Q: We had been in Mammoth during the holiday period so we checked out some condos on the market. We came away with the impression that Mammoth real estate property is an excellent value at this time. We believe recent years of drought suppressed values. What is your opinion?
A: Mammoth condos are always a good value if the ski conditions are fantastic. With snow comes enthusiasm. Alumni in the Intrawest sales teams will definitely recall the phrase “Selling is the transfer of enthusiasm.” So snow equals enthusiasm equals the selling of property. But is Mammoth property a good value with or without snow?
We could talk exactly about proposed developments, and who should own the Ski Area, increased air service and fancier ice rinks all we want. But quality snowpack to perform and recreate on is the crème de la crème supporting the price of local real estate property. Especially since progressively more home owners want to maximize nightly rental income and the winter readers are the “money” within the equation. In that respect the last four drought winters have negatively impacted values.
Value is obviously subjective and subjected to multiple factors. Let’s look at other important dynamics affecting Mammoth’s real estate property “value.”
The recent drought period has also coincided with the peak and eventual decline of the distressed property market. Foreclosures and short sales impacted real estate values in Mammoth around around the nation. Foreclosures peaked in the 2011-12 timeframe and short sales peaked shortly thereafter (and how the federal government intervened in all that can be another column). The most effective “deals” (lowest prices) were that can be found in that period. So the bottom of this past market cycle really occurred along 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 may have been trying to liquidate but can’t afford losing their good credit score. For these people a foreclosure or short sale is out-of-the-question. It is the nature on this market. Many have watched real estate property values nudge upward before year or two and so are determining to sell. Most of these sellers actually have to place money to the purchase to seal the escrow. Some are taking substantial loses (and a few are offsetting those loses with gains with their other investment areas).
But the winding down in the distressed property cycle combined with drought winters created an equilibrium in the marketplace. We have seen enough supply and enough demand to hold selling prices in the stable range. There has been no gigantic push upward like a lot of other markets in California. And also as usual in Mammoth, there are numerous segments of the market that have moved differently.
Among the market comparisons I love to make is exactly what a home sold for inside the mid-2000s peak market era in comparison to a recent sale. I only like to use identical properties for that comparisons because there could be so many minute but critical variables. When closed sales come through the MLS I find out in the event the property sold back into the 2004-2007 timeframe. I try to ascertain if you will find any significant improvements which were done to your property that will modify the calculation.
A lot of the sales that fall into this comparison study show the Mammoth industry is selling at 60 to 70 % of your selling prices in the mid-2000s. And again there are numerous variables. The Intrawest developed and sold properties from that era tend to have lower percentages (meaning they typically sold for higher market prices several years ago). The cheapest recent sale which i recall was 53%. In the very lowest of the market some were below 40% of their mid-2000 price level (most were foreclosure/REO properties). In the opposite side there are many Mammoth properties which can be selling slightly over 70% of the things they sold for in the peak period. Although the majority will be in the 60 to 70% range.
You can surmise with this how the values just have rebounded modestly. And possibly the drought winters had plenty concerning it.
The drought winters also delayed several of the Ski Area’s plans for development and expansion. The existing ownership seems destined to spend money for capital improvements with money they realize as profits as opposed to utilize money they can borrow. So these improvements happen to be postponed from the drought winters. These Ski Area improvement projects always have a tendency to create some property buzz (enthusiasm) plus some increased demand. Investors always follow investors and investment.
The one thing that strikes me as odd is the fact that Ski Area’s ownership owns an important area of the remaining developable real-estate in Mammoth however they see no reason at all to consider just a little risk to stimulate the local values. But what do I am aware? Sometimes it appears that the environmentalists do run the show within Mammoth. The older I get the greater I think which might be that is a good thing.
And lately it appears to be the the Ski Area’s owners have realized the “good value” of getting the Town’s ice rink aligned with all of their real estate. We’ll must see.
One other way of assessing if the local real estate can be a “good value” looks at precisely what is being newly built; almost nothing. If values were overinflated there could be construction happening everywhere. Today, clients who need a nice condo to purchase have to look at a unit that had been internal the 2000s or take a look at an issue that needs significant remodeling. Including 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 event the supreme price-per-square foot will be next to the simple price of today’s new and quality construction. And that doesn’t are the land or permits. Some individuals think that properties selling “below replacement value” mean “good value.”
The only merchandise that is now being newly built in the current market are a handful of homes in Sierra Star. These are generally single-family homes inside the $900,000 to $1,500,000 range. This is a very strong segment of the Mammoth market which cool product is helping to fulfill the demand. Of your 79 single-family home sales in 2015, 30 were priced in excess of $1million. Many buyers are seeing the “good value” from the new homes. Just take a look at all of the factors. The lots are located on among the most gorgeous fairways from the Sierra Star golf course. These parcels were previously slated for condominiums. But that market doesn’t exist. Therefore the land is likely being acquired at a price that helps have the whole equation work.
The equation includes a seasoned developer and builder with 40 years of expertise in Mammoth. The project is most likely being run as efficiently and effectively as possible while making a very attractive finished home and neighborhood. The bonus for a few owners is the fact that the zoning allows nightly rentals. And the rental/revenue potential is apparently quite high. The total package is very attractive, particularly when the discriminating new owners get to select each of the finishing touches.
Another “good value” factor may be the healthier state of the local condominium associations. Many buyers, owners and sellers may well not recognize this. The California Civil Code (aka “Davis-Stirling”) requirements on HOAs get the associations running more professionally than ever before. This runs from accounting and reserve requirements to regular meetings and communications. For associations where nearly all owners are second homeowners, this really is a lot more important. And 64dexmpky drought has played a part too; local HOAs have saved on snow removal expenses previously number of years and they also have been compelled to reconsidered their water and labor intensive landscaping.
And if a buyer looks to build their particular home within Mammoth, the vacant land market still offers excellent and relatively affordable opportunities. Mammoth remains land-locked so sprawl is unthinkable. And the hard costs of subdividing land remain high. So for anyone looking in this particular direction, this value generally is a “great value.”
Ultimately the “good value” criteria is just as different as the range of buyers and those who own Mammoth real-estate. The process is making the proper match, which isn’t always easy. But this is the job of a good agent or broker. And yes, some properties are clearly better values than others. And that is certainly true from the whole price spectrum. In fact it is never about price.
So circling straight back to the question, yes Mammoth remains an excellent value. The greater it snows the higher the significance. So allow it snow, allow it snow, allow it to snow!