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Q: I've been following the things you write and you keep
emphasizing the impact of "crash pads" on the marketplace. I'm trying
to follow your thought process but I don't quite understand the
concept and why it has had such an impact on the real estate market.
Can you explain it in a little more detail?
A: The Mammoth real estate market has changed in many ways in
the past few years and the "crash pad" effect, as I have dubbed it,
is one of the significant changes. In the mid 90's the real estate
industry in Mammoth predicted an upcoming rise in market value
because of depressed values, baby boom demographics, the inevitable
village development, the arrival of Intrawest and more.
Things we didn't foresee were cheap ski passes, terrorism,
ridiculously low interest rates and stock market insecurity. The
combination of all these factors, with emphasis on a new
affordability for frequent skiers and the relatively easier travel
and accessibility associated with Mammoth has driven major demand for
condominiums and homes in the lower and middle price ranges.
Lower costs to ski and snowboard (due to the early-bird pass)
and easier access (a byproduct of better roads and more difficult air
travel) has made Mammoth the "home" ski area for tens of thousands of
skiers from all over the world but mostly from Southern California.
The missing part of the equation for these thousands of new "locals"
is housing. Many rent apartments and condos, sometimes for the whole
year, just to have a place to stay so they can come-and-go during the
winter and utilize their Mountain passes. Rents (especially during
the winter) have been driven higher by this demand.
But many of these new season pass holders have decided to
purchase their own place. Unlike so many of the buyers who purchased
in the past, these new buyers don't want to be on a nightly rental
program. They want to be able come-and-go when they please. If
there's powder in Mammoth, they're calling in sick. And most really
don't care what their places look like as long as there is a shower,
a bed, and a place to plug in their laptop. Hence the term "crash
pad." These people spend their time at Starbucks, on the lifts, and
in the bars and restaurants, not in their condos. Some of this new
breed of owners even share their space with friends if there is
something to be gained.
The impact on the real estate market has been significant.
What was once the lower end of the condo and residential markets, is
now gone. This is where much of the market inventory was in the past.
In fact, the low end of the condo market has probably seen more
appreciation than any other segment. These "crash pad" buyers aren't
all that picky. Now what was the middle range of the condo and
residential markets are being cleaned out. Average and median prices
continue to climb.
Meanwhile, true local residents are scrambling to find
affordable properties and this crash pad trend provides stiff
competition and has pushed prices beyond the reach of many. When I
was a public planning official here in Mammoth in the 90's I believed
that the low end of the condominium market would provide a great deal
of the "affordable housing" market. After all it was cheap and there
was plenty of it. Many locals did buy and the condos do provide
valuable housing for local residents. But who saw cheap ski passes
and the other conditions that have driven the low end of the market
beyond anyone's imagination?
This phenomenon has impacted the whole economy of Mammoth.
The early and late ski season that use to be dead is now busier.
Thursdays and Fridays and Mondays during the winter are busier. And
now that the early-bird pass has been limited (approx. 30,000+) and
sold out, the Mountain is offering a new mid-week non-holiday ski
pass at a discount. So these passes should create even greater impact.
And there is other real estate spill over from this effect.
As more and more people become endeared to Mammoth-it truly becomes
their "second home", the more they plan for the long term. Older
"boomers" want to create "legacy" properties as Intrawest fondly
calls them-properties they and their children and grandchildren can
enjoy-especially if they can all have ski passes.
And many of the younger "crash pad" owners are already
looking to move up-looking for bigger condos or homes or looking to
secure a lot to build on in the future. Many know they can leave
their existing properties behind as successful rentals and income
properties.
Where this trend and phenomenon ends is anybody's guess,
especially if interest rates remain low. But one thing is for sure,
as long as it continues, Mammoth will never be the same.
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