Realtors and property owners say the boom in short-term rentals has little role in Transylvania's affordability crisis. But tenants are displaced and neighborhoods are inundated by Airbnbs.
Important piece. One of the issues we are struggling with here, and in many cities across the nation, is that the lack of available housing isn't just a classic affordable housing issue. The red-hot market for investment properties means that investors with available cash can move much more quickly than folks looking to purchase for year-round living. Many properties that can only be generously labeled as fixer-uppers sell sight unseen and are then lightly rehabbed and flipped into the STR market. What this means is that there is little housing available for renters OR buyers who wish to make a life here. I have had conversations with realtors as well, and they have said, quietly, that they could sell houses to individuals and families who wish to live here full time if those buyers could move quickly enough to compete with the real estate investors who see a bargain for the taking. The math is important here. The last time I checked, the average nightly STR rate was around $289, but for easier math let's make that $250. At an occupancy rate of 85% that generates a gross monthly income of roughly $6400 ($250x30x.85). Let's say that costs to run an STR are 50%, including mortgage costs (they aren't, but to head off the naysayers let's go with that), then the STRs owner clears $3200. 2-bedroom 2 bath long term rentals seem to be renting between $1650 up to $1800 gross right now. So, the math seems to show that STRs will always out compete market rate long term rentals, by a very large margin. I know of STRs that rent for $300/night. That's why investors with cash can snap up anything from marginal 2/1 fixer uppers all the way up to the new $450,00 houses, flip them into STRs, and make a nice net profit. If you use the $289/night at 85% occupancy ($7400/mo.) and a more nuanced monthly expense cost ($2400 mortgage on $450,000 + $1000 cleaning and building maintenance) then the investors net could be as high as $4000. With those kinds of returns affordability is unavailable to someone who wishes to live here across the income spectrum. Do we have a classic affordability crisis - yes. Ask anyone who is trying to hire someone to work in the service economy. But we also have an affordability crisis up to 130% AMI, probably even higher. The math on all this matters, a lot. The decision we are facing is whether we, Brevard, want to be a community where people across the income spectrum can live full-time and accommodate, within reason, a largely tourism-based economy that still allows for small business entrepreneurs, artists, crafts persons, teachers, public safety and service economy workers to build a life here. Or will we become an ungated vacation rental real estate development.
Insightful as always, Dan. It would be interesting to know of the AirDNA map of STRs in and near downtown how many are "entire houses or entire apartments" vs. how many are "private or shared rooms" in an owner-occupied home. While the former certainly contributes to diminishing affordable housing, the later represents residents tapping opportunity from this trend.
On that point, entrepreneurial residents have a wide range of opportunities to start-up businesses around the STR market and family vacationers and wellness / outdoor enthusiast travelers' attraction to our region. My gut instinct is that most STR owners are not do-it-yourselfers, and they can not afford to let maintenance slip on their properties. They need professional plumbers, electricians, handymen and women, remodelers, builders, painters, hot tub repair and maintenance services, chimney sweepers, roofers, landscapers, interior designers, garage door services, locksmiths and home security installers, furniture retailers, pest control technicians, arborists, lawn services, snow plowers, private trash and recycling pickup. The list goes on. Our area is also ripe for cottage-industry startups catering to home rental tourism. Things like cleaning services, concierge services such as grocery shopping and delivery, hiking, biking and fishing guides, babysitting and car services are just a few that come to mind.
I'm not suggesting any of this solves the diminishing affordable housing issue (and I get it...we need places for people to live to provide these services), but with the trend does come new opportunity for lucrative businesses to start up and grow.
Appraise properties used for short term rentals at their investment value not as residential properties. Use the tax revenues to subsidize long term rental investors and make that investment more attractive.
Right, Brady. There are shortages of rentals across all prices points, but one reason this story focused on affordable and workforce -- that's what numbers generated by Bowen report focused on.
It is so unfair and unfortunate that they want to do this, I’ve only been here in North Carolina for 9 years and dislike the way Transylvania county is turning out to be , people are having trouble finding affordable housing for rent now
We don’t need short term rentals and higher rates.
I would be curious to know what the average low income rental prices are.... I think that there may be a concern about renters not paying rent during the Covid 'crisis that may have possibly lead landlords to think twice about long term rentals....maybe this can also be looked at? I do see changes in our town that need addressed and some that have been addressed poorly ie. Dave Service station being closed down... I think that would be a great article to explore in the near future; part of Americana being phased out, thus taking the "home" out of "home town".
One thing for sure, the planners of brevard couldnt give a rip about the young adults who would like to stay and live here. It seems to be composed of tourists who are molding brevard into a tourist hot spot and a non resident business opportunity. In the meantime, the people who service these tourists wont be able to find a place to live in brevard. Maybe THEN it'll all break down and brevard economy collapse? Nothing is sustainable without the young generation. Everybody under 30 always have been and always will be the most important people on the planet. Those who deny that will have their communities die along with themselves
Could Brevard increase short term housing taxes or surcharges to cover costs of providing land, infrastructure low and middle income neighborhoods, units? Say to 50% of nightly, weekly room rate? 25%? That would decrease the number quickly while raising funds.
Raleigh limits number of unrelated people in a house/unit; could concept be expanded to be not just how many at one time, but over course of year?
Also, wouldn't this use fall under laws covering boarding houses (if still on books) or hotels, requiring sanitation and other requirements, inspections, etc? Would this be an avenue to pursue?
Has ANY tourist community solved this yet?
City council will have to show some balls, be ready to put the town before re-election interests to do something. (What we used to call integrity).
Affordable apartment projects should prohibit short term rentals. Neighborhoods and condos with homeowner associations can prohibit vacation rentals in their Rules and many do so because they don’t want to deal with transients coming and going.
Important piece. One of the issues we are struggling with here, and in many cities across the nation, is that the lack of available housing isn't just a classic affordable housing issue. The red-hot market for investment properties means that investors with available cash can move much more quickly than folks looking to purchase for year-round living. Many properties that can only be generously labeled as fixer-uppers sell sight unseen and are then lightly rehabbed and flipped into the STR market. What this means is that there is little housing available for renters OR buyers who wish to make a life here. I have had conversations with realtors as well, and they have said, quietly, that they could sell houses to individuals and families who wish to live here full time if those buyers could move quickly enough to compete with the real estate investors who see a bargain for the taking. The math is important here. The last time I checked, the average nightly STR rate was around $289, but for easier math let's make that $250. At an occupancy rate of 85% that generates a gross monthly income of roughly $6400 ($250x30x.85). Let's say that costs to run an STR are 50%, including mortgage costs (they aren't, but to head off the naysayers let's go with that), then the STRs owner clears $3200. 2-bedroom 2 bath long term rentals seem to be renting between $1650 up to $1800 gross right now. So, the math seems to show that STRs will always out compete market rate long term rentals, by a very large margin. I know of STRs that rent for $300/night. That's why investors with cash can snap up anything from marginal 2/1 fixer uppers all the way up to the new $450,00 houses, flip them into STRs, and make a nice net profit. If you use the $289/night at 85% occupancy ($7400/mo.) and a more nuanced monthly expense cost ($2400 mortgage on $450,000 + $1000 cleaning and building maintenance) then the investors net could be as high as $4000. With those kinds of returns affordability is unavailable to someone who wishes to live here across the income spectrum. Do we have a classic affordability crisis - yes. Ask anyone who is trying to hire someone to work in the service economy. But we also have an affordability crisis up to 130% AMI, probably even higher. The math on all this matters, a lot. The decision we are facing is whether we, Brevard, want to be a community where people across the income spectrum can live full-time and accommodate, within reason, a largely tourism-based economy that still allows for small business entrepreneurs, artists, crafts persons, teachers, public safety and service economy workers to build a life here. Or will we become an ungated vacation rental real estate development.
Good article!
Insightful as always, Dan. It would be interesting to know of the AirDNA map of STRs in and near downtown how many are "entire houses or entire apartments" vs. how many are "private or shared rooms" in an owner-occupied home. While the former certainly contributes to diminishing affordable housing, the later represents residents tapping opportunity from this trend.
On that point, entrepreneurial residents have a wide range of opportunities to start-up businesses around the STR market and family vacationers and wellness / outdoor enthusiast travelers' attraction to our region. My gut instinct is that most STR owners are not do-it-yourselfers, and they can not afford to let maintenance slip on their properties. They need professional plumbers, electricians, handymen and women, remodelers, builders, painters, hot tub repair and maintenance services, chimney sweepers, roofers, landscapers, interior designers, garage door services, locksmiths and home security installers, furniture retailers, pest control technicians, arborists, lawn services, snow plowers, private trash and recycling pickup. The list goes on. Our area is also ripe for cottage-industry startups catering to home rental tourism. Things like cleaning services, concierge services such as grocery shopping and delivery, hiking, biking and fishing guides, babysitting and car services are just a few that come to mind.
I'm not suggesting any of this solves the diminishing affordable housing issue (and I get it...we need places for people to live to provide these services), but with the trend does come new opportunity for lucrative businesses to start up and grow.
Well written on a topic much under discussion in our community.
Appraise properties used for short term rentals at their investment value not as residential properties. Use the tax revenues to subsidize long term rental investors and make that investment more attractive.
Right, Brady. There are shortages of rentals across all prices points, but one reason this story focused on affordable and workforce -- that's what numbers generated by Bowen report focused on.
It is so unfair and unfortunate that they want to do this, I’ve only been here in North Carolina for 9 years and dislike the way Transylvania county is turning out to be , people are having trouble finding affordable housing for rent now
We don’t need short term rentals and higher rates.
I would be curious to know what the average low income rental prices are.... I think that there may be a concern about renters not paying rent during the Covid 'crisis that may have possibly lead landlords to think twice about long term rentals....maybe this can also be looked at? I do see changes in our town that need addressed and some that have been addressed poorly ie. Dave Service station being closed down... I think that would be a great article to explore in the near future; part of Americana being phased out, thus taking the "home" out of "home town".
Excellent article. These issues are not things those of us who rent short term think about.
One thing for sure, the planners of brevard couldnt give a rip about the young adults who would like to stay and live here. It seems to be composed of tourists who are molding brevard into a tourist hot spot and a non resident business opportunity. In the meantime, the people who service these tourists wont be able to find a place to live in brevard. Maybe THEN it'll all break down and brevard economy collapse? Nothing is sustainable without the young generation. Everybody under 30 always have been and always will be the most important people on the planet. Those who deny that will have their communities die along with themselves
Could Brevard increase short term housing taxes or surcharges to cover costs of providing land, infrastructure low and middle income neighborhoods, units? Say to 50% of nightly, weekly room rate? 25%? That would decrease the number quickly while raising funds.
Raleigh limits number of unrelated people in a house/unit; could concept be expanded to be not just how many at one time, but over course of year?
Also, wouldn't this use fall under laws covering boarding houses (if still on books) or hotels, requiring sanitation and other requirements, inspections, etc? Would this be an avenue to pursue?
Has ANY tourist community solved this yet?
City council will have to show some balls, be ready to put the town before re-election interests to do something. (What we used to call integrity).
Affordable apartment projects should prohibit short term rentals. Neighborhoods and condos with homeowner associations can prohibit vacation rentals in their Rules and many do so because they don’t want to deal with transients coming and going.