The Mammoth Chaos Is Over, The Great Melt And Clean-Up Begins!
Market Summary – April 9 to April 23
Single-Family Home Inventory
Market Updates and News
The dump trucks hauling snow that became so predominant in Mammoth the past few months have disappeared in recent days. And roof shovelers too. The weather that barely came above freezing since early November is now barely going below freezing. The lower elevations, below 8,000 feet, are melting out quickly. But the snowpack in the higher elevations is incredibly deep and dense. It will take time. Summer visitors are bound to find large snowfields in various locations. The clean-up has begun but the town is a mess. Dodging potholes is the new sport, but the Town will get to them. Spring skiers and fishermen don’t care. By July 1 most of it will be a memory, except for any serious damage. And maybe the LA Times will come back to find some other chaos. Or come to experience a wonderful water-filled summer in the Sierra.
Property owners are sorting out their own post-winter conditions. Most of the real damage is to their pocketbooks. Single-family homeowners and HOA/condo owners are all $5,000 to $15,000 (or more) over budget for the winter and the bills are due or coming due. Some owners are already getting impatient on repairs and clean-up. But they will have to wait, the town is exhausted and spent. But it is rallying.
Last night there was a retirement party for former MMSA and Alterra CEO Rusty Gregory. I wasn’t invited. But I had an interesting fourth-row seat to his career. I’m sure the announcement of such an event created great ambivalence in the community. Rusty took me to Whistler and Vail in 1991 to understand the economics of “faux alpine villages”, condo hotels, and the modern state of ski resort management. I was the young, pro-real estate and pro-development Town planning commissioner. He needed my support and vote. But at the time, drought and recession had the town ready for any type of economic stimulation. He was the new leader at Mammoth Mountain and he had big plans. Some of it came to fruition. MMSA did prove to be the biggest ace in the North American ski industry and Rusty played the hand to the ultimate formation of Alterra. You probably have an IKON Pass because of it.
One of his biggest plans for Rusty and Mammoth was the redevelopment of the Main Lodge area. The vision has changed over the years. The plan has always been ambitious, but the process is painfully slow. Unfortunately the whole thing is steeped in what some people might call bad karma. And in my youth there were many people who told me “there is serious karma in these mountains.” For an interesting look back, I wrote “Oil Sheiks, Hong Kong Billionaires and Hedge Funds” back in 2006. It is a glimpse of probably the most perverted real estate transaction in Mammoth history. Just be glad you weren’t the seller. I hope everyone enjoyed the party….
Here are some insights from a recent article in the Cowboy State Daily “Billionaires Are Moving Millionaires Out Of Jackson, Similar Trends Happening Across Wyoming”
“Even the millionaires living in Teton County cannot compete with the current influx of wealth that’s moving into a beloved tourist destination. Income stats for Teton County show billionaires are moving out the millionaires and middle class alike—at a pace that appears to be accelerating.
That’s according to a detailed analysis by Jackson City Councilman Jonathan Schechter, who has become well-known for his detailed analyses of income tax data for his home community.
Wyoming has long been known for having some of the friendliest income tax and trust laws in the nation. On top of that, it offers so many places of unspoiled beauty and high-quality recreation…what has added more legs to the most recent influx of wealth to Teton County are technologies that let people cut ties to a particular place and tend to their business interests remotely.
While once upon a time, a vacation to the Tetons might last a week or two, these days, those with means can live where they love to vacation for as long as they want.
The trend is not just happening in Teton County—nor is it even just happening in Wyoming. The stats that Schechter has assembled show the trend is happening anywhere and everywhere in the United States where there is a highly desirable location.”
And something Mammoth property owners won’t experience; from the article “One of the ripple effects of the in-migration of wealth has been a leap in property tax rates. As the demand by billionaires pushes up the purchase prices of homes, that drives property tax rates up and pushes people out of one market and into a more affordable one. It’s a trend Schechter himself has experienced, up close and personal. “My house, the property taxes went up 45 percent last year,” Schechter said. “I can tell you what didn’t go up 45 percent last year, and that was my income.” Schechter knows there are people in Teton County who had to sell their homes because they cannot afford their property taxes.”
Hmmm… this is precisely the theory behind Prop. 13 here in California. The law if often debated and criticized, but despite rising real estate values in California, high income taxes, high sales and gas taxes, at least most property owners will never be forced to sell their homes due to steep rises in their property taxes.
And finally this quote from the article, ”Four years in office have made it clear to me that the forces sweeping over Jackson Hole, the Tetons region, and similar lifestyle areas are so powerful—the money is so large, and is moving with such velocity and strength—that local government can’t adequately address them,” he said in his report…. The money is so large, and is moving with such velocity and strength……..sounds similar to The Great Mammoth Reset? BTW, the photo above is the tarmac at Mammoth Airport yesterday afternoon—it was full of all sorts of private aircraft. It is an interesting barometer.
A variety of April Fools spoof stories from different media outlets (primarily in Utah) were about various efforts to ban snowboarding at resorts. Even though such bans already do exist at some resorts, it was all in jest. But one article had a great comment that explains what I discovered years ago and have tried to relay to many people.
“As a former EMT/Ski Patrol, I can only attest to my experience—most of my on-mountain responses involved at least 1 snowboarder. When snowboarding was first catching on, the joke went something like this: “Q: How does a snowboarder introduce themself? A: ‘Woah!, sorry, dude!'”
Skiing and snowboarding are two completely different sports, requiring two diametrically-opposed physical skill sets. The downward lean of the skier forces a different peripheral perspective than the one caused by the sideward lean of a snowboarder. This causes the body to react differently when confronted with a high-stress situation like an impending collision. The expected reaction creates confusion when a skier expects a certain reaction and a snowboarder reacts in a skier-unexpected manner.”
This is a very important to understand. Ski and ride accordingly, and be safe.
The sale of a 2 bedroom / 2 bath corner unit at The Westin Monache for $945,000. This is below what the most recent 2 bedroom units have sold for. The buyer was represented by an out-of-town agent. With this 2nd floor location and position in the building, this unit will probably have the most negative impact from the Limelight of all the units in the Westin. Of course, who knew if you didn’t marry-up the site maps?…it was all buried in white.
Favorite New Listing for the Period
This is ready to move into! Classic 4 bedroom / 3 bath Fairway Home (Snowcreek Phase 5) with a private 2-car garage. Beautifully remodeled and updated with a traditional mountain flare. Upstairs great room with views to Mammoth Mountain. Primary bedroom on upper level. This location is at the far end of the golf course fronting homes and adjacent to Forest Service land with easy trail access to Hidden Lake and the Enchanted Forest—super popular with dog owners. Very desirable location and setting. Upgrades throughout.
Listed at $1,649,000
Courtesy The Snowcreek Property Company
Other Real Estate News
Many potential Mammoth real estate buyers have been asking about foreclosures and REOs (REO being a longstanding industry term for Real Estate Owned—properties owned by an institution via foreclosure that it wants to liquidate). A new REO listing hit the MLS during the period and it created some interest. But this new listing itself is indicative of what the next cycle might be like. There are new processes and laws in place and I expect even more changes. But the future of all of this is far from clear.
First, the new REO listing located in the Sierra Valley Sites is not a newly distressed property. The default was in the system prior to the pandemic. So it is certainly not “the beginning” of a foreclosure cycle and trend in Mammoth. My readers know the inventory remains low here in Mammoth and values are being upheld by buyers. But the specifics of this new listing are a sign of these new times—the listing agent discloses she hasn’t even been inside the property (how do you do an accurate market analysis?) and the property is emphatically being sold AS IS and buyers are not allowed to have any access or inspections. The property is also occupied, and occupancy in the state of California now comes with all sorts of new baggage.
The current implication is that the new owner (if there is one) will have to purchase the property with the occupants in place (I didn’t say tenants, that might imply they are actually paying rent to the owner). Covid and the State have created all sorts of new regulations about tenants, foreclosures, and more. None of it is clean like the last cycle. And I’m anticipating that the new institutional owners of these REOs are going to think that buyers will buy with occupants in place, and without normal due diligence including simply “standing in the property.” But this may not go over very well, and it certainly won’t help maximizing the value of the asset upon sale.
And again, there is no indication of the beginning of a foreclosure cycle in Mammoth. There are markets across the country that are heading in this direction. Most of the owners were FHA and other types of low-down buyers. A headline from last week stated that such-and-such percentage of homeowners were “now underwater” in some markets. But many of these owners also have very low-interest rate loans that make their monthly payments lower than comparable rents. Many of the dynamics are different from 2008 including the very low, fixed-for-30-years interest rates of the recent years. Many new property owners in Mammoth have the same low-interest rate mortgages, but also put 20-30% down. And many have significant revenue streams, or can generate significant rents or revenues as a backside position.
The major carry-over from the last foreclosure cycle, at the end of the cycle, is how the properties will be marketed and sold. The process may continue to work, or it maybe not. If the bulk of the potential buyers figure out the game, it may not work. And especially if the property is occupied and sold without any buyer due diligence opportunities like the recent new REO listing in Mammoth. This new carry-over process is the online auction process found at sites like Auction.com, Hubzu.com, xome.com, etc.. This is where buyers will actually purchase the next round of REOs (at least that is the plan). The days of dealing with real people in a relatively fair bidding process are gone (yes, there used to be real, professional asset managers reviewing all of the offers and making selling decisions).
Today, the “evolution” of the industry to these online auctions likely has buyers bidding against themselves. No one really knows. And the people on the other end of the “auction” hitting the buttons could be anywhere including India. The auction side is destined to be increasingly run by artificial intelligence. The process simply does not instill confidence. On top of everything else the buyers will have to pay a “buyers premium” to the online company—usually 5% of the purchase price (the winning price). The beginning of a foreclosure cycle is classically the start to a downward trend in market values. If the buyers find the sale conditions and process so disagreeable, imagine how deep the downward trend could go? A market could get crushed if the buyers revolt. Or maybe it is a set-up for Blackrock to scoop it all up.
This move away from the traditional liquidation of REOs may ultimately facilitate more short sales in any distressed market. The last cycle moved heavily in this direction. The institutional owners or potential owners learned that it was a more efficient way—there were no eviction costs and delays, no “property preservation” expenses and coordination, no carrying costs, etc.. The short sale process is far more transparent, far more human. But the Mammoth real estate market is far from being there at this point.
Here’s an interesting chart that puts things in perspective.
Thank for reading!