Q: We had been in Mammoth in the holiday period therefore we looked at some condos available for sale. We came away together with the impression that Mammoth real estate property is a great value at this time. We believe many years of drought suppressed values. What do you think?
A: Mammoth condos are often a good value once the ski conditions are excellent. With snow comes enthusiasm. Alumni of your Intrawest sales teams will certainly recall the phrase “Selling is the transfer of enthusiasm.” So snow equals enthusiasm equals the selling of real estate. But is Mammoth property an excellent value with or without snow?
We can talk information on proposed developments, and who should own the Ski Area, increased air service and fancier ice rinks all we want. But quality snowpack to try out and recreate on will be the crème de la crème supporting the value of local real estate property. Especially since progressively more home owners are attempting to maximize nightly rental income as well as the winter readers are the “money” from the equation. In this respect the last four drought winters have negatively impacted values.
Value is certainly subjective and at the mercy of multiple factors. Let’s look at other important dynamics affecting Mammoth’s property “value.”
The recent drought period also has coincided together with the peak and eventual decline in the distressed property market. Foreclosures and short sales impacted real estate values here in Mammoth up to around the nation. Foreclosures peaked within the 2011-12 timeframe and short sales peaked shortly thereafter (and how the federal government intervened in all that can be another column). The very best “deals” (lowest prices) were to be found because period. So the base of this past market cycle really occurred combined with the start of the drought.
There is also a large faction of houses for sale in mammoth who purchased or refinanced in the mid-2000s that have been seeking to liquidate but can’t afford the decline of their good credit score. For them a foreclosure or short sale is out-of-the-question. It will be the nature of this market. Many have watched real estate property values nudge upward in past times year or two and therefore are opting to sell. A number of these sellers have to set money into the purchase to seal the escrow. Some take substantial loses (plus some are offsetting those loses with gains with their other investment areas).
However the winding down of the distressed property cycle combined with the drought winters created an equilibrium on the market. We have seen enough supply and enough demand to maintain selling prices in a stable range. We have seen no gigantic push upward like a lot of other markets in California. And as usual in Mammoth, there are various segments of the market that have moved differently.
Among the market comparisons I like to make is what a property sold for within the mid-2000s peak market era in comparison to a recent sale. I only love to use identical properties for the comparisons because there may be countless minute but critical variables. When closed sales come from the MLS I check to see if the property sold back in the 2004-2007 timeframe. I try to see if you will find any significant improvements that have been performed to the house that will modify the calculation.
Most of the sales that get caught in this comparison study show the Mammoth market is selling at 60 to 70 percent of the selling prices in the mid-2000s. And again there are numerous variables. The Intrawest developed and sold properties from that era generally have lower percentages (meaning they typically sold for higher market prices 10 years ago). The smallest recent sale which i recall was 53%. At the very lowest from the market some were below 40% of their mid-2000 selling price (most were foreclosure/REO properties). In the opposite side there are some Mammoth properties which can be selling slightly over 70% of the things they sold for inside the peak period. Nevertheless the majority have been in the 60 to 70% range.
You can surmise using this how the values have only rebounded modestly. And maybe the drought winters had plenty related to it.
The drought winters also delayed a few of the Ski Area’s plans for development and expansion. The current ownership seems going to spend money for capital improvements with money they realize as profits rather than utilize money they can borrow. So these improvements happen to be postponed from the drought winters. These Ski Area improvement projects always usually create some property buzz (enthusiasm) and a few increased demand. Investors always follow investors and investment.
One thing that strikes me as odd is that the Ski Area’s ownership owns a tremendous area of the remaining developable property in Mammoth however they see no reason to take a little risk to stimulate the neighborhood values. But what exactly do I realize? Sometimes it appears that the environmentalists really do run the show in Mammoth. The older I get the more I feel that may be which is a great thing.
And lately it seems the the Ski Area’s owners have realized the “good value” of getting the Town’s ice rink aligned with their property. We’ll must see.
Yet another way of assessing if the local real estate property is actually a “good value” is looking at what exactly is being newly built; almost nothing. If values were overinflated there can be construction going on everywhere. Today, buyers who need a nice condo to purchase have to check out a unit which had been built in the 2000s or look at something that needs significant remodeling. The ones integrated the 2000s require some updating and lots of the older ones are deserving of “to the studs” remodels. But in either case the best price-per-square foot will probably be next to the simple expense of today’s new and quality construction. And therefore doesn’t are the land or permits. Some individuals think that properties selling “below replacement value” mean “good value.”
The sole product that has been newly built in the current market are some homes in Sierra Star. These are typically single-family homes in the $900,000 to $1,500,000 range. This can be a very strong segment in the Mammoth market and also this cool product is helping to satisfy the demand. Of your 79 single-family home sales in 2015, 30 were priced at over $1million. Many buyers are seeing the “good value” inside the new homes. Just look at each of the factors. The lots are located on many of the most gorgeous fairways of your Sierra Star golf course. These parcels were previously slated for condominiums. But that market doesn’t exist. And so the land is likely being acquired at a price which helps create the whole equation work.
The equation also includes an experienced developer and builder with forty years of experience in Mammoth. The project might be being run as efficiently and effectively as is possible while creating a very attractive finished home and neighborhood. The bonus for a few owners is the fact the zoning allows nightly rentals. And also the rental/revenue potential is apparently very high. The total package is incredibly attractive, particularly when the discriminating new owners reach select each of the finishing touches.
Another “good value” factor is the healthier state in the local condominium associations. Many buyers, owners and sellers may not recognize this. The California Civil Code (aka “Davis-Stirling”) requirements on HOAs get the associations running more professionally than previously. This runs from accounting and reserve requirements to regular meetings and communications. For associations where nearly all owners are second homeowners, this is much more important. And 64dexmpky drought has played a part too; local HOAs have saved on snow removal expenses before couple of years and they have also been made to reconsidered their water and labor intensive landscaping.
And when a buyer looks to create their very own home within Mammoth, the vacant land market still offers excellent and relatively affordable opportunities. Mammoth remains land-locked so sprawl is out of the question. As well as the hard costs of subdividing land remain high. So for people looking in this particular direction, this excellent value can be quite a “great value.”
Ultimately the “good value” criteria is as different as the plethora of buyers and people who own Mammoth real estate. The challenge is making the proper match, and this isn’t always easy. But which is the job of your good agent or broker. And yes, some properties are clearly better values than the others. And that is true from the whole price spectrum. And is particularly never about price.
So circling back to the question, yes Mammoth remains a great value. The better it snows the better the benefit. So permit it to snow, allow it snow, let it snow!