Mammoth Inventory Watch—Spring 2007

Which pendulum will swing next? A below-normal year of snowfall (after two record winters) and an early Easter put a quick end to the winter tourism season in Mammoth. In the past couple of months, multiple negotiations between buyers and sellers have resulted in few real transactions. The sellers are generally apathetic and the buyers are looking to shave 10 to 20 percent off of asking prices. Some local agents are pushing harder, some are simply backing off, and some have simply gone on extended vacations (not me).

Most sellers still think there is something—some announcement regarding the airport(s), the “signings” of high-end hotel chains, interest rate cuts, etc. that will spark the market to another level of higher value. The sellers, at least those posers with their properties listed for sale, are apparently not feeling any pain. The (potential) buyers pretend that the world is coming to an end,but they still want to buy something in Mammoth. When serious sellers meet the serious buyer the result is usually a successfully closed transaction.

But as we move into the late spring and early summer, the raw inventory numbers are going to be the best indicator of the market’s health. This is typically the time when the inventory numbers rise, usually peaking out around Labor Day weekend. So far in 2007, we saw a rise in the February time frame when it became apparent that this was going to be a dry winter. Overall we’ve been sitting in the 275 range for total condo listings. A variety of Village condos have come on and off the market the past few months, but overall they have represented about 16% of the total condo inventory. There is substantial resale inventory in some of the recently built condo projects like The Lodges, The Cabins, Solstice, etc. Then there are “bunches” of listings in projects like Sierra Manors and Woodlands. In some projects there isn’t anything for sale. Adjusting for the listed re-sales in the recently built projects and some of the bunching, the condo inventory numbers are not historically excessive at all.

In the single-family residential market there are only 74 homes listed for sale with 30 listed under $1,000,000. Of that 30 there is an odd lot of nice homes on substandard lots or lousy locations, obsolete homes on nice lots, and some funky added-on-to properties. Most really do need some owners that feel some pain if they want to get sold. Then there’s the almost 20 homes listed above $3,000,000. This segment of the market has been a flat line for over a year. And while there are many homes in this price range under construction around town, the buyers are turning their noses up at the existing inventory.

Residential vacant lot inventory will always be low just based on scarcity, but there are some interesting offerings out there, some with owner financing. The crushing demand for contractors has mellowed somewhat, making it a potentially good time to build a home or remodel. But according to the contractors I’ve talked to, there doesn’t appear to be any decline in the cost of materials. Oil prices and inflation may guarantee that.

The foreclosure pipeline is showing just a couple of possibilities, but nothing so far that will impact the market or create a trend. So for those watching the Mammoth real estate market, the following months will be an interesting time to watch the quantity and quality of the inventory. I’ll also try to decipher any significant announcements. (There are lots of rumors flying, but I’m content to wait and see. I can’t see anything that is going to “rock” the market.) Stay tuned. In the meantime, an early summer is always welcome.

3 thoughts on “Mammoth Inventory Watch—Spring 2007”

  1. Paul, just wanted to say that I always enjoy reading your blog. Very interesting perspective on Mammoth and RE.

    I know that there is a lot more than just wood that goes into building a house, but lumber prices seem to have come down a bit the past couple of years

    http://www.randomlengths.com:80/base.asp?s1=In_Depth&s2=Useful_Data&s3=Monthly_Composite_Prices

    A friend of mine is doing a owner/builder project in Mammoth this summer and when he told me his lumber costs, they corresponded with the price decreases listed above.

    Maybe Mammoth builders just like big juicy profit margins?

    Reply
  2. Barry Sternlicht, chairman and CEO of Starwood Capital, told CNBC’s “Morning Call” that high construction costs may limit the number of new hotels built in the immediate future.

    “It’s very expensive to build right now,” Sternlicht said. “Steel prices, all commodity prices, copper – even asphalt because of its oil component – (are high) and that means there’s not a lot of new construction in most markets. Some markets, like the hotel market, there are record numbers of new hotels in the pipeline. But it remains to be seen if these hotels will be built because when you put pencil to paper and see how much they cost, a lot of them don’t make economic sense.”

    Reply
  3. As the data guy in Paul’s office, I’ll add that we are at the highest level (460) of homes+condos+lots+commercial listings since I’ve been keeping track in early 2003. The lowest I’ve seen since then was 120 in December 2003.

    The most recent dip went down to 198 listings in April 2006 (after the Starwood excitement started subsiding). So we’ve shot up 232% in just one year. But that is still less than the tripling of inventory heard about in other areas around the state.

    And I concur about the poser sellers out there who still have the boom in their too recent memories. Prices need to come down a bit more.

    Reply

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