How to Solve the Affordable Housing Crisis
Three examples of Colorado communities that have made actionable changes and reaped the benefits
In nearly every destination or gateway town, not only are short-term rentals squeezing the last drops out of the housing supply, but more profoundly, they are threatening the very character that drew in locals and tourists.
For example, in Crested Butte in 1997, short-term rentals were a mere 6 percent; by 2016, they were almost 30 percent of the housing stock. Similar scenarios are playing out throughout the country in countless communities. How does this impact affordable housing?
SHORT-TERM RENTALS HAVE BALLOONED
The total number of homes in places like Crested Butte have barely budged, while demand for housing has increased both from second homeowners and residents alike. This has driven prices up exponentially, as housing stock has ben removed due to the presence of short-term rentals.
Sure, short-term rentals aren't the only factor contributing to high prices in resort communities and a lack of affordable stock, but they are a contributor to the decrease in supply of available units.
WHY IS THIS IMPORTANT?
Tourism in many areas continues to grow.
To keep up with the influx of visitors, businesses must hire employees. It's no surprise these employees have a shortage of places to live, and therefore it's harder for businesses to find employees in the first place.
THERE IS A WAY TO ALLEVIATE THIS PROBLEM AND CREATE BALANCE IN THESE MARKETS
Of all the destination communities throughout the country, Colorado seems to be on the forefront, since there are so many communities heavily dependent on tourism. Here are three solutions that have been implemented:
The metro area passed strict ordinances a property must your primary residence and written permission must be maintained from home owner's associations, landlords, owners, etc. This eliminates most nightly rentals in the city.
The community took an innovative approach, as shifts from short-term rental zoning to commercial zones increased taxes substantially – from 7 percent to 29 percent.
They went a different route and placed strict limits on short-term rentals. They barred short-term rentals in certain areas and capped the number in each neighborhood block.
WILL REGULATING SHORT-TERM RENTALS CAUSE VALUES TO PLUNGE?
There is talk that by limited short-term rentals, property values would plummet.
This is not the case, as values in all three examples above have continued to climb well above national averages.
So, how can communities solve the affordable housing crisis?
By using one of the three methods above or a hybrid.
WHAT'S THE BEST APPROACH?
The optimal approach would be a combination of what Salida and Durango have done. There are certain neighborhoods where short-term rentals should not be permitted. For example, in Steamboat Springs, there are neighborhoods where the HOA bars short-term rentals. To be fair to all businesses, people renting their homes short-term should also be taxes as other businesses, like hotels.
TOWNS NEED TO FIND BALANCE
There is no way to completely eliminate short-term rentals, but cities should take back control of their housing stocks to help local businesses and residents cope with the affordable housing crisis that will only get worse without action.