If we needed yet another example of the insanity of the housing market comes this personal experience which took place literally next door to The Gulch.
Last Saturday I was departing The Gulch to go visit a old friend – Sgt. Mommy - I hadn’t seen since the whole Covid Apocalypse started a couple of years ago. I had some difficulty getting out of my driveway because of all the vehicles parked along the road. It turns out one of the neighboring homes was holding an Open House.
My neighbors – a nice family from down in the People’s Republic of Massachusetts – had bought that house a couple of years ago as their vacation home. (Our neighborhood overlooks the Big Lake.) No one had any idea they were listing it, but they had been up over the past few weeks doing a lot of spring cleaning inside and out. I hadn’t thought anything about it even though there were up a couple of times during the middle of the week, something unusual during a non-vacation week, obviously working on their place.
The Open House lasted all of two hours. The house was under agreement in one day. They had listed it for $480,000. They got more than asking price.
WTF?
This is a place they had paid a little over $330,000 for a couple of years ago, a price everyone here knew was too high as other similar homes in this neighborhood were selling for $230,000 to $270,000. (The $270,000 homes had an unobstructed view of the Big Lake.) The house is a little under 1200 square feet, 3 small bedrooms, 2 bathrooms – one full bath and a three-quarter bath, a 1-car garage, with a crawlspace rather than a basement. All of the homes in this neighborhood are roughly the same size with a couple of exceptions.
I have seen other homes the ex and I had looked at in our old neighborhood years ago which were recently listed selling for crazy prices. One such home that was listed for $380,000 went for $900,000. I have seen this again and again over the past year. And that brings us to the second, but related, topic of this post.
Short Term Rentals.
They are also known as AirBnB’s. (Yes, AirBNB is a service, but most folks refer to any Short Term Rental as an AirBnB, even those listed by VRBO - Vacation Rental By Owner.)
What has been driving some of the insane home prices in our town has been the major proliferation of Short Term Rentals (STRs), and more specifically, commercial STRs. What I have come to call Property LLCs buy the home for above asking price and pay cash. If more than one of those LLCs is interested, a bidding war can take place which drives the price up to unheard of levels. It has also locked out a lot of families looking to buy homes because they are priced out of the market. That is not a good thing.
I differentiate between owner-occupied STRs and the commercial STRs, with owner-occupied STRs being either a room within the owner’s home, an In-Law apartment, or an apartment over a garage or boathouse, or some other structure. The owner is generally on site. The exception to that is when a homeowner may rent their home while they are away on vacation. A lot of folks do that to help pay their property taxes or mortgages, renting out their home for a few weeks while they are away. This is something that has been going on here long before AirBnB or VRBO existed. Some folks in my neighborhood have been doing just that for decades.
The commercially operated STRs have been referred to as ‘distributed hotels’ by some. That makes sense as some of those STRs are owned by hotel chains. They aren’t much different than hotel rooms or suites. In most cases these STR owners are out of state and have no connection to or concern for the town in which their STR is located. This has led to problems, and not just in my town.
One problem has been is that our town doesn’t always know who really owns the STRs. There is a phone number and the name of the LLC that owns it, but little more. That can create an issue if there is an ongoing problem with the property or the renters but the town cannot contact the owners to resolve the problem. At least owner-occupied STRs can address problems in short order since the owners are there. The commercial STRs need to have a someone the town can contact, preferably someone nearby capable of handling any problems that might arise, be it with the property or the renters.
Unfortunately for us we will not be able to institute some of our town’s proposed STR regulations until next year since they will need to be approved by voters at Town Meeting...next March. There are some things our Board of Selectmen can do to help alleviate some of the problems that have been cropping up, but only ‘along the edges’ of those problems.
It’s going to be a long 11 months until we can get Short Term Rentals under control.
