The dog days of summer have finally allowed me to write this long over due broker’s report. But it still took awhile. The Mammoth real estate market is trending in typical fashion for this time of year. And we are in that almost laughable period in which I annually refer back to. Or at least scratch my head over. There is a good volume of inventory and selection (the usual summer peak) to choose from. The numbers aren’t extraordinary, but there is availability of better properties. Most potential buyers with winter orientation who desire to have a home in Mammoth are focused on summer activities, and not those in Mammoth. They are at the River or the beach. The number of properties currently going under contract (according to the local MLS) is rising off of the late-spring/early-summer low. And again in typical fashion, in a few months the winter-oriented buyers will be here asking, “where did that one go?”––the best properties they see today on the Internet and thought they would “take a look at” when they come skiing. They’re even likely to drive past the property just to be sure it’s not on the market. And likely they’ll see the new owner’s vehicles there or some contractors working. The best properties don’t last, especially if they are priced right. And even if the price is high, the best properties in this market are always worth submitting an offer on.
Many themes of the past are carrying on, but some with a new or added twist; be it chaotic world events, fluctuating oil prices, our own governments trying to destroy us, the economic distress of recession and depression, the continued inflation/deflation debate, Town lawsuits, global climate change, ridiculously low and enticing interest rates (that may not last), unpleasant predictions of even larger snowfall totals for the coming winter, and on and on. But one thing remains constant; people still want to escape to Mammoth for their favorite variety of recreation and relaxation. And many still want to own a piece of it. Mammoth real estate is a strange show of juxtaposition. While some people are financially distraught and victims of everything wrong as we know it today, others are flying high and have the cash and credit to prove it.
The most significant new or added twists? I’m not really sure. And maybe the most significant is that Mammoth just keeps plugging along despite all of the upheaval, negativity and challenge. Like it always seems to. Maybe that is part of the special attraction. Or maybe the landscape puts things in perspective. And lawsuits and judgments and other hubbub are nothing compared to life threatening acts of God like earthquakes and such. Pity the folks in northern Japan or New Zealand or in tornado alley. Thankfully we’re not dealing with that, and nobody even seems to talk about it anymore (except for the occasional loser who owns that broken record). Too much snow can drive you a little crazy, but it sure leaves behind fabulous waterfalls and wildflowers. If you aren’t taking them in, then you are missing out.
Mammoth real estate remains a very price sensitive market. Potential sellers who are listed significantly above the price point should pray for a miracle. And each segment has a changing price point. Buyers on the other hand have to lose out on a few good deals to grasp the price point. There are very few screaming deals. Sellers learn by having their listing languish on the market. During the dog days of summer properties priced below or at the price point will get activity. Properties above the price point may be shown but will be mostly ignored. Nowhere is this microeconomics played out more clearly than in the foreclosure/REO/short sale part of the market. These deals continue to represent about one-third of all pending transactions. Almost all sellers continue to prefer to play “go fish”(initially price it high to see if there is a biter), even the institutional ones. But the institutional sellers calculatingly lower the asking price and eventually find the price point. The process gets the property sold but maximizes value for the seller. It’s amazing how a selling price can be found when there is no emotional attachment.
But what’s new with price points? Condos in the Village proper appear to have a rising price point, but oddly the Westin Monache is not following along. Has next month’s auction of the final Intrawest held units temporarily tarnished the values and demand? Or are the Village units just hitting maturity while there are still unanswered questions at the Monache; Will the Westin franchise stay? Are the common area fees budgeted correctly? Despite the “hotel” quality of the facility are the “kitchenettes” in the individual units a value detractor? I’m not sure. And there aren’t enough recent sales of the condo hotel units at Eagle Base to know for sure what is going on there, but the demand doesn’t appear to be as strong as in the Village. (This may bode well for the equity funds/developers looking to do something with their empty Village land.)
The low end of the condominium market remains active with all sorts of buyers and turning inventory: from “crashpad” seekers to local residents hedging against rents (and taking advantage of low-down loans and ridiculously low interest rates). Most don’t seem too concerned about location or condition. The low interest rates offset common area fees to make the package affordable. And it doesn’t cost that much to paint and carpet a 600 square foot condo. Meanwhile, the best selection of condos is in the $300-350,000 range. Some need to come down a bit to find the price point but my bet is that this part of the market gets attacked between now and winter. Many of these have strong winter appeal. In this segment the location and condition seems to be more important. Most times the overall utility is the attraction, but each buyer has their own wants and needs.
The single-family home market has some opportunities that have been missing in the recent past. There are more home listed under $500K right now than there has been in some time. And not because the whole market is drifting down below that number. There are some REOs and short sales, and there are some pretty decent little homes. But some of these properties just need to come down another $50-100K to meet the price point. Single-family affordability is a good thing. There are also improving opportunities in the $700K range. We’ll see if they sell by winter. And nice, newer homes in the $1M range sell pretty fast, so new offerings in that segment typically don’t last. These buyers are getting properties in good-to-great condition, some in “turn-key” condition in unique locations and with substantial square footage. These $1M sales are indicative of the macroeconomics (there is still plenty of money out there). Beyond that price point the property has to be really special and/or the buyers need to smell blood in the water, or both. The residential vacant lot market is dead although the Town is being petitioned to relax impact fees and building permit fees to spur some local construction. Cutting out $20-30K in fees could help offset the new cost of fire sprinklers (a statewide requirement as of Jan. 1) in single-family homes. Mono County has already relaxed their fees. We’ll see if the lobby is successful and if it does in fact motivate anyone to build.
Most real estate watchers pay attention to the Case Shiller Index or anything else they report on. They’re almost always focused on inventory numbers, and rightfully so. We’re close to the traditional, seasonal peak in inventory (usually about Labor Day). We’re sitting with 244 condominiums on the market and some 30-odd of those are Westin Monache units. Historically, that is not a lot of inventory in a “down” market. There are 71 homes on the market, which is probably below historical average. My readers know I constantly watch aggregate inventory numbers. These are healthy numbers, for buyers and sellers. Right now there is a good selection of properties (but there are still many frustrated buyers) as we head into our pre-winter selling season.
So many other things going on but not enough time… The Town’s Hot Creek judgment is going through “discovery” prior to negotiation. It has been expressed that it is “negotiate and settle or bankruptcy.” The twist I see and can’t figure out; all the talk was that the original Hot Creek developers had sold their interest in the judgment but now they are the ones doing the discovery. There is lots going on behind closed doors, stay tuned…. The Mortgage Interest Deduction is a hot potato as most eyes are on Washington DC, especially for second homes. Some have expressed concerns over a potential impact on the Mammoth market. Obviously, these people have never assessed how AMT impacts income taxes and the MID. What always burns me is that renter types always complain about the MID, but do they realize their landlord is subsidized through depreciation? I say if they take away the MID then they have to take away depreciation on income properties. That would only be fair. Let the yelling begin.
I’ve run on too long. My bi-weekly newsletter has become very popular. I think it will prove to be the best barometer of market activity for those serious about watching the Mammoth real estate market. And some have suggested I should archive it on the blog site. I’ll have to think some more on that. If you aren’t signed up you can do so on the right. No spam, no sold lists, no bullshit.
Enjoy the dogs day, we’ll be shoveling snow soon enough!