Second homeowners who want to make a little money off their vacation homes when they’re not using them increasingly resort to short-term rentals.
COLORADO’S STEAMBOAT SPRINGS
In Steamboat Springs, Colorado, hotels along the road, where previously skiers and snowboarders and spa-goers slept before hitting the slopes or the waters of the town’s hot springs.
These hotels have been transformed into homes for service industry workers like Marc McDonald, who are essential to the town’s economy. They live in cramped quarters, some equipped with microwave kitchenettes or 6-foot kitchens that barely hold a refrigerator. Others opt for mobile homes as their primary residence.
Steamboat Springs is one of several American resort communities struggling with an affordable housing shortage and figuring out how to govern the sector they believe is to blame: The rising cost of living for permanent residents in small towns is directly correlated to the increasing popularity of short-term rentals like Airbnb and Vrbo.
The 42-year-old McDonald and his wife pay $2,100 a month for the smallest hotel room they could find, which is about 500 square feet. “It’s basically like living in a fixed RV,” McDonald said.
In November, rent and utilities are expected to increase to about $2,800, putting McDonald, who does maintenance at a nearby golf course and bartends at night, and his wife, who is undergoing treatment for thyroid cancer and hepatitis E, out of their affordable range.
His greatest worry was for his family’s material possessions to be lost. “My wife being unwell, she can’t do it,” he said.
Second homeowners who want to make some money off of their vacation homes when they’re not using them are turning to short-term rentals. Property investment firms have also poured hundreds of millions of dollars into the sector in the hopes of reaping a higher return from vacationers who prefer to stay in homes rather than standard hotels because of the added space, privacy, and flexibility they offer.
Airbnb reported a near 50 percent increase in listings outside of large metropolitan areas between the second quarter of 2019 and 2022, as the epidemic ushered in a new era of remote labor.
According to a survey conducted by the Colorado Association of Ski Towns, a tidal wave of wealth has washed over six Rocky Mountain counties, including Steamboat Springs’ Routt County. Almost two-thirds of 2020 home sales will go to newcomers, most of whom will earn over $150,000 working outside the counties.
Lincoln County, on the Oregon coast, and Ketchum, in Idaho’s Smoky Mountains, are just two examples of places where local governments are trying to figure out how to manage a $74 billion business that they claim both drives their economy and exacerbates their housing woes.
The city council of Steamboat Springs, Colorado, voted in June to prohibit the construction of new short-term rentals across much of the city and to put a 9% tax on the business on the ballot in order to generate revenue for affordable housing.
Heather Sloop, a council member who supported the law, said, “There is not a day goes by that I don’t hear from someone… that they have to relocate” because they can’t pay rent. The impact on our society is devastating.
The Steamboat Springs Community Preservation Alliance is a group of local companies and property owners that are united in their opposition to the proposed tax. Coalition vice president and property management firm co-founder Robin Craigen is concerned that the tax may reduce Steamboat’s competitive advantage relative to other resorts in the Rockies.
What I hear most often is, “The short-term rental sector brings visitors to town, finances the city, and you want to tax it out of existence?” To quote Craigen: This is completely illogical.
A coalition study of local statistics estimates that in 2021, visitors who booked via sites like Airbnb would have spent $250 million in Steamboat Springs. Local businesses in the community of 13,390 people would lose $25 million if tourism declined by only 10%.
Smaller tourist destinations need to strike a balance between the strict regulations enacted in larger cities like Denver and Boston, which prohibit vacation rentals in homes that are not also the owners’ primary residences. In order to keep the employees who keep their economies afloat, they want to encourage the hospitality business while also keeping it under tight enough control to do so.
Margaret Bowes, executive director of the Colorado Association of Ski Towns, which monitors initiatives to manage short-term rental markets, stated, “No one has discovered the ideal answer yet.”
She said that the current rate at which more and more homes are being converted into Airbnbs was unsustainable. There will be “no one (living in) these communities” who can do the job required to live there.
Susana Rivera, a 30-year resident of Steamboat Springs, explored the possibility of moving to Craig for a lower monthly rent. Her daily routine consisted of dropping off her youngest kid at a friend’s home and then driving the 45 minutes to her work at the supermarket in Steamboat Springs.
After getting off the waiting list for a $800-a-month, two-bedroom apartment in a government-run affordable housing complex in 2014, she finally gave up the rigorous routine. She has her youngest kid living there, along with her mother, her brother, and sometimes her niece and nephew.
Local authorities have tried to address the issue via the affordable housing program, but the demand has far outstripped the availability.
According to Alyssa Cartmill, regional property manager for the Yampa Valley Housing Authority, some 1,200 individuals have shown interest in the new subsidized housing development’s 90 units.
Data from analytics company AirDNA and the U.S. Census Bureau reveal that roughly 30% of residences in Steamboat Springs are holiday rentals, despite the fact that industry giants like Airbnb and Vrbo do not provide detailed data publicly.
Zillow reports that the median monthly rent for a two-bedroom apartment in Steamboat Springs reached $3,100 in August, eliminating roughly 3,000 units from the market.
Since the beginning of 2020, median house prices have increased by 68%, from $1.0 million to $1.6 million, bringing them closer to San Francisco’s home values, which are now at $1.8 million.
Airbnb commissioned a research that indicated short-term rentals sustain 13,300 employment in prominent Rocky Mountains counties and had no influence on house costs. It claimed that the lack of progress in the building of new homes in relation to the expansion of the labor force was the root of the issue. The survey also showed that due to their high rental costs, just 3% of short-term rentals are suitable for use as worker housing.
“This analysis underlines the important importance of short-term rentals in the Colorado tourist economy,” Airbnb spokeswoman Mattie Zazueta stated in an email.
According to a statement released by Vrbo’s parent company, Expedia Group, “vacation rentals provide a diversity of accommodation options for visitors, help some vacation homeowners and residents afford their homes, and are a key revenue generator in local economies — providing jobs, income, and taxes to local communities.”
However, Daniel Brisson, a professor at Denver University and the head of the Center for Housing and Homeless Research, points out that the research didn’t take into account alternative choices, such as making houses that are too expensive for a single worker accessible to groups living together.
The exorbitant costs are forcing out not just those with lower incomes but also those with higher salaries, such as nurses and police officers.
Hospital president Soniya Fidler stated the number of unfilled posts at Yampa Valley Medical Center, the city’s hospital, has increased from 25 to 70 in recent years.
“What’s keeping me up?” , Fidler enquired. How will we respond to the next trauma victim?
Sherry Burlingame, chief of police in Steamboat Springs, spends her days helping new recruits find homes and negotiating mortgage loans. Due to a lack of personnel, police have had to reduce their presence in the community and increase their response times.
“We have disregarded what it takes to keep this town alive,” Burlingame added.
The new law in Steamboat Springs divides the city into three distinct areas. Most of the city is in the “red zone,” where any new short-term rentals are illegal but those who have leased within the previous year are allowed to keep operating. The number of new vacation rentals is capped in the yellow zone, whereas in the green zone—most of which is located below the ski mountain—there is no such limit.
Lincoln County, located on Oregon’s coast and largely dependent on tourism, passed a proposal in November to prohibit the construction of new short-term rentals and to begin a five-year phaseout of the remainder. This action has been put on hold while a lawsuit filed by owners of short-term rentals is heard.
After researching the experiences of other cities throughout the country, Steamboat Springs proposes to keep an eye on how its new restrictions and tax hike are faring in order to make any required adjustments.
The new regulations couldn’t have arrived at a better time for Sean Bailey. In 2019, Bailey relocated to Steamboat, Colorado, where he now works as a sales associate at the outdoor gear retailer Big Agnes and lives in a mobile home, where he pays $650 a month to rent a single bedroom. It’s been three years since he first put his name in for one of Steamboat’s low-cost housing units.
According to Bailey, “my bedroom functions as living room, dining room, den, and workplace — all in one 12-by-12 area.” He lamented that “low-income housing is being priced out of the water for a lot of us who are simply trying to make it.”