Mammoth Real Estate Q&A, April 2008

This Real Estate Q&A appeared in this last weekend’s issue of The Sheet under the headline “Maybe a Trip to Mexico Is a Good Idea”. That was the Publisher’s banner. I originally titled it Asleep At The Wheel? Both are appropriate.

Q: In a very recent column you stated that the spring buyers “have exited for the most part and there won’t be any volume of buyers looking until late summer”. I was told from somebody in the industry that business was picking up. Can you explain your perspective?

A: Since the year 2000 there are clearly two primary selling seasons for Mammoth real estate. There has always been a pre-winter push driven by the anticipation of skiing and positive rental income. The other busy and productive period has become the late winter/early spring when Southern California families are here for extended vacations. Those weeks are more spread out due to the schools being on “tracks”. During these weeks there is no rush, no “weekend warrior” mentality. Mom and dad (and grandma and grandpa) relax a bit and can spend some quality time looking at real estate.

So with the spring break period over, the ski season winding down, and thoughts of the beach and the River on people’s minds, the Mammoth real estate market historically takes a pause. And yes, there will still be some buyers poking around and Fourth of July always brings great expectations, but as I said, I wouldn’t expect any volume of buyers until late summer.

But it is an important time of year for real estate types. Our minds go from skiing and snow management to summer sports and landscape and repair. The contractors are already moving here in town and Mammoth puts on a delightful face for summer. But here’s what is important––between now and Labor Day the inventory traditionally moves up in numbers. This typical increase in inventory will once again expose the real sellers from the not-so-real sellers. For me, I’m paying attention to the possible “gems” that may come to the market––those really choice properties that are prized and few-and-far-between, or the really good buys of quality properties. And some that after 90 days or so of marketing may become good buys. Again, for market watchers it’s an important time to observe.

So the inventory is going to increase?? Let’s look at some of the current numbers. But let me first state that there are dozens of properties that have been listed in the past 12 months that have expired or been withdrawn from the market. Many of these listings won’t reappear. This is characteristic of the Mammoth “don’t-have-to-sell” market. As of this writing there are only 65 homes listed for sale––a relatively low number. Some are very attractive high-end homes and have been on the market for years. And some are really the dregs and their owners are still living in a Starwood induced delusional state. I think some just like the attention of a (pretty) Realtor®. We’ll see some newcomers to the market, some rehash, and maybe even some price reductions. I do know thing, in this market segment there are lots of folks (wannabe buyers) watching. And as I drive around the neighborhoods this spring I see some major remodels starting.

The condo inventory has been sitting right around the 300 mark for some time. Over 10% of the condo inventory is in the Westin Monache. Another 10% is condo hotel product in the Village, and another 10+/-% is in the Snowcreek Phase 6 (The Lodges) or in Intrawest or other developer’s new inventory. That leaves about 200 of the regular old resale condos in the today’s inventory. Again, this is in no way excessive from a historical perspective.

The bulk of the truly motivated sellers are those that bought in the 2004-06 timeframe, and typically bought with 100% financing (with rapidly increasing “toxic” payments). Many of these owners will simply end up in foreclosure and those properties will end up being good buys for someone else. Oh, and there are a few motivated sellers who just couldn’t resist refinancing every penny out of their properties at the height of values.

And as we head towards the second half of 2008 there are some interesting unknowns and uncertainties that may generate activity and some good buying opportunities. The first is the Presidential election. God only knows what could happen. While one candidate proposes raising the capital gains tax, a backlash of support arises for eliminating it for a window of time to stimulate the economy. Capital gains taxation is a serious underlying driver for Mammoth real estate––both in and out of the market. And yes, tinkering with either way will have ramifications.

And what about mortgage rates? Who knows? Those buyers with down payments and good credit can get loans. Appraisals have been unpredictable––some higher, and some lower than expected. Some appraisals have queered transactions. Some have made sellers renegotiate. But the mortgage rates have been bouncing around almost arbitrarily. Now is an even more important time for buyers to have a top-notch mortgage professional working for them.

Yes, a seasonal lull in buyer traffic is all part of the sales cycle here in Mammoth. The sales push for the Ritz is having nominal, if any, effect on the balance of the market (not like in the past where these sales efforts created whirlwinds of activity). Serious market watchers will be perusing their favorite search engines and watching their segment of the market. I can already see a big difference coming between some segments. It’s all about supply and demand. In the meantime it is time to finish off some spring skiing, get the bike tuned up and maybe even think about a trip to Mexico.

5 thoughts on “Mammoth Real Estate Q&A, April 2008”

  1. Paul, I trust your candid and sober evaluation of all things real estate….although I think your take on current inventory levels may prove to be too kind (just keeping it real). Anyway, I hear the city council unanimously voted to move forward on upgrading the airport. I know all things “airport” are very complicated and rife with legal landmines due to opposing advocacy groups lurking in every corner…but could you cut through the crap and give us your take. Is commercial air service really around the corner and if so, will the scale be too puny to matter? Oh, and will they have valet terminal parking for Barry’s beloved “1” crowd. Considering the onerous subscriber fees to your blog, I think you’re obligated to share your insight and give me at least one gem I can throw out at the next BBQ to impress my buddies (of which all of us are shameless Mammoth wannabes). Thanks, Wilbur

    Reply
  2. Me too, I want to know what the status of the airport is. I just got laid off from the mountain and am wondering if its too late to lock in the Mrs. Fields Cookies concession at the new terminal. Ahhhh nevermind, the council members probably already beat me to it.

    Are they hiring???

    Reply
  3. Barry has left the building one step ahead of Elvis. Staubach/Ritz predicted in hot pursuit of exit.

    Ritz Tahoe? Ritz Mammoth? Horizon Air maybe vs 130+ flights per day Reno?

    Reply
  4. mm1968

    With Talus in the ditch, the Westin and 80/50 heading toward the ditch and as Paul informed us, little excitement or interest generated by Ritz dirt lot, where is Starwood? Has Starwood left building?

    Regardless of what we may think about the impact of what Intrawest built and left behind, Intrawest promoted a very public vision and development plan/timeline for Mammoth. Vision statements and timelines create performance exposure along with the selling of the dream. Intrawest had key people in town that worked with TML and promoted the “vision”. Intrawest encouraged the town and private businesses to upgrade their service and physical image. Remember all the remodeling of store fronts and lighting etc, along Main Street/Old Mammoth Road business district. Sure, Intrawest Mgmt did this to help market their product, but the fact is that Intrawest, for better and for worse, created interest and demand for Mammoth property and visitors.

    With the exception of the press releases associated with the sale to Starwood that glowed about how Starwood was the ideal buyer ready to transform Mammoth into an international resort destination and some ho-hum talk about a “wellness” vision, Starwood has been the absentee mystery owner. Even if you credit or hang Starwood with the Westin development, there is no comparison between the development and interest created by Intrawest and that not created by Starwood.

    Does the predictable airport delay, airport service downsize and economic downturn, after the Starwood purchase, explain Starwood’s vacuum? Didn’t Starwood decide they could not build a Hotel “1” in Mammoth within their business performance plan and timeline? If Starwood bailed on the Hotel “1” plan, if the Westin Monache was delivered behind schedule, over budget and below quality expectations, what the heck was Staubach/Ritz thinking? Does the Ritz have a magic wand?

    Anyone expect a Starwood vision, development timeline and massive transformation in the next four years? I’m guessing TML will need to limp along as SoCal’s favorite, sleepy little fishing and ski town a while longer.

    Reply

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