As appeared in the Mammoth Real Estate Times, Winter 2001 edition
Q: A Mammoth real estate agent told me that lots of people
were taking money out of the stock market to buy property in Mammoth.
I really didn't believe him and thought that his comment was
exaggerated, so I pose the questions to you, are they and to what
extent?
A: The real estate business keeps me quite busy so I
certainly don't profess to know that much about the stock market, but
I do try to pay attention to it, and especially as it relates to
resort real estate. Part of my responsibilities as the supervising
broker of my company is to review the files of the real estate
transactions my organization is involved in. That represents a
substantial amount of business in the Mammoth area. What those files
have shown in the past couple of years is that there has indeed been
lots of money move from the stock market into real estate in this
community-especialy in the higher end of the market.
Mammoth area brokers have experienced many buyers paying cash
(no loans) for properties. Most of the homes that sell in the million
dollar range are purchased without loans. Mammoth has also seen a
tremendous volume of single family home construction in the past few
years. Many of those investors purchase quality undeveloped lots (the
$200,000 to $600,000 range) and build large homes or plan to build in
the near future. Much of that activity is completed without lenders.
Again, the files show these buyers are pulling their money from large
mutual fund holdings and stock portfolios that have accumulated for
retirement or have been amassed by being directly involved in the
establishment of a now successful company, and very often a computer
or technology related company.
Lately, as the stock market (more specifically the NASDAQ)
has slid, it appears that those folks who still have sound stock
portfolios are part of the latest crowd trying to purchase property
here. And very recently we are hearing more and more investors say "I
am getting back to something I understand-real estate." But they
appear to be in a lower price range. The Mammoth real estate market
has been very strong since Labor Day. There really isn't much
condominium inventory below $190,000 and forget trying to find a
livable home under $350,000. With vacant (and private) land becoming
more scarce than ever and construction costs increasing all the time,
that trend may certainly continue.
We are all watching tremendous amounts of new capital being
pumped into Mammoth, and this might just be the beginning. Add to
that the very apparent impact of today's demographics on quality,
isolated mountain resort communities, and it is no wonder why this
market is seen by affluent investors as an opportune place to
allocate some of their assets to. But even more important is the
tangible usability of the asset-the personal enjoyment, recreation
and quality of life afforded by being a part-time or full-time
resident of Mammoth.
One stock I do watch is that of Intrawest on the NYSE. It has
bounced around but it is generally up. Probably because they have
lots of real assets, and because they are very good at what they do,
and they understand the demographics that are pushing resort and
leisure marketplaces, and have for many years. That demographic push
is just beginning to show here in Mammoth. And that is why Intrawest
is so heavily invested here.
So will the flow of money from stocks to resort real estate
continue? All the major financial publications don't talk about it
too loudly but they have sure reported on it. If the stock market, as
recently suggested, becomes less speculative and investors hunker
down with more long term strategies, the flow of money from the
market should continue, maybe even increase. Today however, more and
more aging boomers seem to be more concerned about their new ski pass
and the tune on their new shaped skis than their short-term
investment strategies.
RE/MAX of Mammoth
Mammoth Real Estate Guide