This Mammoth Real Estate Q&A appears in the Thanksgiving Weekend 2022 issue of The Sheet.
“Home ownership makes mayors of the citizens.”
— an old public planning adage
Q: You’ve covered a lot of ground in your last few columns about what the future may hold for Mammoth area real estate; the potential effect of inflation, the impact of new developments, Mammoth’s new affluence, etc., etc.. But something tells us there is even more to the story, or something missing that hasn’t been discussed?
A: The mythical Chinese curse is “living in interesting times”. And cursed or not, here we are. At this point, the most profound thing here in Mammoth might be that the whole thing isn’t a Ponzi scheme. Seems like everything else is, or close to it. The mountains and terrain are real, the abundance of recreational opportunities is real, and the properties are real. The STR income may fluctuate based on the seasons, snowpack and smoke, but the historic ~50% occupancy rate has proven to be fairly recession proof. And in the IKON era and the new-found popularity of Mammoth in the summer, even more so.
My regular readers know I love conspiracy theories. That is unless they fail to engage critical thinking. Mammoth has had plenty of trials and tribulations in the past. On the local real estate side, I’ve recently heard accusations that the local brokers try to manipulate the Mammoth market with extra hyperbole of demand, phantom offers, and other shenanigans. It could be sour grapes, but it is almost believable because we are a small, isolated market. And the local brokers and agents are a relatively tight group of many longstanding participants who repeatedly do business with each other. Many are friends, neighbors, and colleagues of different sorts. We know their kids. It all sounds reasonably plausible.
But there is a wrench thrown in the works of this theory of manipulation. And it is an important dynamic in this market. It took me years to really understand it. I often say that Mammoth is a “don’t have to buy, don’t have to sell marketplace.” This is something that separates the Mammoth market from so many others. Obviously there are some exceptions, but by-and-large this is true through the majority of the market. A seller may want to sell, but doesn’t have to. As an example, of the multiple, most recent $1M+ listings I have been working, none of the owners have any debt on their property. And they have low property tax basis. This affects motivation. They also have strong emotional ties to the property, lots of great memories.
On the other hand, the majority of buyers don’t have to buy a Mammoth property either. They may want to (especially when it snows early!), but most don’t have to. I’ve talked to people for years who ponder buying a property here, but never do. Every agent in town has file full of them. One of the most interesting motivators for buyers in this market was the advent of the Gold Pass some 22 years ago. This was the first mass-marketed “cheap” ski pass and the predecessor to the IKON. The attitude of many buyers at the time was “I have a ski pass, now I need a condo.” It was a new revelation.
As the IKON Pass becomes more popular, a good deal of that attitude exists even today, but with a new twist. Now owners have additional reasoning –– “if someone is paying to stay in my Mammoth condo this weekend, I can fly to __________ and use my IKON Pass there”…. It almost makes perfect sense!
But ultimately this real lack of urgency in most of the market makes the market impossible to manipulate. It is a raw supply and demand market. And the supply is limited to the boundaries of the town and existing properties. And sure there is some “hard” selling that happens, and some buyers “lose their minds”, but buyers rarely have a compelling need to buy a property in Mammoth. It is a fascinating dynamic of the local market. It is currently in play maybe more than ever.
And any discussion of market manipulation has certainly changed in the Zillow era. Today’s buyers and sellers have greater access to property data than ever before. This too is a significant change. Zillow and other websites provide all sorts of information that was once only the privilege of the local brokers and agents. This includes marketing and sales data pulled directly from the MLS (that the brokers and agents pay to conglomerate), County data including transfer information and property tax rates, owner/seller information, etc..
Buyers and sellers who are data hounds can find out all sorts of things. Some are better informed than the agents. This too helps create a level playing field. So the accusations of market manipulation by any of the participants is bogus. Ultimately, this market is quite transparent.
Another deeper discussion that seems to be missing is part of the social and economic dynamics of real estate and housing in the community. I’m reminded of it when people clamor over the hot topic of affordable/workforce housing. It is the simple high cost and responsibility of real estate ownership. It is far beyond just the acquisition. People who don’t own real estate are often oblivious to the real cost and responsibility. It is especially true in California and even more so in Mammoth Lakes. And the recent inflation and the potential for continued inflation only makes the situation more intense.
Over my decades of brokering Mammoth real estate there has always been a small faction of potential buyers looking for some cheap way of owning a part of the Mammoth region. Almost to the point of comedy. It used to be phone calls or walk-ins. Today it is mostly internet-based leads. They see a cheap price and get excited. They are looking at fractional properties like 80/50 (with low asking prices, large monthly fees and limited use), or legacy fractional partnership offerings, or manufactured homes in parks (again with low asking prices and large monthly fees), or cheap vacant lots where they can drop an inexpensive manufactured home or build a “container house.” Some people always think there is an angle.
As a result of listening to all of this over the years, I developed another phrase, “There is no cheap way to own real estate in Mammoth.” People hate hearing it, but it is true. Lots of people have tried. Vacant, private land is actually scarce in this County that is 96% government owned. And there is more land reverting back to public ownership than becoming private (and that makes the private land more valuable and expands our “big playground”). And once you own the land then you need water. Wells are expensive. Or being part of any municipal district is expensive. Here in Mammoth we are very lucky to have the Mammoth Community Water District organization that has an excellent grasp on it all.
Once you have water then you need power, and permits, and special engineering for snow load and seismic, etc., etc. And have you ever dealt with a Planning Department?? And those shipping containers sound great until you need a crane, and a welder, etc.. Our society watches too many real estate shows on TV.
Owning real estate is an expensive proposition and far beyond just saving for a downpayment. It is also a huge responsibility and even more so in this climate. And for non-owner occupants, the cost goes even higher. There are added expenses like snow removal, protecting plumbing from freezing, ice control and roof shoveling, and maintenance due to the dryness and high altitude sun.
For many this added cost of ownership is too excessive. The condo environment brings some economies and efficiencies to it all, but the real cost is reflected in the HOA fees. Many prospective buyers think Mammoth’s HOA fees are too high, but they have no clue about the high cost of snow removal and ice control (and now insurance). They just drive into to town after a snowstorm and think it all magically gets pushed around. And as I have pointed out in the past, the turnover from summer-to-winter and winter-to-summer are major tasks themselves. They also underestimate the simple cost of someone being watchful of it all.
In light of all this, the Mammoth community clamors for affordable/workforce housing. And do I dare say to an almost nanny-state fever pitch. And some think housing should also come with the opportunity(right) to ski a hundred days a year. Or have housing and not have to deal with tourists, including sharing the “mountain experience” with them. Mountain resort communities all across North America struggle with this predicament. Clearly, the housing is needed for the employment base. So the local governments end-up subsidizing this affordable/ workforce housing. Thankfully the State and federal government help make it work, and they have been very generous as of late. But it still comes at a significant cost to the local government. This includes the “opportunity cost” of not being able to do something else with the money (like build and operate ice rinks and cultural centers).
All of this and more creates distortions in the local real estate and rental market, and it inevitably causes some social anxiety in the community. Mammoth is at this juncture. The disparity of wealth has never been so high. Some feel housing is an entitlement. Others, like most owners, know they have worked hard and sacrificed in their lives to be able to afford what they have. And they’ve taken the risk and responsibility (and cost) of ownership. And hidden away are plenty of local residents (and second homeowners too) who are living in a property their family subsidized (oh, to be so lucky…or not). The bottom line is that owning a decent home in the Mammoth region is not easy and certainly not affordable. Those are bygone days.
Without the impressive tax revenues that are being produced locally there would be no opportunity to subsidize housing. Without this high level of business and the subsequent revenues, the demand for housing would be absent too (should we blame Marketing for the housing shortage?). The real irony is that if all of this tourism related business and second homeownership wasn’t here, people would be hanging out living in tents in the forest. Like they did in the gold mining days.
Mammoth has plenty to be thankful for. Go look at The Parcel and see how the boxes have stacked-up. Almost miraculously. Hopefully, this time next year another round of grateful local employees will appreciate the opportunity to have a warm place to live including indoor plumbing. And the chance to go take a few runs. I guess life is good being subsidized by the government. And maybe they can act like mini-mayors in the community.
Happy Thanksgiving!