THE NEW MAMMOTH MANDATE – SPEND, SPEND, SPEND
By Paul Oster
Q: Your last two Thanksgiving weekend columns gave us local market updates but also gave us some unique and various perspectives into the local market. So is it more of the same, or are there new insights to consider?
A: Quite frankly, I had to go back and look at the discussions in those columns. The highlights from last year were the crushing winter of 2023, the Limelight hotel construction including the future “Aspenification” of Mammoth, the changing STR (short term rental) industry, the frantic push for the development of workforce/ affordable housing, and the new affluence in the Mammoth market. Some of these specific issues are still quite relevant, maybe more so, but Mammoth is clearly changing in other ways.
As for the current market conditions, the exodus of owners/sellers who were psychologically impacted by the winter of 2023 now appears to be over. Give us a few mild winters and it will all be forgotten. The inventory totals for condominiums and single-family homes has gone through the usual ups-and-downs in the past six months and today the numbers remain quite low. The lack of attractive offerings in the market has left many potential buyers in a frustrated state. Mortgage interest rates in the seven percent range have other buyers hesitating, and despite plenty of predictions, nobody really knows if rates will go higher or lower.
Other potential buyers are waiting for some sort of correction (lowering) in prices because they believe a crash is inevitable. Various media outlets have convinced them that it is coming, and have been for many months. But many of the more desirable segments of the local market continue to hit new highs and are often bid-up beyond the original asking prices. Properties in-and-around the Village are generating this type of activity, some impressively so. Prime Snowcreek properties are doing so also. Properties in remodeled, upgraded and “turn-key” condition typically see short marketing periods before they are sold.
Sellers come and go in the market but many local owners have little to no debt on their properties, and many others are “locked in” with their ~3% mortgage rates. The STR (short term rental) owners are typically seeing declining demand and revenues compared to the last few years, but the calendar still drives the solid demand periods, and that is not going away. And the primary reason for owning an STR in Mammoth remains the “usage.” Over time, the usage component may actually become more important to the owners than the revenue. Many of the owners who don’t fall into this category, and purchased purely for income, have moved on or are looking to move on.
While the asking and closing prices still remain high compared to before 2020, the cost of ownership has increased significantly, too. Blame it on general inflation, and insurance has become the real estate bugaboo. The insurance premium increases (and availability) have been incredibly inconsistent through the entire local market, and some of it inexplicable. Construction materials and labor are also up, so maintenance and repairs have become more expensive. But so far these increased expenses have not deterred most buyers, and has not created any “rush to the exits” for sellers.
The level of general construction around town was probably at an all-time peak in 2024. Besides the Limelight, there were (and are) major construction activities happening almost everywhere and especially in the commercial corridors. This is an impressive indication of capital flowing into town. Maybe like we have never seen before. Some of the projects include property repurposing including the Innsbruck Lodge and the old Country Glass building being converted to affordable housing, the original Bank of Mammoth location becoming a brewery as part of the old Mammoth Mall remodel, and the old high school bungalows have been relocated to become a new day care center. The single-family neighborhoods continue to see new home starts, and most of these will ultimately be impressive (and expensive) custom homes.
Beyond the specifics of the local real estate market, the travel and hospitality industry is noting a meaningful downturn in traffic and numbers. I was observing this trend in Mammoth over a year ago in this column and in my newsletters. This is the result of more inflationary pressure on certain segments of society. This slowdown was obvious this past summer, and especially after the post Covid “revenge travel” era of the past few years. Publicly held Vail Resorts recently made these market observations and moved to streamline their operations and expectations. Alterra isn’t compelled to make such reporting, but I’m sure IKON pass sales are not as robust as in the past.
Mammoth Lakes Tourism (the marketing arm of the Town) recently reported on the September 2024 tourism taxes. The bed tax (TOT) was down 11.9% from the previous year. The TBID retail taxes were down 18.7% and restaurant down 10% from the 2023. And September 2023 wasn’t great. And these are government-produced numbers, so their accuracy is always in question. In the business world these numbers would be a “red flag”—that some actions and adjustments are in order (see Vail).
It now appears that Mammoth went through an almost “peak everything” in the last few years. The problem is that the Town and the Council seem to think this level of tourism is the new normal and they are budgeting and spending like it will go on forever. And after spending millions and millions in the latest and greatest of marketing efforts, they still haven’t figured out that the bulk of the demand in Mammoth, like almost all mountain resort communities, is driven by the calendar, i.e., when the kids are out of school. Oh, and by great snow conditions.
Most keen observers believe the Town has reached peak hubris, too.
The Mammoth electorate recently passed three bond measures including Measure L, that increases the bed tax another two percent. This sends the message to the Town and the other agencies to spend, spend, spend. The spending proposes to include new subsidized housing for firemen and teachers. Many old-timers that I have talked to were surprised by the Measure L results and believe this is a cultural shift and is telling about the future of Mammoth. The “new affluence” that I described last year, and is so apparent and reflected in the local real estate market, is rapidly converging with these cultural changes. The end result is going to be a Mammoth very unlike the Mammoth we grew up with in the past 40+ years.
The new affluence has already created an increasingly deep “have and have-not” environment in the community. But it remains quite subtle. The approval of these bond measures by the community probably guarantee this strata for future generations (and of course, very few of them are actually paying any of these new taxes). The beauty of Mammoth in the past, was the ability for any bum (like myself ) to get ahead of the hamster wheel. There were opportunities to start a business with little money, do whatever possible to buy a piece of real estate or two, and still be able to ski and recreate accordingly. We became vested in the community on multiple levels.
For many, the inspiration to be part of this community was Dave McCoy himself. We watched and witnessed it first hand. Up until just a few years ago, anyone with the willingness and motivation could get onboard. Many long-time second homeowners had similar inspiration (they struggled to be here too— most weren’t wealthy). It is what made Mammoth real. And the fight through earthquakes, volcano scares, deep recessions, prolonged droughts and all kinds of other headwinds only made the community stronger. There was (and is) unspoken respect for those who stuck it out. The spirit and culture of the McCoy era is now coming to an end as these individuals retire, move on, and pass on. And those who never experienced it, will never realize that it existed.
But now the mantra is “everyone deserves a safe, stable, and affordable place to live.” Nobody thought that way 30 or 40 years ago. Many future employees will be coddled into what the planners refer to as Mammoth’s 5-minute city (you will own nothing and be happy?). Hopefully these subsidized employees will show up for work, and don’t automatically expect that 20% tip on the bottom of the bill. And hopefully they last for more than a couple of seasons. The Alterra affiliation has brought plenty of good, but the deep corporatocracy merger with local government has advanced this culture of haves and have nots. This is Mammoth’s future. And hopefully when times get tough, all of the workforce who live in subsidized housing won’t just leave town.
The spend, spend, spend mentality has now made it entertaining to watch the Town making major capital expenditures for projects big and small. Forget all of the long term debt and its ramifications (the Town is now “rich” in case you haven’t noticed). And forget that all of it will grow more costly to maintain in the future. These projects make me think back to the years of struggle this community put into bringing a college to Mammoth. It was a big deal. Years of energy, debate, staff time, public meetings, etc.. It all seemed so logical. Intrawest even promoted that with a college we could have a small culinary school and a curriculum focused on hospitality management. This could feed all of their other resorts, and obviously be a huge benefit to this community. Where are they today?
Once the Mammoth college property was finally annexed, the McCoys donated millions to build the college facility located on one of the most valuable pieces of publicly owned developable parcels. It all came together rather spectacularly. But “the passage of time” and a variety of factors make it probably the most underutilized public (or private) enterprise in all of Mammoth. It is the proverbial white elephant of Mammoth. And nobody can figure out how to repurpose it.
I can see our new $30M civic center going the same way. It is the ultimate expression of the Town thinking it is part of the “haves”. They forget that Mammoth is notorious for black Mondays. And most Town employees will eventually be replaced by some sort of AI. Maybe the Council decisions will be too. The facility isn’t even built yet and maybe we should be thinking about how to repurpose it.
And the ice rink could go the same way. Once all of the excited “founders” of the facility are long gone and the whole thing becomes a giant maintenance headache (that is the history of ice rinks), how will it be repurposed? Maybe it too can become housing.
As we come to the end of 2024, Mammoth is a boom town both on the private side and the public side. Only time will tell if either side lacks the staying power (we’ve been through this before). As long as our guests keep coming (and paying all of the taxes), the public side can keep spending. And the demand for real estate should stay high because the “haves” keep coming and pushing it higher. For now, we can be thankful for our new Mammoth.
Happy Thanksgiving!
Paul Oster is the Broker/Owner of RE/MAX of Mammoth (celebrating 30+ years). For other timely real estate information you can go to www.MammothRealEstateBlog.com. For legal, accounting, or construction advice, please seek out the appropriate professional.
