This Mammoth Real Estate Q&A appears in the Easter Week 2021 issue of The Sheet.
Q: My friends in Truckee tell me that many of the new second homeowners there are actually moving in as permanent residents or plan to make their new Truckee homes their permanent residence in the near future. Is this true with all of the activity in Mammoth? And what other trends are you seeing in the market with all of this activity?
A: The real estate activity of the the past 10 months here in Mammoth Lakes has been quite impressive. The underlying motivations of both buyers and sellers has also been fascinating to observe from the position of an active market participant like myself. While some agents and brokers are “just along for the ride”, I’m one who likes to look a little deeper at the dynamics of the market and how the microcosm of Mammoth is being affected by the larger world we live in.
Last summer I noted the concept of “movement” in the market. After the spring lockdown people started moving in all sorts of directions, including in and out of Mammoth. Many people accelerated their future plans. Contemplating your mortality can do weird things like this. Some are making changes and choosing to have a home or live closer to their children or other family members. Others want to insure that can spend quality time with their children before they go off to college. Or they desire to create an attractive environment for them to return “home” while they are in college and beyond. Second homes in Mammoth often fulfill this goal, at least in theory. Others are simply responding to a good deal of self reflection. And some want to “get out of dodge”, wherever “dodge” may be.
How all of this settles out remains to be seen. The demand for Mammoth real estate still appears very strong. There are many frustrated buyers who see little desirable inventory and rising prices that are being supported by actual closings. Many market observers also believe that real estate is currently one of the the best hedges against the anticipated coming inflation. This alone may be driving the market more than anything else. There are others who believe there will be excess inventory once the “pandemic hysteria” settles down and people return to some level of normalcy (does anybody know what this “normalcy” is actually going to be?) The market forces of fear and greed are alive and well.
For now Mammoth has become a popular place for the most recent work-from-home (WFH) or at-distance working trend. This may or may not be a permanent condition. It may be somewhere in between. Plenty of people are simply trying it out. And for certain, the concept was growing here in Mammoth before the pandemic and will be a part of Mammoth life well into the future.
We’ve been talking about the telecommuting trend and Mammoth for years, and maybe even a couple of decades. The word telecommuting now seems to be a lost word, but not a lost concept. Its hard to imagine life before the Internet and mobile phones that are like mini-super-computers. I’m astonished some businesses still use fax machines. While Mammoth and telecommuting has always made sense, up until a few years ago there wasn’t sufficient bandwidth in Mammoth to handle it in any substantial way. The Digital 395 project and Suddenlink’s (love’ em or leave’ em) substantial investment in infrastructure changed everything. Today we just take it all for granted.
But even with our new, (almost) great Internet service, the telecommuting trend never really became a major trend here or a driving influence in the market. Until Covid. And even a year into this it really isn’t clear how much it is influencing the local market. The operative term is “how much?”
The local real estate market activity of the past 10 months has been strongest in the larger and more expensive properties, both in single-family homes and condominiums. There was strong “move-up” buying last summer – existing owners purchasing larger properties. Today, with very limited inventory, this is tricky to do. But buyers are clearly looking for larger properties with space for office carve-outs or extra bedrooms that can be converted to offices. And don’t forget the kids, they need desk space and privacy too.
But are these new owners going to become permanent residents? My guess is probably not. I could be wrong, especially if the winters remain mild. Big winters have a way of driving people out of town, or back “home.” We may not know for sure about any permanence until the schools return to full, live attendance. Right now many of these new second homeowners are spending considerable time here but they aren’t making Mammoth their permanent home. Others may be thinking that Mammoth is their “escape hatch” if new lock-downs occur. Or if the unruly behavior that occurred last summer in places like Santa Monica and Beverly Hills happens again. The permanence may also be an evolution. The plan may be “not now but sometime in the future.” And I have no doubt some new owners are simply “trying it out.” And when the malls and all the other attractions reopen, Mammoth may look boring again.
One thing that could push more owners to make the Mammoth region their permanent home is the establishment of more reliable air service to the eastern Sierra. Only so many of these new home owners have their own private jets and twin engines. Regular commercial air service is scheduled to re-start next December in Bishop. The Bishop Airport is the answer to consistently and reliability. We’ll just have to wait and see if any wrenches (or lawsuits) get thrown into these plans. It’s happened before. Mammoth Airport will be the commercial back-up plan and will remain the relatively busy general aviation airport that it has become. But the reliability of commercial air service in Bishop could certainly attract more people to the area for permanent or semi-permanent residency.
Part of the Truckee experience has been the substantial migration out of Silicon Valley. The tech industry already represented a significant percentage of second homeowners in the Tahoe region. Covid pushed them up the hill. It was a logical step. But these tech workers may be finding their way to Mammoth (rumor is they are already here and pushing up rents). If Mammoth gains popularity with this tech crowd, everything could change on the valuation side. And again, reliable air service would be a multiplier.
Recently it appears the telecommuting and WFH trend may be reversing. At least with some big companies like Goldman Sachs. Their CEO recently called to end the remote-work “aberration.” “It is not ideal for our business and it’s not the new normal” he said. Some companies are reporting mixed results from remote work. The flexibility and eased burden of childcare and commuting are great. But many miss office life and the ”water cooler” interaction that can lead to increased productivity and advancement in the company, “It is still about collaboration and output.”
Each company and each industry are bound to be different. The future will certainly be a mix of all kinds of arrangements. It will be a challenge for each to sort this out, and maybe employee by employee. But the demand to be in Mammoth whether full-time or part-time for remote work opportunities is not likely to go away.
One simple question remains; why the major push by affluent families to become second homeowners in Mammoth and other mountain resort areas? The answer may have been in the February issue of Real Estate magazine that confirmed what we have experienced here in the Mammoth market the past 10 months; described as “a jump in demand to ski resorts as investors flock to the mountains.”
According to the article, the trend may be even stronger in Europe. And notedly there is a greater emphasis on size and space rather than location (we sure have seen this in Mammoth). Another apparent trend; “beyond recreational pursuits like skiing, cycling and hiking, new owners want to become integrated into all aspects of the community.” One broker from the French Alps was quoted, “There has been a global change in buyer attitudes, mountain resorts are now seen a year-round locations, not just vacation properties. We expect demand to remain strong in 2021 as investors realize the lifestyle benefits of a residence with an abundance of privacy, space and fresh mountain air.”
Ultimately there doesn’t appear to be any exact or consistent theme for all of the demand in the local market. But higher selling prices and rents may be here to stay. And they could potentially go higher. I’ve discussed plenty of the potential reasons. It may simply come down to the same reason why people have been coming here for decades – the beauty of the mountains, open space and fresh air. Except this it is now in demand more than it ever was. Hopefully we can preserve these wonderful attributes for future generations.
Happy Easter!! Happy Spring!