Q: We had been in Mammoth during the holiday period and we looked at some condos on the market. We came away with the impression that Mammoth real estate property is a good value at this time. We think time of drought suppressed values. What do you think?
A: Mammoth condos are usually a good value if the ski conditions are wonderful. With snow comes enthusiasm. Alumni of your Intrawest sales teams will definitely remember the phrase “Selling will be the transfer of enthusiasm.” So snow equals enthusiasm equals the selling of real estate property. But is Mammoth real-estate a good value without or with snow?
We can easily 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 play and recreate on may be the crème de la crème supporting value of local real estate property. Especially since progressively more homeowners are attempting to maximize nightly rental income and also the winter visitors are the “money” within the equation. Because respect days gone by four drought winters have negatively impacted values.
Value is undoubtedly subjective and at the mercy of multiple factors. Let’s look at other important dynamics affecting Mammoth’s real estate “value.”
The recent drought period has coincided together with the peak and eventual decline of your distressed property market. Foreclosures and short sales impacted real estate values here in Mammoth up to any place in the world. Foreclosures peaked inside the 2011-12 timeframe and short sales peaked shortly thereafter (and just how government entities intervened in all that is another column). The best “deals” (lowest prices) were that can be found for the reason that period. So the bottom of this past market cycle really occurred together with the beginning of the drought.
Additionally there is a large faction of mammoth lake homes for sale who purchased or refinanced from the mid-2000s who have been looking to liquidate but can’t afford losing their good credit score. For these people a foreclosure or short sale has gone out-of-the-question. It will be the nature of this market. Many have watched real estate values nudge upward in past times year or two and so are determining to sell. Several of these sellers actually have to set money into the purchase to close the escrow. Some are taking substantial loses (and a few are offsetting those loses with gains with their other investment areas).
Although the winding down in the distressed property cycle together with the drought winters created an equilibrium available in the market. We have seen enough supply and enough demand to hold selling prices in the stable range. There has been no gigantic push upward like countless other markets in California. And also as usual in Mammoth, there are many different segments of your market which have moved differently.
One of several market comparisons I love to make is what a home sold for in the mid-2000s peak market era compared to a recent sale. I only prefer to use exact same properties for the comparisons because there might be countless minute but critical variables. When closed sales come through the MLS I check to see if the property sold during the 2004-2007 timeframe. I try to find out if you can find any significant improvements which have been performed to the property that would affect the calculation.
Many of the sales that fall into this comparison study show that the Mammoth industry is selling at 60 to 70 percent of your selling prices of the mid-2000s. And again there are plenty of variables. The Intrawest developed and sold properties from that era tend to have lower percentages (meaning they typically sold for higher market prices 10 years ago). The lowest recent sale which i recall was 53%. On the very lowest of the market some were below 40% with their mid-2000 selling price (most were foreclosure/REO properties). Around the opposite side there are a few Mammoth properties which can be selling slightly over 70% of what they sold for from the peak period. Nevertheless the majority are in the 60 to 70% range.
One could surmise from this how the values only have rebounded modestly. And perhaps the drought winters had plenty with regards to it.
The drought winters also delayed a number of the Ski Area’s plans for development and expansion. The existing ownership seems going to spend cash for capital improvements with money they realize as profits as opposed to utilize money they may borrow. So these improvements are already postponed through the drought winters. These Ski Area improvement projects always usually create some real estate buzz (enthusiasm) and a few increased demand. Investors always follow investors and investment.
The thing that strikes me as odd is that the Ski Area’s ownership owns a significant area of the remaining developable property in Mammoth nevertheless they see absolutely no reason to adopt a little risk to stimulate the regional values. But precisely what do I know? Sometimes it appears that the environmentalists really do run the show here in Mammoth. The older I get the greater number of I do believe that could be which is a good thing.
And lately it appears the the Ski Area’s owners have realized the “good value” of obtaining the Town’s ice rink aligned with all of their real-estate. We’ll need to see.
A different way of assessing whether or not the local property is a “good value” is looking at what exactly is being newly built; almost nothing. If values were overinflated there would be construction going on everywhere. Today, buyers who desire a nice condo to acquire have to look at a unit that was internal the 2000s or examine something that needs significant remodeling. Even the ones built-in the 2000s require some updating and many of the older ones are deserving of “to the studs” remodels. But in any case the ultimate price-per-sq . ft . will probably be close to the simple value of today’s new and quality construction. And this doesn’t range from the land or permits. A lot of people feel that properties selling “below replacement value” equate to “good value.”
Really the only merchandise that will be newly built in the present market are a couple of homes in Sierra Star. These are typically single-family homes in the $900,000 to $1,500,000 range. This is a very strong segment in the Mammoth market and that new product helps to meet the demand. Of your 79 single-family home sales in 2015, 30 were priced at over $1million. Many buyers are seeing the “good value” from the new homes. Just examine all of the factors. The lots are located on probably the most gorgeous fairways in the Sierra Star golf course. These parcels were previously slated for condominiums. But that market doesn’t exist. Hence the land is likely being acquired at a cost that assists make your whole equation work.
The equation comes with a skilled developer and builder with forty years of experience in Mammoth. The project is most likely being run as efficiently and effectively as you can while producing a very attractive finished home and neighborhood. The bonus for several owners is the fact the zoning allows nightly rentals. Along with the rental/revenue potential is apparently quite high. The entire package is very attractive, especially when the discriminating new owners reach select every one of the finishing touches.
Another “good value” factor is definitely the healthier state from the local condominium associations. Many buyers, owners and sellers may well not recognize this. The California Civil Code (aka “Davis-Stirling”) requirements on HOAs possess the associations running more professionally than in the past. This runs from accounting and reserve requirements to regular meetings and communications. For associations where nearly all owners are second homeowners, this is certainly a lot more important. And 64dexmpky drought has played a part too; local HOAs have saved on snow removal expenses previously few years and they have also been required to reconsidered their water and labor intensive landscaping.
Of course, if a buyer is looking to build their own home in Mammoth, the vacant land market still offers excellent and relatively affordable opportunities. Mammoth remains land-locked so sprawl is out of the question. And also the hard costs of subdividing land remain high. So for anyone looking in this direction, this value might be a “great value.”
Ultimately the “good value” criteria is as different as the range of buyers and those who own Mammoth real estate. The process is making the best match, and that isn’t always easy. But which is the job of your good agent or broker. And yes, some properties are clearly better values as opposed to others. And that is true with the whole price spectrum. In fact it is never exactly about price.
So circling straight back to the question, yes Mammoth remains an effective value. The greater it snows the better the benefit. So permit it to snow, let it snow, permit it to snow!