June 3, 2012 in Business

Some communities remain slow in warming to vacation rentals

 

We often hear that “real estate is local,” and that there is little use in dreading or celebrating national home sale prices and activity. For example, why should sellers fear their ability to sell when their neighborhood is thriving, agents are receiving multiple offers on specific properties, yet national news reporters believe things will get worse before they get better?

Real estate is also local when it comes to use, regulation, standards and practices. Customs that are readily accepted in some areas are often vehemently opposed in others.

For example, several years ago I encouraged parents who were sending a youngster to college or university to check home prices to see if a rental home made economic sense. If the child stayed four years, much of the monthly mortgage payment could be paid off by roommates. The parents would receive the benefits of a rental property, including deductions for travel for maintenance and repairs, while the student residents could receive an appealing alternative to a high-rise dormitory.

I was deluged with responses from upset college-town residents, indicating that there were so many student-run homes near schools that miniature “Greek Rows” were popping up on a number of streets. Other responses stated how some parents had refurbished run-down homes and that the student-managers were helpful, mature and eager to volunteer for community projects. What was a major problem in Eugene, Ore., and West Los Angeles turned out to be a boon in Columbia, Mo., and Missoula, Mont.

The subject of short-term rentals in vacation and resort areas has brought the same type of reaction in some regions. Owners who wish to offer their properties for rent have run into huge problems with neighborhood groups and hotel lobbies. In Santa Monica, Calif., and Honolulu (and most of the island of Oahu), vacation rentals are deemed illegal, with some owners being threatened with fines of $1,000 a day.

“Vacation rentals are faced with attempts to regulate their operations,” said Doug Coates, whose blog, VRRegs.com, discusses vacation rental issues and regulations. “This is being done by lodging industries that compete with vacation rentals, by ordinary citizens, and by local legislators.”

Proponents of new regulation, Coates said, propose a wide range of solutions, ranging from reasonable attempts to assure guest safety and minimize community impacts, to unreasonable attempts to completely ban all types of vacation rental operations, with no consideration of the potential impacts on the owners or the community. 

You would think that local restaurants and retail owners would race to support any new revenue, especially if the home would remain vacant without the short-term guests.

“Vacation rental operations make important contributions to the communities that host them,” Coates said. “These contributions are often completely in line with local community efforts to attract investment funds, increase tourism, develop the local economy, create year-round jobs and minimize impacts of tourism on the local community and the local environment.” 

Some small-town residents often have a difficult time warming up to owners who choose to rent out their homes. Much of the time, it has more to do with perception than reality.

“Vacation rental operations can have negative impacts on the communities that host them,” Coates said. “These can include parking problems, noise and parties, and trash and litter problems. Some of these problems also occur at full time residences, longer-term rental homes and other types of lodging operations, but are noticed more when they occur at a vacation rental. Some people also would say that they unfairly compete with legitimate lodging businesses – implying that vacation rental ownership is an illegitimate activity.” 

Compounding the issue has been the success of popular vacation rental websites, which allow consumers from around the globe to check a property’s amenities and reviews and then book a reservation online. The demand for vacation rentals has been far outpacing supply, according to online leader HomeAway.

Like anything else, the key to finding a potential solution in local communities is communication.

“Vacation rental owners and managers should form local and regional organizations for the purpose of improving the way they operate, mitigating impacts, and dialoging with their host community about benefits and issues associated with vacation rental operations,” Coates said. “We believe that appropriate regulation based on real, documented issues will benefit all parties.”

Tom Kelly is a former real estate editor for the Seattle Times.


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