Q: We were in Mammoth during the holiday period and we investigated some condos for sale. We came away using the impression that Mammoth real estate property is a good value at this time. We believe many years of drought suppressed values. What do you think?
A: Mammoth condos are always a good value when the ski conditions are great. With snow comes enthusiasm. Alumni of the Intrawest sales teams will certainly keep in mind the phrase “Selling may be the transfer of enthusiasm.” So snow equals enthusiasm equals the selling of property. But is Mammoth real estate property a great value with or without snow?
We are able to talk information on proposed developments, and who should own the Ski Area, increased air service and fancier ice rinks all we wish. But quality snowpack to perform and recreate on is the crème de la crème supporting the need for local property. Especially since progressively more home owners are attempting to maximize nightly rental income along with the winter readers are the “money” within the equation. In that respect the past four drought winters have negatively impacted values.
Value is undoubtedly subjective and subjected to multiple factors. Let’s have a look at other important dynamics affecting Mammoth’s real-estate “value.”
The recent drought period has also coincided with the peak and eventual decline from the distressed property market. Foreclosures and short sales impacted the real estate values here in Mammoth as much as anywhere in the country. Foreclosures peaked inside the 2011-12 timeframe and short sales peaked shortly thereafter (and just how the government intervened in all of that is another column). The ideal “deals” (lowest prices) were to be found in 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 houses 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. On their behalf a foreclosure or short sale has gone out-of-the-question. This is the nature of this market. Many have watched real-estate values nudge upward before few years and are determining to sell. A number of these sellers actually have to get money in to the purchase to seal the escrow. Some take substantial loses (and several are offsetting those loses with gains with their other investment areas).
Although the winding down of your distressed property cycle combined with drought winters created an equilibrium in the marketplace. There has been enough supply and enough demand to maintain selling prices in a stable range. We have seen no gigantic push upward like numerous other markets in California. And also as usual in Mammoth, there are various segments in the market which have moved differently.
One of the market comparisons I like to make is what a home sold for within the mid-2000s peak market era compared to a recent sale. I only like to use identical properties for your comparisons because there can be so many minute but critical variables. When closed sales come with the MLS I determine in the event the property sold back in the 2004-2007 timeframe. I try to determine if you will find any significant improvements that have been performed to the home that could affect the calculation.
Most of the sales that fall under this comparison study reveal that the Mammoth market is selling at 60 to 70 % from the selling prices in the mid-2000s. And again there are many variables. The Intrawest developed and sold properties from that era usually have lower percentages (meaning they typically sold for higher market prices several years ago). The best recent sale that we 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 several Mammoth properties which can be selling slightly over 70% of the things they sold for from the peak period. However the majority will be in the 60 to 70% range.
One could surmise from this that this values have only rebounded modestly. And perhaps the drought winters had plenty to do with it.
The drought winters also delayed a number of the Ski Area’s plans for development and expansion. The existing ownership seems destined to spend cash for capital improvements with money they realize as profits as an alternative to utilize money they are able to borrow. So these improvements happen to be postponed by the drought winters. These Ski Area improvement projects always often create some real estate buzz (enthusiasm) and several increased demand. Investors always follow investors and investment.
The thing that strikes me as odd is the fact that Ski Area’s ownership owns an important part of the remaining developable real estate property in Mammoth nevertheless they see no reason to consider a little risk to stimulate the neighborhood values. But what do I realize? Sometimes it appears that the environmentalists really do run the show in Mammoth. The older I get the more I feel that could be that is a positive 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 their real estate. We’ll need to see.
Another way of assessing whether or not the local real estate property is a “good value” is looking at precisely what is being newly built; almost nothing. If values were overinflated there can be construction occurring everywhere. Today, buyers who need a nice condo to get have to check out a unit that had been built-in the 2000s or have a look at an issue that needs significant remodeling. Even ones built in the 2000s need some updating and most of the older ones are deserving of “to the studs” remodels. But in either case the ultimate price-per-square foot will likely be close to the simple value of today’s new and quality construction. And that doesn’t add the land or permits. Some individuals believe that properties selling “below replacement value” equate to “good value.”
The only real product which will be newly built in the present market are a handful of homes in Sierra Star. They are single-family homes within the $900,000 to $1,500,000 range. This can be a quite strong segment in the Mammoth market and that new product is assisting to satisfy the demand. Of your 79 single-family home sales in 2015, 30 were priced at over $1million. Many buyers are seeing the “good value” in the new homes. Just look at all of the factors. The lots can be found 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. And so the land is likely being acquired at a price which helps have the whole equation work.
The equation includes a seasoned developer and builder with four decades of experience in Mammoth. The project may well be being run as efficiently and effectively as is possible while generating a very attractive finished home and neighborhood. The bonus for a few owners is always that the zoning allows nightly rentals. As well as the rental/revenue potential is apparently quite high. The complete package is quite attractive, specially when the discriminating new owners arrive at select each of the finishing touches.
Another “good value” factor will be the healthier state from the local condominium associations. Many buyers, owners and sellers might 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 can be even more important. And 64dexmpky drought has played a part too; local HOAs have saved on snow removal expenses in the past number of years and they have also been required to reconsidered their water and labor intensive landscaping.
And in case a buyer is looking to develop their own home here in Mammoth, the vacant land market still offers excellent and relatively affordable opportunities. Mammoth remains land-locked so sprawl is out of the question. Along with the hard costs of subdividing land remain high. So for all those looking with this direction, this value may well be a “great value.”
Ultimately the “good value” criteria is really as different as the range of buyers and people who own Mammoth real estate. The problem is making the correct match, and this isn’t easy. But that 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 throughout the whole price spectrum. And is particularly never all about price.
So circling back to the question, yes Mammoth remains an effective value. The better it snows the greater the worth. So permit it to snow, let it snow, permit it to snow!