A weekend topic starting with Go Banking Rates. “A housing bubble can cause property prices to soar to unrealistic levels, leading to an eventual crash that can have detrimental effects on homeowners and the economy. Seth Jacobs, an experienced mortgage broker and founder of Maine USDA Home Loan, said, ‘When housing prices rise at an unusually fast pace over a short period, it could indicate a housing bubble.’ While homes are appreciating assets, their prices won’t go up forever. So, if you start to see home prices plateau after skyrocketing, watch out. And if this price growth has significantly outpaced income growth and other economic indicators, you should be even more careful, he warned. ‘If there’s a surge in speculative buying or excessive construction of new properties without a corresponding increase in demand, it could signal an oversupply in the market. This oversupply can drive prices down as supply outpaces demand, leading to a potential housing crash,’ said Jacobs.”
KPVI in Montana. “Cameron Crossing, a Three Pillar Development community, was unveiled Tuesday with new manufactured homes starting at $200,000. In a press release, the company said this development would serve as an ‘affordable housing solution for Bozeman.’ At first glance, this development could be seen as a solution. The median price of a new-build, single family home in Gallatin County in 2022 was $950,000, double the price recorded in 2019, according to the 2023 housing report from the Gallatin County Association of Realtors.”
The Providence Journal. “Want to buy a house in Rhode Island? What about in that sweet spot of $340,000 to $440,000, the new median price for a single-family home? ‘It’s a madhouse, with 40 to 50 people showing up to open houses,’ real estate agent Constance Stowers said, referring to houses in the new mid-range price. March’s median price of $440,000 was up 66% from the pre-pandemic March 2019 median price of $265,000 for a single-family house. ‘When you go and look at a property right now, you look at the history and it’s almost hard to swallow that five years ago, it sold for $199,000, and now it’s selling for $420,000, and it’s worth $420,000,’ Stowers said.”
Market Place. “The typical homeowner enjoyed a 45% increase in net home value in just three years. Evan Karr, who recently bought one home and sold another, has been riding this home-equity train. ‘We just moved in about a week and a half ago,’ said Karr, walking through the midcentury modern home he and his wife are renovating in a leafy, hillside suburb of Portland, Oregon. Their previous home was in a high-demand residential neighborhood near Portland’s urban core. ‘We bought that at about $520,000, sold it for $860,000,’ he said. ‘Took about four years to renovate, but we were able to gain that market appreciation.’ Israel Hill, managing principal broker at the John L. Scott real estate agency in Portland, helped the Karrs with both property sales. ‘The leveraging of equity — that’s a big thing,’ said Hill. ‘Houses took a monster jump through COVID, and people are cashing out of that equity.’”
The Boston Globe in Massachusetts. “For the last few years, finding a summer rental on the Cape has felt nearly impossible as prices soared, making it increasingly out of reach. But in a rare bit of good news on the housing front — at least for vacationers — renting at a reasonable rate might be a little more possible this year due to an uptick in availability. A big reason is the ripples from the wave of second-home buying that hit Cape Cod during the COVID-19 pandemic. Many second homeowners are now looking to recoup some of their costs as they spend less time on the Cape and return to more normal work and school routines, said Paul Niedzwiecki, executive director of the Cape Cod Chamber of Commerce. That increased availability has stabilized the cost of rentals. Prices were unsustainable during 2021 and 2022, Niedzwiecki said, when people flocked to the Cape as a safe space during the pandemic, sending costs to rent a house for the week (or longer) soaring.”
The Lumberjack. “Shockwaves from 2016 state legislation that sparked unprecedented growth of short-term rentals in Arizona still ripple throughout the state as debate in communities continues over their impact on housing. The city of Flagstaff has identified a total of 1,299 short-term rentals within city limits as of Feb. 1, according to city officials. A Flagstaff renter earning minimum wage would need to work more than two full-time jobs — roughly 90 hours a week — to afford a two-bedroom apartment at the average rental rate. AirDNA found 92% of the short-term rentals in Flagstaff are not occupied by their owners on a seasonal basis or at all. The sample of January Flagstaff Airbnb listings had only six listings with a host who lived in the rental or on the property.”
“Flagstaff City Councilmember Lori Matthews said she is optimistic the new regulations will address some common residential complaints related to noise, trash and parties. ‘We can monitor if there’s a problem,’ Matthews said. ‘Some people felt unheard. Maybe these places were renting to party places and it was a nightmare all the time — noise, having to call the police, then not complying, and they weren’t the owners so they didn’t care.’”
KTLA in California. “The Santa Ana City Council has voted to ban short-term residential rentals within city limits. A recent spike in short-term rentals proliferated by sites like Airbnb and Vrbo has led to ‘a range of issues’ in Santa Ana, city officials said. ‘These rentals, typically lasting less than 30 days, have been linked to a range of issues including trash and litter, excessive noise, parking problems and neighborhood degradation,’ the city’s release stated.”
From Fox News. “A $2 million settlement — and pending lawsuits — after a tourist was murdered during a carjacking in a rental community is a warning shot to the short-term rental industry, the victim’s mother and lawyer said. Jeremiah Brown was 22 in July 2022, when he, his girlfriend and her children took a celebratory vacation from California to Central Florida, where they stayed at the sprawling rental community called ChampionsGate. Unbeknownst to them, the rental properties were actively targeted by violent criminals for months. Two days into Brown’s trip, he was fatally shot in the rib during a carjacking and thrown from his car, according to a police report. Lawyer Pedro Echarte, secured a settlement from ChampionsGate’s security company, RAMCO Protective of Orlando, Inc., but said the rental community, and the industry as a whole, has blood on its hands. ‘It’s a massive, unregulated industry that operates without any real regulations,’ he said.”
WTSP in Florida. “It’s an issue that has been a hot topic across Tampa Bay in recent weeks: short-term rentals. In Harborview, there are several neighbors who have issues with short-term renters. One neighbor, Hillary Simpson, wants to know why the county has ordinances in place to restrict short-term rentals if they’re not being enforced. Simpson said she is on the phone with code enforcement nearly daily and just wants to be able to go 24 hours without short-term renters disturbing her family. Simpson said her neighbors often wake up her toddlers in the middle of the night. The rental unit’s backyard is adjacent to hers. She said when parties go on, the noise is unavoidable. ‘Noise is definitely the one that is the most disruptive,’ Simpson said. ‘There’s a ton of unknown, and that can be a little scary when you bought a home in a neighborhood where you intended to raise your children because it was safe and quiet and peaceful.’”
The Associated Press. “A single mother of two, Amy Chadwick spent years scrimping and saving to buy a house in the town of Lahaina on the Hawaiian island of Maui. But after a devastating fire leveled Lahaina in August and reduced Chadwick’s home to white dust, the cheapest rental she could find for her family and dogs cost $10,000 a month. Napili is where Chadwick thought she found a place to buy when she first went house hunting in 2016. But a Canadian woman secured it with a cash offer and turned it into a vacation rental. Gov. Josh Green got so frustrated he blurted an expletive during a recent news conference. ‘This fire uncovered a clear truth, which is we have too many short-term rentals owned by too many individuals on the mainland and it is b———t,’ Green said. ‘And our people deserve housing, here.’”
The Colorado Sun. “A bill that would have quadrupled the property taxes on many homes offered as short-term rentals in Colorado was rejected late Tuesday in a Colorado Senate committee, marking at least the third time in recent years that such a proposal has failed at the Capitol. Short-term rental property owners, who showed up in force at the Capitol to oppose the bill, said that if the legislation passed they would be forced to sell their homes or reduce their rental nights to avoid the legislation’s 90-day threshold.”
“‘This new bill … unfairly and discriminately singles out STR owners,’ Kristine Lee, who owns a short-term rental in Summit County, testified Tuesday night. ‘You see us as a cash cow.’ Lee said in reality she’s not making much money on her rental property as nightly rates decrease as demand wanes. She recently had to give up her property manager because she couldn’t afford it.”
CBC News in Canada. “A provincial rule to limit short-term rentals to a homeowner’s principal residence plus one secondary suite or accessory dwelling comes into force in British Columbia on May 1 in 60 communities, while 17 additional communities have chosen to opt into the rules, despite being exempt. ‘Balanced new rules to crack down on speculators who are effectively operating mini hotels, while also ensuring homeowners can still rent out spaces in their principal residence,’ said Premier David Eby. He said the changes will allow both the province and local governments to crack down on speculators. ‘If you’re flipping homes, if you’re buying places to do short-term rental, if you’re buying a home to leave it vacant, we have consistently, publicly, repeatedly sent the message: Do not compete with families and individuals that are looking for a place to live with your investment dollars.’”
“Earlier this spring a group of nearly 300 B.C. property owners took the province and City of Victoria to court over new provincial limits on short-term rentals. They claim the rules aren’t legal and will result in significant financial losses for short-term rental owners.”
Business in Vancouver in Canada. “An organization representing short-term-rental-unit owners announced Thursday that it has filed a petition in B.C. Supreme Court against the province and the City of Victoria in a last-minute bid to preserve their operations. Owners of short-term rental units have been fighting against the new legislation for months, saying it was brought in without consultation. Those who have tried to sell their units have said there’s a glut on the market, making sales difficult. They said many owners only have one or two units and rely on the properties as retirement investments and for income.”
From The Local. “Holiday lets have been pinpointed as one of the primary reasons property prices and rents have skyrocketed in recent years in Spain. But who owns these properties, and are rich foreign buyers the straw that broke the camel’s back? By the end of 2023, there were 340,000 short-term holiday lets in Spain, according to the country’s national stats body INE. Although they barely represented 1.3 percent of the total number of homes in Spain last year, the number of holiday lets increased by 9 percent after increases in all 17 regions except the Balearic Islands.”
“The autonomous regions with the most short-term lets were Andalusia (79,065), followed by the Valencia region (58,337), Catalonia (52,026), the Canary Islands (44,376), the Balearic Islands (26,507), Madrid (16,970) and Galicia (18,080). If the figure for Madrid strikes you as low that’s because the Spanish capital has a big problem with holiday lets without a licence, which in turn calls into question the real figure of Airbnb-style rentals across the country as a whole. Overall, it can be concluded that the number of tourism rentals in Spain is probably higher than the 350,000 suggested by the Spanish government, and that the role real estate investment firms and vulture funds are playing in warping the country’s rental market is most likely underestimated.”
Estate Agent Today. “It’s tempting to think that Michael Gove’s proposed clampdown on Airbnb-style short lets is a uniquely British form of small-mindedness, part of the current government’s haphazard approach to housing policy. Yet this sort of interference in the short let market is not unique and indeed is less draconian than many other parts of the world. Look at Spain. The Canaries, for example, is recruiting 35 inspectors to police new short let controls coming in later this year – new-build properties will be barred from accommodating short lets while existing owners will need a permit to let, including (wait for this) support from their neighbours. Barcelona already has 70 such inspectors while Madrid has a rather feeble-sounding eight.”
“Meanwhile in Germany – where many laws are heavily devolved to regions – short let hosts in Munich have a limit of eight weeks per year beyond which they require council permits, while in Stuttgart it’s 10 weeks. Berlin has had various regulations for many years: currently an entire property can be short let for no more than 90 nights in a year, but that requires host registration and a hefty fee. Amsterdam – which has made moves to deter tourist numbers in recent years – there’s a 30-night annual limit while most other Netherlands cities have 60-night rules.”
“And then, of course, there’s New York. Officially the city has long had regulations effectively outlawing short lets, but this was rarely – some say never – enforced until the passage of Local Law 18, which strengthened existing legislation, beefed up enforcement and required mandatory host registration. NY short let registrations plummeted from approximately 13,500 listings in August last year to under 3,000 in December. Australia is curbing short lets too, most vociferously in Western Australia which is introducing limits similar to those proposed here by Gove. It wants new short lets to require planning consent, some exemptions for long-standing existing hosts, and a 90-night limit.”
“The Italian city of Florence – by density, the country’s most heavily touristic city – has banned new short-term listings by property owners in its historic centre, and is offering three years of tax breaks to landlords of existing short lets if they switch to ordinary long-term letting. In Iceland you can let out your home, or part thereof, for no more than 90 nights per year and there is an annual income cap on how much a host can receive. In Tokyo – where the annual limit is 180 nights – hosts must either live and remain in the property that’s let, or have an administrator employed to do the same.”
“In France the annual limit is 120 nights and in some cases council approval is required; in San Francisco there’s a 90-night limit and strict compliance rules, while in Canada – particularly some parts of Quebec, including Montreal – there are selective complete bans on short lets. I could go on, because almost all western countries now have restrictions. You get the picture, I’m sure. So while the UK’s short let clampdown pledged by Gove and his government looks of a piece with the rest of their restrictions on other forms of landlordism, on this occasion it’s part of a bigger global picture.”