Q: We were in Mammoth during the holiday period and that we investigated some condos available for sale. We came away with the impression that Mammoth real estate property is an excellent value at the moment. We believe the years of drought suppressed values. What do you think?
A: Mammoth condos are usually a good value when the ski conditions are fantastic. With snow comes enthusiasm. Alumni in the Intrawest sales teams will certainly recall the phrase “Selling may be the transfer of enthusiasm.” So snow equals enthusiasm equals the selling of real estate property. But is Mammoth real estate an effective value with or without snow?
We can easily talk all about proposed developments, and who should own the Ski Area, increased air service and fancier ice rinks all you want. But quality snowpack to perform and recreate on will be the crème de la crème supporting value of local real estate property. Especially since an increasing number of property owners want 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 obviously subjective and susceptible to multiple factors. Let’s examine other important dynamics affecting Mammoth’s real estate “value.”
The current drought period also has coincided with the peak and eventual decline of your distressed property market. Foreclosures and short sales impacted the real estate values here in Mammoth as much as anywhere in the world. Foreclosures peaked within the 2011-12 timeframe and short sales peaked shortly thereafter (and how the federal government intervened in all of that is yet another column). The ideal “deals” (lowest prices) were to be found in that period. So the foot of this past market cycle really occurred combined with the start of the drought.
There is also a large faction of mammoth real estate who purchased or refinanced inside the mid-2000s who may have been looking to liquidate but can’t afford the decline of their good credit standing. For these people a foreclosure or short sale has gone out-of-the-question. It will be the nature with this market. Many have watched real-estate values nudge upward before couple of years and are choosing to sell. A number of these sellers actually have to place money to the purchase to close the escrow. Some take substantial loses (and several are offsetting those loses with gains inside their other investment areas).
But the winding down of the distressed property cycle combined with the drought winters created an equilibrium in the market. There has been enough supply and enough demand to keep selling prices in the stable range. There has been no gigantic push upward like so many other markets in California. So that as usual in Mammoth, there are many different segments of the market which have moved differently.
Among the market comparisons I like to make is what a property sold for inside the mid-2000s peak market era compared to a recent sale. I only prefer to use very same properties for the comparisons because there could be so many minute but critical variables. When closed sales come with the MLS I find out in case the property sold in the 2004-2007 timeframe. I try to see if you can find any significant improvements that have been done to the house that will affect the calculation.
Many of the sales that fall under this comparison study show that the Mammoth market is selling at 60 to 70 percent from the selling prices from the mid-2000s. And again there are numerous variables. The Intrawest developed and sold properties from that era normally have lower percentages (meaning they typically sold for higher market prices a decade ago). The best recent sale that we recall was 53%. On the very lowest from the market some were below 40% in their mid-2000 selling price (most were foreclosure/REO properties). On the opposite side there are some Mammoth properties that are selling slightly over 70% of what they sold for within the peak period. However the majority happen to be in the 60 to 70% range.
One could surmise out of this the values have only rebounded modestly. And perhaps the drought winters had plenty to do with it.
The drought winters also delayed a few of the Ski Area’s plans for development and expansion. The actual ownership seems destined to spend cash for capital improvements with money they realize as profits as an alternative to utilize money they could borrow. So these improvements have been postponed by the drought winters. These Ski Area improvement projects always have a tendency to create some real estate property buzz (enthusiasm) and some increased demand. Investors always follow investors and investment.
The thing that strikes me as odd would be that the Ski Area’s ownership owns a tremendous portion of the remaining developable real estate property in Mammoth however they see no reason to adopt a little bit risk to stimulate the regional values. But what exactly do I understand? Sometimes it would appear that the environmentalists do run the show within Mammoth. The older I recieve the more I do believe which might be that is a a valuable 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 their property. We’ll ought to see.
One other way of assessing if the local real estate property is really a “good value” looks at exactly what is being newly built; almost nothing. If values were overinflated there could be construction taking place everywhere. Today, clients who want a nice condo to buy have to look at a unit that had been integrated the 2000s or examine something which needs significant remodeling. The ones integrated the 2000s need 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 near the simple expense of today’s new and quality construction. Which doesn’t include the land or permits. Some individuals feel that properties selling “below replacement value” mean “good value.”
The only product which will be newly built in the current market are a couple of homes in Sierra Star. They are single-family homes in the $900,000 to $1,500,000 range. It is a very strong segment from the Mammoth market and that cool product is helping to satisfy the demand. Of the 79 single-family home sales in 2015, 30 were priced in excess of $1million. Many buyers are seeing the “good value” in the new homes. Just examine each of the factors. The lots can be found 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. So the land is likely being acquired at a price that can help make your whole equation work.
The equation includes a skilled developer and builder with 40 years of experience in Mammoth. The project is most likely being run as efficiently and effectively as possible while creating a very attractive finished home and neighborhood. The bonus for several owners is the fact the zoning allows nightly rentals. As well as the rental/revenue potential is apparently extremely high. The total package is incredibly attractive, specially when the discriminating new owners get to 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 not recognize this. The California Civil Code (aka “Davis-Stirling”) requirements on HOAs hold the associations running more professionally than previously. This runs from accounting and reserve requirements to regular meetings and communications. For associations where the vast majority of 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 in past times several years and they also have been made to reconsidered their water and labor intensive landscaping.
And if a buyer looks to construct their particular home in Mammoth, the vacant land market still offers excellent and relatively affordable opportunities. Mammoth remains land-locked so sprawl is unthinkable. Along with the hard costs of subdividing land remain high. So for those looking with this direction, this the best value generally is a “great value.”
Ultimately the “good value” criteria is really as different as the variety of buyers and those who own Mammoth real estate. The problem is making the proper match, and therefore isn’t always easy. But that is the job of a good agent or broker. You will find, some properties are clearly better values than others. And that is true through the whole price spectrum. And is particularly never all about price.
So circling straight back to the question, yes Mammoth remains a great value. The more it snows the more effective the worth. So allow it snow, let it snow, allow it snow!