand-off in the second half of the year. The lenders with defaults (who care) certainly hope the buyers support higher prices. Sellers should look for stabilization not appreciation. But the buyers will determine that. And buyers and their agents are frustrated by the lack of good inventory. Meanwhile, the quality and quantity of snow have made this a good winter for Mammoth all around. To expect more commerce in this economy would be foolish. We’ll see how the new businesses (especially the Village) and those on the brink will react though the coming slower months. Unless someone has a card up their sleeve, May and June will be dead. Mammoth has a local election in June and its guaranteed to get heated. Eight candidates will run for three Council seats and that includes four existing or previous Council members. I hope the local media has the guts to cover it.
Come hit the slopes in April, plenty of snow pack and the crowds will be light. Bring the fishing rods and the bike. It’s triathlon time.