Mammoth Continues To Dig Out, But Fabulous Weather Brings IKON Inundation!
Market Summary – January 15 to January 29
Single-Family Home Inventory
Market Updates and News
The “stress test” concept I mentioned in the last newsletter has been fascinating to observe the past two weeks, even for someone who has lived through more than 40 winters in Mammoth. There is always something different. Clearly, the recent storm cycle that started right after Christmas was impressive in terms of snow volume, water volume and wind impacts. Basically, Mammoth received 20 feet of snow in three weeks. And it left a mess, especially for owners of real estate. For most of the visitors it was a mild nuisance—they were focused on getting to the slopes.
By now a significant amount of the road and parking lot clean-up has been completed. From my desk I have watched a constant parade of dump trucks traveling down Old Mammoth Road out to the snow pit on the Snowcreek Phase 8 site. It seems a little strange to not see the trucks heading down Hwy. 203 to the snow pit of the past. There have been plenty of out-of-town trucks and crews here to cash-in on the windfall caused by the high demand for snow removal. They are likely to be gone soon enough.
At this point the biggest concern is roofs and the weight of the loads. Many have been shoveled already but many others need attention. This storm cycle produced impressive volumes of snow but was also wet making the volumes even heavier. The storms were also windy and extra snow was inordinately deposited on the “lee” side of many buildings. Recent days of warm weather have also produced massive ice dams and giant icicles and ice formations with some hanging off the edges of roofs. I was looking at one massive icicle with a 40+ year Mammoth roofing contractor and he said that it probably weighed over a 1,000 pounds. He was anxious to get his crew to remove it. He had seen too much damage in the past caused by large formations of ice, and inevitably there was always someone willing to blame him.
Trucking snow gets expensive, but businesses and condo projects need accessibility, including fire lanes. Shoveling roofs gets even more expensive and often times the snow that comes off the roof needs to be trucked away too. This past week I heard reports of homeowners (single-family) spending $3-4,000 to have their roofs cleared. Some condo projects may spend many multiples of that. Sometimes it is a tough call. Every property is different. There is plenty of winter left and another major storm cycle is certainly possible. The beautiful sunny days of Mammoth winter can be deceptive. Most experienced Mammoth property owners and property managers know it is better to be safe than sorry. Most HOAs have probably exhausted their entire snow removal budget for the year, and February is just beginning.
Meanwhile the skiers and snowboarders have come in droves and they are mostly oblivious to all of the ongoing snow removal operations. But “looking up” is still valuable advice, especially around buildings with uncleared roofs.
I was asked this week about the engineered snow loads in Mammoth’s modern construction, and shouldn’t most of the new construction be able to handle this type of snow load? Well, yes and no. Again, every property is different. Even similar condos in the same project are impacted differently. The freeze/thaw cycle can create insidious ice formations that can find there way into any crevice or imperfection, or create their own. Some of it can be determined by the occupancy and heat generated inside the property. Other times it is a simple design quirk. Wind and solar have their effect. And every season can be different. Ultimately “the call” is usually up to an experienced property manager to assess the potential for serious damage.
The single-family home closing in the Trails for ~$500 per square foot for modestly upgraded 1990 construction is solid price support in this segment of the market. But there has been very little competition in the market in the past few months.
There were two closings at the 80/50 fractional project in the Village. I never count these in my statistics but there seems to be increased “turn” of these units as of late. The project is going through its own “refresh” assessments and as more “owners” buy into the project there is less opportunity for existing owners to come and use the unoccupied nights (which was a big part of the past popularity).
Favorite New Listing for the Period redo
This has been a Favorite before but it needs some winter exposure. With condo and single-family inventory so low, this property has all of the benefits of condominium ownership but lives like a luxury home. This Timbers townhome has a fantastic location both summer and winter. Located on the 17th fairway of the Sierra Star golf course and only steps out to Meridian Blvd. for a quick shuttle trip to Eagle Base/Express. With 4 bedrooms plus den / 3.5 baths the property can accommodate large groups/multiple families, etc… And a nice 2-car garage. Private spa on rear deck. These can be a very successful luxury STR properties. Forced air heating and wood burning fireplace. Tons of owner storage.
Other Real Estate News
• AirDNA reported on January 22 that “U.S. short-term rental (STR) performance exceeded expectations in December 2022 as demand surprised to the upside, growing 19.8% year over year (YOY).” The YOY demand in November was more than 16.7%.
The report noted that occupancy levels dropped throughout 2022 as listing growth (hosts) outpaced the rising demand (guests). The gap between rising listings and guest demand peaked in June of 2022 but reached the lowest level of 2022 in December. It is interesting to watch this part of the STR industry on both a macro and micro level, after all it is all about supply and demand.
As for markets similar to Mammoth Lakes, the report states “Looking at the specific price tiers within mountain/lake destinations provides some additional context for the low ADR (average daily rate) growth. There is evidence that performance is diverging among the top and lower tiers, as luxury properties in mountain/lake destinations still had robust ADR growth of 5.0% YoY. Upscale properties had an essentially unchanged ADR, while budget, economy, and midscale properties all saw declining ADR.”
According to the AirDNA Mammoth Lakes specific data, the occupancy rate for the past 30 days has been 73%, the average length of stay is 4 days, the booking lead time is 62 days (must be the snow), the average daily rate is $339, and there are currently 3,200 active rentals in town.
• Recent issues of The Sheet have included extensive job opportunity postings from Mono County; from assistant district attorneys to paramedics to psychiatric specialists to cadastral mappers. There is clearly a labor shortage in many places including Mammoth. But Mono County seems like it would be an appealing place to live and work. Especially with a government job. Except for one big problem—the lack of housing, especially affordable housing.
But Mono County only has themselves to blame for the lack of this affordable housing. While Mammoth has aggressively planned and developed affordable housing in the past and present (with an unfortunate gap between 2008 and 2017), Mono County has decidedly played the role of obstructionists to the whole concept. I know because I have two clients who have recently tried to develop workforce housing in the County and I have witnessed their trials and tribulations. Both are involved in desperately needed moderate income housing projects (ideal for many government employees).
The County officials and employees have simply stood in the way including denial of projects that conform to the County’s Housing Element, slow-walking processing, and making excessive (and expensive) demands for development. The County has also missed-out on the recent, tremendous funding opportunities for workforce housing from the State and federal government.
• During the recent crazy post-lockdown market phase, I was involved with a couple of 1031 tax-deferred exchanges that were clear second home properties that the owners were claiming as qualifying for exchanges. It really isn’t any of my business, but the subject of 1031s is a regular topic in the Mammoth market where 1031 exchanges are common both in-and-out of the market. And there are also a variety of local properties that are true “second homes” and “investment properties” (producing income, like STRs). I also know there are CPAs with different strategies. But the 1031 exchange remains a valuable tool to buy or sell in the Mammoth market, and quite frankly, is important to the valuations in the market. A recent email from IPX 1031 included a good summary of vacation and second homes qualifying for 1031 exchanges. Also, there is a growing trend of converting previously exchanged properties into primary residences—an especially interesting tax strategy for some.
• For Yosemite lovers, the Park Service is dumping the much loathed reservation system but are also looking for input on the future usage of the Park and potential traffic restrictions. One future proposal may look like single-day users being forced to utilize public transportation in-and-out of the Park. But that has yet to be decided. They are looking for input ending Feb. 3.
Thanks for reading! Please stay healthy.