Mammoth Broker’s Report, March 7, 2012

Broker’s Report, March 7, 2012––My readers know I’m not ignoring all of the negative news coming out of Mammoth; from the low snowfall and all of the ramifications to the Town’s financial debacle to more harassment from LADWP over local water rights. But oddly, the Mammoth real estate market trudges along with activity. The interesting unknown in my mind; just how active would the market be if we had great ski conditions and a “normal” weather pattern? The market could be doing very well. As I often explain, the selling of Mammoth real estate is highly influenced by two factors. The first is people in town. Sure, in this Internet age people are looking at the inventory all of the time, but the more they are actually here the more likely they are to pursue their interest beyond just looking and photos and data on their favorite device. Looking at property online is great, but there is no substitute for getting in the properties. The second influence is enthusiasm. Great ski days with friends and family create real estate demand. So does envisioning your own home-base for all of the other activities the area has to offer. Lest we not forget the Intrawest marketing motto, “selling is the transfer of enthusiasm.”

So what’s the good in the market? I do see many things, but then again I’m fundamentally an opportunist. Sour times are always good times for opportunists. The early 90’s were ugly (much like today) and great opportunities were seized. This is probably true across the broader economy, and it will be here in Mammoth. For now, the most upbeat market condition is that the inventory has not exploded and there are no initial indications that it will. This winter, or lack thereof, will certainly drive people out of town. But so did the deluge of last winter. Reminds me of the words of the late Andrea Lawrence, that living here “is an art form.”

Due to the (lack of) winter conditions, what we may see in the local real estate market is an early entry by the “summer sellers.” Mammoth’s real estate inventory usually builds in late spring and early summer and peaks around Labor Day. The best inventory is usually available during the summer when the winter-oriented folks aren’t paying attention. That part of the cycle may move ahead this year, but we’ll see. And some of the new listings are likely to be owners who are frustrated with the lack of cash flow generated by nightly rentals this winter. The lack of quality snow has compromised cash flow all around town, and the nightly rental condos have not been spared.

The REO and foreclosure segment of the market is taking a small respite (that is one of the reasons I have time to write this). December and January were hectic to say the least. Many of those listings and transactions have closed-out or are just wrapping up. The “coming soon “ (aka pre-listed) inventory here in Mammoth may be at a four-year low for this office, although there are some pretty nice homes on the list. BUT, the stack of new and upcoming Trustee’s Sales is once again increasing, so the “controlled burn” is just taking a small time-out. I wish the skiing was better, I could get in shape.

The foreclosure side of the market will be interesting to watch in the next year. The banks and investors continue to show increasing favor towards short sales, or maybe not. It remains a moving target. Almost half of the “sale pending” properties in the Mammoth MLS are actually pending short sales. Many have been there for months, and months. Many short sale “deals” are no longer deals after months of waiting around. And with an increasing number of short sales are being handled by “professional negotiators” (third parties), the buyer is required to come up with additional funds to cover costs. Some short sale listings are listed at “too-good-to-be-true” prices and when the appraisal comes in the lender has a different idea about an acceptable (higher) value. But there are still opportunities. Some distressed owners don’t want to bother with a short sale process (will the future credit hit be any different?), or some prefer to bleed the maximum value or utility out of the property on the way to foreclosure. Other owners have completed loan modifications in the past few years only to find they are still grossly underwater. Without a perceived “rebound” coming to the market, those owners are likely to be throwing in the towel in the near future. So many interesting dynamics…

There are some minor market trends I’m seeing. The first is the continuance of the move-up buyer. Mammoth condo owners are seeing an opportune time to move-up and many are moving up to a home (grandkids will do that). Yes, they’ve seen the steep decline in their condo value, but many of these are long-time owners and hardcore Mammoth lovers (the potential Town BK is just another on of the list of trials and tribulations of Mammoth history). And they see homes selling at below replacement cost and are deciding to make their move. There continues to be strong demand in the low-end of the single-family home market. Homes listed under $500,000 get strong buyer attention. The problem is the bulk of these homes still have significant compromises––either poor locations or “funky” structures, etc. Conventionally built structures in good locations get snapped up rather quickly. But even the compromised properties are still selling. Demand in the affordable (low-end) segment of homes and condos remain strong. Meanwhile, most of these low-end deals are going to second homeowners. Local residents have become hesitant to purchase in the past couple of months, the drought winter has killed job security for almost everybody.

Speaking of capitalizing on opportunity, the Tallus project is making a comeback and I find it quite compelling for many reasons. Besides being a prime opportunity for some buyers, the whole Tallus story (“live the life”) might be the kind of “reset” and vision the whole Town can look to. This fractional project located on the Sierra Star golf course went into receivership early in the recent real estate downslide. The improvements on the site are large custom homes and were sold in fractional interests. Some of these homes have sat uncompleted for years. Construction materials lie dormant on the site. There is a wonderful clubhouse with a large indoor pool. The receiver has maintained the property but now there is a new owner and he has brought the original developer back to renew some of the vision.

But the new owner has included something quite fascinating to the program. Each new fractional owner becomes a member of the Tallus Club Card, and there are up to 10 cards available to each owner at a time. The Card privileges are similar to the Ski Area’s Black Pass including all Ski Lift and Front of Line Access, preferred parking pass, Black Pass Concierge and Parallax Private Dining. It also includes two memberships to the Sierra Star golf club. This is tremendous added value. The 1/6th ownership includes 3 weeks of winter planned, 2 weeks of summer, and 1 week of “anytime.”  But the new program recognizes that very few people/owners ever have the “one week” available in their schedule. So they have created the “unlimited” short notice availability. They will also have a “luxury” (read expensive) nightly rental program so owners can opt for rental revenue instead of usage.

The new owner has budgeted $3 million to complete the unfinished units, a $750,000 budget to upgrade the existing units, they are converting the managers quarters in the clubhouse to an HOA owned rental unit, and are building new manager’s quarters at the guard house. They have hired some new and very experienced personnel.  The shares are price at $450,000 and $475,000 and the monthly all-inclusive HOA dues are $950 per month, which they point out would hardly cover HOA dues and utilities at most condo projects in Mammoth. The project also has private shuttle (perfect for getting to the slopes or airport) and daily housekeeping. These guys know I’ve been a major fractional skeptic in the past. But the inclusion of these Club privileges really make this a sweet deal. The “short notice” component is great too. I like this direction. The apparent cooperation by the Ski Area is interesting. This is not for everybody but it is definitely for somebody. How could your wife and extended family not love it? There will be no big developer splash or hard selling program. Contact your favorite Mammoth agent for more info.

That’s all for now. If this type of Mammoth real estate market information is of value don’t forget to sign up for my bi-weekly newsletter. They are like mini Broker’s Reports with some varied content and very timely.

Thanks for reading.

Leave a Comment

This site uses Akismet to reduce spam. Learn how your comment data is processed.