Cooler Summer And Slow Tourism Continue, Motocross And Labor Day On Tap.
Market Summary – August 13 to August 27
Single-Family Home Inventory
Market Updates and News
Hurricane Hilary dropped steady but light rain last weekend and thankfully spared Mammoth from any serious negative impacts. The region will only become more impressively green and blooming. Tourism remains light in Mammoth although the beginning of the motocross crowd rolled into town the last few days. The Motocross format will take the normal schedule with the Oldtimers events this weekend, racing all week and then the pro events next weekend. Definitely weird to see this event this time of year. It usually marks the beginning of summer. Many local residents are hoping the event means summer is now coming. I’m not betting on it. Throwing this crowd onto Labor Day weekend may actually bring substantial tourism numbers, I hope everyone will be ready.
There has actually been some low level construction activity at the new ice rink site. There was even a concrete mixer delivering wet concrete one morning. This weekend’s issue of The Sheet ran a lead story questioning the progress of the facility, especially since the original opening was scheduled for the winter of 2022-23. The reporter questioned a variety should-be answerable sources including the Town’s manager, public works director, finance director and parks and recreation director. The reporter got nothing but a lot of good old-fashioned obfuscation. The construction site foreman had nothing to add. The lack of any forthcoming information is incredibly suspect.
The old Charthouse/Bleu pyramid building is now advertising as being newly leased. Having represented the old Slocums restaurant location on Main St. the past two years, I have spoken with dozens of Mammoth restaurant want-to-bees. There are plenty of dreamers and few with the real financial wherewithal to take on a major, new restaurant operation. The monthly lease rate for the old Charthouse is substantial. It will be exciting to see what happens. I can’t imagine they are anxious to open before mid-December. It will be nice to see my literal first home in Mammoth come back to life.
The old “Pavlovich” fourplex on Minaret Rd. was finally demolished and removed from the site this past week. This abandoned apartment building next to Stonegate has been an eyesore for many years. It was originally purchased to create an additional phase of the Stonegate project, but 2008 put an end to that. The winter of 2023 crushed the building, and now it is gone for good. But with it went a piece of Mammoth history. Before Minaret Road was pushed through to the top of Chateau Rd., this fourplex sat at the end of the road down below Whiskey Creek. Good times. And the owner Nick Pavlovich was a notorious Mammoth character from the past who owned the La Sierra nightclub and restaurant on Main St. for many years. If you worked for him, your life was truly in danger if you showed-up late for work.
AirDNA’s July 2023 report finally displays a downturn in the industry. July’s ADR (average daily rate) slipped by ~1% which is a “sharp departure” from the increases seen in the last three years. The “Destination Resort Mountain/Lake” category dropped significantly from June to July. International travel is being reported as the major competitor for this segment this summer. August bookings are expected to be slower (they are here in Mammoth) but Labor Day is expected to be strong but not equal to 2022. The good news is the growth and supply of STR units has slowed dramatically which, in theory, should keep overall occupancy rates up.
Following Maui”s horrendous fire I was reminded of the value of all of the reciprocating departments and agencies we benefit from in California—tremendous out-of-area help available in case of serious emergencies. Mammoth benefitted this past winter. The photos below is from March 19 just outside my office; the Carlsbad FD Urban Search and Rescue team was here to assist with exploded and crushed buildings. And no, they weren’t over drinking at Distant Brewing, they were picking up breakfast at Salsa’s.
Another small Mtn. Shadows unit (Studio) sold for over $1,000 per square foot. Nicely remodeled and “modernized”. Buyers just can’t get enough of the modern decor. Don’t forget the gray tones.
The 3293 Main St. building closed for just under $1M this last week. Talk about the end of an era, especially for this real estate broker. This was the Coldwell Banker building next door to Schat’s Bakery for decades. The CB signs have already been removed from the property. In the pre-internet era this was the premier real estate location for walk-in traffic next to Schat’s. It was the top producing brokerage in Mammoth for many years. I started my real estate career across the parking lot at Main St. Real Estate. In 1993-94, I recruited seven of their high-producing agents and the long-time owner George Fowler declared war on me. More good times. George was always proud of his building and location and historically maintained the building in meticulous condition….how the business has changed!
Favorite New Listings For the Period
This property needs to be seen and experienced in person to appreciate how incredible and unique it is. There is nothing quite like it in Mammoth. The modern 3 bedroom / 2.5 Bath home is full of custom woodwork and metal work. A true mountain home including a chef’s kitchen. The balance of the property is an almost magical mix of Mammoth Creek, natural and enhanced landscape, extensive indigenous hardscape, and an eclectic mix of yard art. Go across the bridge to the property’s “island” and find historic pines. Incredible privacy found in only a handful of Mammoth properties. This property was last sold 100 years ago in 1923. Check out the video tour.
Listed at $3,500,000
Other Real Estate News
The apparent lower level of tourism this summer in Mammoth will certainly impact owners of STRs. Like I said in the last issue, it will affect each owner in an individualist way. Some for the good and some for the bad. Gross revenue is certainly down for most. The critics of the industry (and there are plenty of them) are bound to be excited that some of these STR owners will be in financial trouble. In Mammoth, maybe not so much. Some may change their game plans. But there are some options for those really dependent on the cash flow.
First, I would mention that over the years there have been many buyers who, when purchasing a Mammoth condo with no intention of renting, do consider it valuable to have the potential to rent as some sort of “back-side “ protection if they meet economic difficulties. Others see themselves using the property solely for themselves in a 10-20 year timeframe and then converting it to a rental, with less or no owner usage. Others consider the rental potential as some sort of possible retirement income. Not every Mammoth condo owner wants to do STR, but the possibility to do so has value.
(As always, accounting and tax planning advice should come from your personal advisors. But these are just strategies I have observed in this marketplace.)
Here are options for owners who might want to change the usage and/or tax strategies of their current STR/investment property.
One idea would be to convert the property to a primary or true second home. The idea opens the door to doing the remodeling that has been dreamed about. The usage changes and so does the tax structure. Your accountant should definitely advise. It does happen in the Mammoth market and especially with properties that were acquired through 1031 tax-deferred exchanges. For some, it becomes a “what are you waiting for”moment.
The next and probably obvious option would be convert it to a long-term rental. But the “usage” concept goes away completely unless there is some strange accommodation. The community always welcomes an addition to the long-term housing inventory, but remember that not all long-term renters are part of the local workforce. The demand is high and the rents are strong, but it isn’t necessarily the highest potential.
The really interesting options are the seasonal rental market and medium term rentals (I call them MTR). The demand can be strong and rather varied. This strategy allows for owner usage. Seasonal rentals are typically winter only or summer only (believe it or not, some Mammoth property owners only come in the winter—they are strong winter users and ignore summer). Winter seasonal rentals are in strong demand and can be high-priced and lucrative. Season passes like IKON have helped drive this demand. Some of these renters really only want the core of the winter months but are willing to pay for 5 or 6 months to secure the accommodations. And almost laughingly, some owners who recognize this high demand ask for exorbitant rents and never get rentals. Every winter season is a bit different.
Demand in summer can be summer-oriented users (classically from hot climates) but also a variety of workers here for the summer. Construction worker-types may seem taboo, but experience has shown me that they are either working or sleeping or have headed out-of-town to see their families. And they are well paid. And then there are actually some property owners who do both winter and summer rentals—5-6 months to one party and 5-7 months to another, trying to capitalize on premiums for both. These are typically fully furnished properties and many were previous STRs.
And MTR has also become increasingly popular, both for owners and renters. In fact, this may be the most interesting part of the current rental market. This would be rentals in the 30-60 day range. One key is that with any rental over 31 days in Mammoth, there is no TOT or TBID taxation. This can be a substantial saving which can benefit both the owner and renter. The end-of-the-year holidays and January are obviously a prime period. But there is demand through the whole year. And the fall is a new demand period—the change of seasons and geotourism. Some STR owners are attuned to this demand during less demand periods like the fall. I occasionally get calls from people looking for these types of rentals. I refer them to VRBO.
Lastly, some Mammoth STR owners who experience a drop in revenue may consider selling. STRs qualify as “property held for investment” and qualify for 1031 tax-deferred exchanges. 1031 exchanges are very common in the Mammoth market, especially in-and-out of the condo segment. Sellers can purchase all sorts of properties with these exchanges including raw land. And the huge variety of Airbnb properties makes the prospects even more interesting for re-investment. You could end up owning a yurt in some remote location. Or…?
Ultimately, I would like to think less demand in the Mammoth STR market should allow owners more time to enjoy their property/investment/business in the eastern Sierra. Just stay within the guidelines of the IRS, otherwise they might break down your front door for misrepresenting your maintenance days or owner/guest stays.
Thanks for reading!