Are AirBNB, VRBO and other short-term rentals killing Park City?
There is a great article in Outside Magazine about how AirBNB and other VRBO services are killing the “last great American ski town.” No, they aren’t talking about Park City. They are talking about Crested Butte. However, the article might as well be talking about Park City. What are the problems? Traffic. No affordable housing. Fewer year-round residents. Increased home costs.
The articles theorizes that ski towns in the West are being decimated because people are buying homes to rent as STRs (short-term rentals). This drives up prices and makes everything from long-term rentals to home purchases less affordable. With that comes traffic and other issues.
The director of Colorado Association for Ski Towns says, that historically short term rentals “were mostly just excess inventory—someone had an extra room, they weren’t going to rent it out long-term anyway.” Now, she argues, “it’s reached such a point that people buy homes for the sole purpose of renting them.”
Is this just a Colorado thing? No. Ulrik Binzer, founder and CEO of Host Compliance, a San Francisco startup that helps municipalities track STR activity, says in the article, “I have friends who pitched me on the idea of buying a place in Park City and renting it out during Sundance, basically paying the mortgage for the whole year.”
We often hear that 2/3 of homes in Park City and 1/3 of homes in the Snyderville Basin are second homes. It makes sense that these folks want to help pay their (second) mortgage. Unfortunately the rental income also enables people to pay more for a home, thus driving up costs. For instance maybe you live in Chicago and love Park City. You might decide to buy a condo here. Let’s say you can afford a second mortgage payment of $2,600 a month. At today’s rates, you could buy a $550,000 condo (30 year mortgage). Now, what if you thought you could rent that property out for 6 days a month at $250 a night, thus making $1500 extra a month. Now you think you can afford to buy an $875,000 house (or condo). You think you can probably make even more during Sundance.
They are going to buy more. They are going to pay more than they would have. If hundreds or thousands of people have this mentality, the demand drives prices up. To be honest we’ve had those thoughts… should we buy a second condo in New Park and rent it via VRBO? Our friends have those thoughts as well. It’s much easier to justify if you tell yourself that the income help pay the $400 per square foot.
Where this hits hardest is workforce housing. We like that term better than affordable housing. Is a $500,000 condo affordable? What’s affordable? The article highlights the issues affecting workforce housing. “It’s always an issue, and this has just exacerbated it. Homes that used to be rented to the workforce, that offered year leases, are suddenly being pulled out from under them and put on the short-term market.” In Crested Butte, long term rentals shrank from 43 percent of the town’s free-market housing stock in 1997 to 24 percent in 2016. Locals are competing for fewer rental units.
So, what are ski towns doing about it? Much like Park City and the Snyderville Basin they are trying to increase supply. Much like our affordable housing initiative that will happen at Cline Dahle (by Jeremy Ranch elementary School), Crested Butte is creating income-restricted apartments. However, it’s difficult to help ensure there is enough affordable housing. As the Outdoor Magazine article states, a new hotel would be required to create a certain amount of affordable housing. However short-term rentals have no such requirement.
So, what do we do about it? If there was a good answer, it would be implemented everywhere. There isn’t. There are cities who try and limit short-term rentals by limiting rentals to 90 days total a year. STR owners often then let the house sit empty, except for the prime 90 days. This of course lowers tax revenues because visitors aren’t out on Main St (in our case) for the other 275 days spending money. Therefore, cities and counties are against it.
Other limitations are often floated but they get shot down by attorney’s and other property owners who depend on that income. For example a Crested Butte realtor says, “I’m not sure what the problem is. Crested Butte had spent money to bring more visitors but now we’re saying we don’t want them here. Limiting STRs is not going to lower the price in town. The town is going through the roof because people want to live here.”
Also, does this statement from the article’s author sound familiar? “I could also sense an inchoate fear that Crested Butte was in danger of losing what made it so desirable in the first place. Much of its last-great-ski-town aura comes less from its skiing than from its strong sense of identity (it was a working town long before there was a ski resort), its relative affordability (compared with, say, Aspen or Vail), and its quirky cast of local characters.” The author then talks about a local school teacher who says, “After a while, it wears on your community when your schoolteachers and folks like that can’t be a part of it. They should be the ones coaching and volunteering and showing up for free music. When you drive home for the night and don’t come back, it’s harder.”
If anything, it shows we’re not alone.
If you have a few minutes this weekend, we’d recommend reading the entire article. It highlights many of the issues we are dealing with today and the ideas that have been tried.
Here is what the current VRBO market looks like in Park City and the Snyderville Basin.
The problem is restrictive zoning. 20 story apartment buildings would solve the housing cost problem quickly.
Before more subsidized housing is built I would like to see proposed policies for long-term enforcement of the deed restrictions. On too many occasions I have shown deed restricted properties that are obviously being used as short term rentals as evidenced by key boxes on front doors, hotel style linens and open display of property manager information. If government agencies and affiliates are unable to manage restrictions of existing deed restricted units I question if more should be built.
What drives home & condo prices up is the growing trend of people buying second homes. With years of experience in the hospitality business – maybe 10% have enough income in rentals to pay for mortgages, taxes and insurance. Two things that could discourage purchases of 2nd home could be done at both the State and Federal level. Even though non primary homes are taxed at a higher level than a pthe tax level has not changed in years. If the state wants to address affordable housing – increase the tax rate. Trumps tax guy is lookign at lowering what can be used as a deduction on the fed tax form.
All of these thoughts will not make realtors happy.
Wut?! Lack of affordable housing, increased traffic, and increased home costs due to STRs? Hardly.
Try looking in the mirror PC. Your refusal to build sufficient housing in the city leads to more sprawl (with sprawl leading to traffic) and increased home prices (less supply = higher home prices). The lack of political will to build affordable housing is the only reason that is lacking.
Before blaming others for your problems Park City, you should reflect a little bit. The price wall you’ve created around your city is the same Trump is trying to build on our southern border. You can fix this it if you want to. All it takes is to rethink zoning and build more housing in the city.
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