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June 14–Mammoth's real estate market reminds me of an old rock-and-roll lyric "the more things change, the more they stay the same". We're back to the fundamentals of real estate investment and counsel. The market is experiencing a nice May/June lull after a very busy late fall (post-election) and winter sales push. Less than perfect weather and the typical late spring absence of visitors can certainly account for the slowdown–all pretty normal conditions for Mammoth's market. Now that most of the snow has melted and the post-winter maintenance is underway, we are beginning to see new properties come on the market. Inventories are expected to build between now and late summer with a peak usually around Labor Day.
In the past eight months the strongest market segment, by far, has been the high-end of the market, and especially properties located near ski runs or lifts and the Village. The slowest market has been the middle price-range condominiums, especially the ones in the 1906's and 70's built projects that have no special features or benefits.
And once again the new, recent round of properties listed for sale in Mammoth appear to be priced higher than the sales of the recent past. This trend indicates that sellers believe prices are going to continue to climb and/or they just are not real sellers, at least until prices get to those seller's anticipated prices. As the past eight months have shown, this may work for some segments of the market but may not work for all segments of the market.
But the two biggest questions at this point in time are; what will the effect of continued low interest rates (very low at this writing) be on the local market and probably even more important is what will the eminent sale of part or all of Mammoth Mtn. Ski Area have on the local real estate market. Interest rates are certainly a driver of real estate values and even the long-term doubters are beginning to believe they will stay low for some time to come. And there are still plenty of cash, large down payment, and tax-deferred exchange buyers in the local market.
Meanwhile, the transaction that is likely to alter the ownership of the Ski Area is mostly a mystery outside of the well-calculated press releases. There are plenty of rumors and there have been numerous expensive corporate-type jets at the airport over the past couple of months. And recently there have been more celebrity-sightings then anyone can remember. (If that matters, but my local friends tell me that "real" money follows celebrities.) Maybe the Planet Hollywood Ski Area is in our future.
Once the announcement is made and the public gets a grasp of what has happened there may be a rush to buy, or sell, depending on how the transaction is perceived. And if anyone thinks that the transaction that is being put together in the administrative offices of Mammoth Mountain isn't going to create plenty of buzz, they are kidding themselves. And this broker thinks that the ramifications on the real estate market will create the next big surge in values, but it may take a year or two.
One of the market factors many folks are watching in real estate markets around the country is the level of speculative buying in a particular market. Here in Mammoth there is some pure speculation going on but not that much. Most of it is occurring in the new "pre-sold" projects built by Intrawest. (That scenario has worked out for many investors but holding the property after completion for more than a year or two can quickly erode any profits.) There is some speculation in the new fractional properties, and if that turns out to be a "highest-and-best usage" of investment dollars, I would be very surprised. But by-and-large most buyers continue to buy for the long term, which many feel gives the market greater stability.
Meanwhile, the summer construction cycle is cranking up with some impressive construction occurring in the Village, including the 80/50 project and the start of The Westin Monache. Tallus, the private residence club fronting on the Sierra Star golf course, is just about got their model completed and plans to complete their clubhouse and several high-end homes by the end of the year. Smaller condominium projects are in various stages of completion all over town. Two major affordable housing projects are well underway. Snowcreek Phase 6 (The Lodges) continues to expand and the finished units there are looking very good. And things are just getting started.
The summer weather has arrived, kids are getting out of school and the motocross crowd is starting to appear in town, all signifying summer is here. While it is a lot like the summers of past, the next few months are going to be very interesting. Stay tuned.
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