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October 22- Inventory of available properties for sale has dropped to
a four year low (the last time prices took a significant upward bump)
and are heading to a possible all-time low.
Even though some new resale condos have come on the market in
the past week, the existing condo inventory remains around 90 units.
However, that number needs to be "scrubbed". Right around 50 of those
units are Intrawest new and resale properties (mostly new condos
including uncompleted units in the Village) and then there are some
properties that have "marketing difficulties" (i.e. Homeowners
Association problems). So actual resale condominium inventory is less
than 40 available units. Interestingly, there are no Snowcreek units
listed for sale in any of the phases.
Residential inventory is heading toward equal lows. The last
45 days has seen numerous sales in the market segment of older (10-20
years), larger homes in excellent locations that have sold in the
$600K-$700K price range. Considering present lot values and
construction costs, these properties are great buys. Inventory of
existing homes remains just under 40 properties and in this broker's
opinion there are a couple of good buys still under the $600,000
price mark, but there are also some real overpriced "dogs" in the
market, so the decent inventory is really at about 30 properties.
So with inventory low and demand and prices up, many are
asking the question "Where is the Mammoth market going?" The question
is timely because of so much projection that the real estate bubble
is about to burst. The financial publications and "experts" who are
predicting this burst say to look for the telltale indicators that
this is about to happen. Those indicators include inventory, rents,
the "leveraged" positions of buyers and owners, and the sales trend
in the high-end of the marketplace. Let's look at those criteria.
We've already said that inventory is down, quite frankly it
is way down. Local Realtors are scrambling for properties to show
their prospective buyers. This is similar to four years ago when
inventories were down and the winter visitors came to Town and saw
all kinds of new changes to Mammoth-both to the Mountain and in town.
Real estate values climbed substantially the following late winter
and spring. This winter the visitors are going to see the new gondola
coming right into the heart of town and the first two buildings of
the Village rising up right next to it. The exteriors of those
buildings are looking more and more finished every day. Any body who
hasn't been to Mammoth in the past six months will be rocked.
As for rents, forget it. This summer saw typical vacancies
but those are long gone. Rental rates are higher than ever. Many
entities like the hospital, school district, Town of M.L. have
trouble hiring quality people because of the high rents and low
availability. Many higher end properties are rented by "boomers" who
are trying out Mammoth before they decide when and where to invest.
If rents are an indicator of a bubble coming....
As for leveraged buyers, this second home market has always
been a 20 percent down market but in the past few years we have seen
many, many cash buyers and many buyers purchasing with "1031" money
(tax deferred exchanges) who come with large down payments. Those
with loans have likely re-financed in the past year and reduced their
payments. Quite frankly, most owners in Mammoth today have long term
plans for their property. Cheap ski passes and global terrorism have
only reaffirmed those positions.
As for the high-end of the market, there has been plenty of
business in the higher end of all market segments. But look around at
the high-end residential construction that is ongoing. It is
staggering and nothing like Mammoth has ever seen before. None of it
reflects in recorded sales. But there are very expensive homes being
built all around Mammoth. The casual drive through town doesn't
expose them. They are down more secluded streets. But again based on
lot values and construction costs, most of the high-end homes are
probably good buys. And to put it into perspective, there are only
six homes listed for sale over $1 million.
So is a real estate bubble coming to Mammoth? Demographics
and world events have made resorts a separate market from
metropolitan markets. And Mammoth may be a special market in the
resort market. We know Mammoth has been undervalued in the mountain
resort arena. That is why when Intrawest bought in cheap they called
Mammoth "the biggest opportunity in mountain resort development". The
proximity to the population and wealth of California has become a key
asset. On balance, the distance from and seclusion from major
population centers, essentially our isolation, is becoming an even
bigger asset. And forget that the climate is so ideal for an aging
but active population.
All of that being said, we have had a beautiful fall with
spectacular colors and mild weather, but many minds are beginning to
think about skiing. It's time to put away the summer toys and break
out the warmer clothes. The change of seasons are a wonderful thing.
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