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April 11, 2023

Homeowners and Hotels Swap Guests

Problem or opportunity?

Even before the pandemic, homeowners were switching their long-term rental apartments to short-term rentals (STRs) arranged by Airbnb and the like. Even way back then, new houses, at least here in Vermont, were being built for the STR market rather than to provide leased apartments. Both those who live in the buildings they rent and absentee landlords prefer STRs.

Before the STRs were available, more people stayed in hotels and motels when vacationing. The low-cost end of the hotel/motel market was suffering. When the pandemic first hit, there weren’t any travelers; but it was important to have non-congregate space for the homeless – whose numbers rose during the crisis. Putting unhoused people in the unused motels, particularly those which had been failing even before the pandemic, was good for the families and good for the motel owners who had mortgages to pay. Now some of these motels are being turned permanently into “affordable” housing at the same time as even more formerly used for emergency housing have often become hotspots of crime, especially drug dealing. They’re the focus of so much police activity that some motel owners are having to reimburse law enforcement; they’re also dangerous for families who live there. Generally renters are safer in owner-occupied buildings because the owner is in a good position to observe and is highly motivated to remove dangerous tenants.

The neighbors of STR properties are often not happy about their new short-term neighbors, who have often come to party and don’t see any need to be quiet about it. After all, they’re on vacation. The partying problem, like the drug-dealing problem, is worse on premises from which the owner is absent. The Front Porch Forum, at least here in Stowe, is full of arguments for and against STRs with absentee owners. Not surprisingly, both hotel owners and those who live in the buildings where they also rent would like to shut the competition down. On the other hand, those who sell services to the visitors who stay in the STRs want their customers to have an affordable place to stay. At a time when it is very expensive to build anything, much new construction is for the lucrative STR market and wouldn’t be done at all if that market didn’t exist.

The move of visitors to houses and the former tenants of those houses to motels is an example of markets adjusting to reality. There would be less housing built if there weren’t a market for STRs and less visitors to Vermont if there weren’t places they wanted to stay. There’d be less places for people to live if motels weren’t recycled as housing. A very real danger is that local and state government will interfere with the building which is happening by banning absentee-owned STRs in the mistaken belief that there will then be more traditional apartments available

So what should happen?

Government should allow and encourage (not require, not subsidize) more building of less expensive housing including rental units. With restrictive zoning keeping buildings low in downtown areas and forbidding “development” in rural areas, we have made the economics of building cheaper, smaller houses and affordable apartment units impossible. The Vermont Senate was considering an excellent compromise which would have addressed both zoning and the regulatory obstacles in Vermont’s notorious anti-development Act 250. Somehow the compromise fell apart as the bill moved from the Senate to the House; The House can and should revive it.

Government can also encourage homeowners to get back into the long-term rental business by making it much easier to evict tenants who break the law and/or trash their units and/or don’t pay the rent. Short-term renters are never a long-term problem for the landlord, but many homeowners would prefer long-term leases with law-abiding tenants.

Non-law-enforcement hurts landlords’ willingness to rent. The effect is worst on tenants who have less housing choice and have and must live with the miscreants whether in a motel or an apartment house. Not separating the violently mentally ill from those who just need economic help makes the problem even worse.

We can have the vacation and housing stock we need. It will be built largely with private money – if government does what it should do in keeping the peace and does not do what it shouldn’t do and decide exactly how each property is to be used.

See also: Legislators Squandering Money

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