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As appeared in the Mammoth Real Estate Times, Winter 2001-2002 edition
Q: I saw you at a Holiday party and asked you whether it was
a buyer's market in Mammoth, because that is what I had heard from
some other real estate agents, and you said that there were some good
buys in the market but that it wasn't a buyer's market . That doesn't
make sense to me, can you explain?
A: It could have been the libations or maybe it was my
counter-intuitive mind at work, but I'll stand my ground, there are
good buys in the Mammoth real estate market but it is not a "buyer's
market". First, what is a "buyer's market"? The clearest definition
comes from the California Department of Real Estate Reference Book,
the definition is-The condition which exists when a buyer is in a
more commanding position as to price and terms because real property
offered for sale is in plentiful supply in relation to demand.
The key words here are supply and demand. In the past few
weeks we have seen some buyers come to town that think because the
nation is in a recession and tourism is down, etc., that they can
come and make low offers and "steal" a property. With exception, most
get turned away. The people who know the Mammoth market understand
the relationship between supply and demand, and there is more than
meets the eye. It is almost funny, but with all of the changes,
technology, and so-called advancements in the real estate industry,
the real experts in the industry all agree that the business
continues to be very localized. And Mammoth is a unique and special
market. So let's look at some of the factors.
We can start with the seller's or owner's profiles. The
people who own property in Mammoth are by-and-large financially sound
and then some. Those that aren't are sometimes those that represent
the "good buys" in the market. In the last few years, many of the
buyers paid cash for their properties, making them even less
susceptible to the vagaries of the marketplace and state or national
economy.
One of the other things many people don't see is the volume
of purchases made via IRS code section "1031" tax-deferred
exchanges. These acquisitions have many financial consequences, but
they usually represent large down payments or all cash, and the
buyers are making moves that have been calculated and planned for
years. Again, they represent stable ownership. But the real point is
that many buyers have bought with major plans of usage at some point
in the future. And many who don't have those kinds of plans still
think there is a strong upside to market values, so they're not
inclined to sell, not yet.
Another factor that can ease seller motivation is the revenue
producing capability of properties here in Mammoth. Demand for long
term rentals is very high, whether it be a home or condo. Many
"move-up" buyers keep their old properties for a positive cash flow
long-term rental and enjoy their new place and maybe even rent it on
a nightly (transient) basis.
According to the demographic experts, the "baby boom"
influence on Mammoth is just beginning. Recent world events seem to
be accelerating the whole movement. People are re-assessing their
lives and want to get out of the city. Some of the other things that
drive this market are a bit more fickle. Consider the impact of cheap
season ski passes. The numbers distributed by the Ski Area-namely
that the first year of the program was a marginal snow year and was
the highest revenue year ever-almost guarantees that those passes
will continue. So people with passes need a place to stay. That alone
has driven many acquisitions. This year's excellent early snow
conditions have driven sales.
So there continues to be demand and inventory(supply) is low,
but there are some good buys out there. Sometimes these "buys" are
snapped up quickly and sometimes they sit around for a while.
Sometimes just a quick turn in the marketplace-like some pressure on
one segment of the market, can turn a property into a good buy. (When
there is such limited inventory just a little pressure on one segment
of the market can change things around quickly.) Sellers do become
motivated for of a variety of reasons. Business difficulties or
business opportunities, relocation, divorces, etc., all create
motivated sellers.
And sometimes the best buys aren't always the best buys. I
have always believed that in Mammoth you are better off paying a
little more for a property that has an awesome view, or extra sun, or
close proximity to a key recreational amenity (especially a ski run.)
These properties resell quicker, rent better, and provide greater
pride of ownership and enjoyment over the years. But then again you
don't get to brag to your friends about what a great deal you got.
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