News » News Features

A House Divided: Dissecting the AirBnb Effect

Do short term rentals help solve the housing crisis? It might depend on who you ask

by

comment
feature-4eaa979802981cb2.jpg

Right now, a Dutch guy is bathing in Carol's bathroom. It's attached to her master bedroom in the mid-century bungalow she shares with her elderly mother. "He seems to take two showers a day," she laughs. "Maybe it's a European thing."

In her 50s, Carol—who asked to be known only by her first name—was born and raised in Central Oregon, and was one of the casualties of the economic downturn in 2009, when she lost her job. "It was a complete shock," she says, "I was a single mother of two growing boys, my mother fell ill, I had a mortgage to pay for, and I felt completely helpless."

Four years later, she struggled to make ends meet, at one point holding three part-time positions. That all changed in 2013, when she sent her eldest son to college in Portland and had trouble finding a place to stay. "Everything was $200 or more a night," she reflects. "I thought, here I am sending my son off to start his life, and his mother can't afford to properly send him off." Someone mentioned Airbnb. "I stayed in someone's home, just like mine, for $55 a night. That's when the lightbulb went off."

Carol came home energized and hopeful. She added a separate entrance to her master bedroom four weeks later, moved into the smaller guest room and has been welcoming guests ever since. "It's been a godsend," she says as she pulls up to my driveway, checking her Uber app to make sure she has the right address, "and now I'm thriving, where I would have been struggling."

Did I mention she also supplements her Airbnb income by driving for Uber? She's given nearly 900 rides since the ride sharing app began service in Central Oregon in May — a prime example of a local capitalizing on the "sharing economy."

screen_shot_2017-09-28_at_12.46.04_pm.png

Once taboo, now the norm

A

cross the high desert, stories such as Carol's are increasingly common. The City of Bend reports there are 744 active short term rentals within the Bend city limits—more than a 200 percent increase in as little as three years, when there were only 344 listed permits. This is partly due to a 2015 rule change which required those leasing their homes, or up to two bedrooms to a tenant for fewer than 30 days, to apply for a short term rental permit. The rentals may have already been active, but now, homeowners are required to be licensed.

"You can see that prior to the rule changes on April 5, 2015, there was a spike in the amount of permits being applied for at the City of Bend," says Lorelei Williams, the City's program manager. "After rule changes were made, there was a dropoff in the amount of permits being filed for, and this is mainly due to the 250-foot density buffer requirement for whole-house STR permits. Many homes became ineligible for a whole-house rental permit after those rule changes."

The 250-foot requirement is an effort by the City to regulate rentals, so that entire communities aren't made into vacation sanctuaries. Though there is much speculation about Federal Street. being one of those vacation rental-heavy communities, the City says of the 105 tax lots on the street, only 18 of those are short term rentals—a rate of 17 percent.

"The permit still proves to be popular as we are still receiving applications... and infrequent rental permits are not subject to a density buffer so those may still occur in saturated areas," says Williams. Hence, why Federal Street may have more than the 17 percent reported rental rate.

People attribute rental platforms such as Airbnb, VRBO and FlipKey to the spike, as it becomes easier and safer to rent. For people such as Carol, the taboo of letting strangers into your home seems to dissipate in the face of benefits such as self-employment and subsidized income.

screen_shot_2017-09-28_at_12.46.15_pm.png

Vacation rentals: happening for 20 years

"P

eople used to ask me, how can you let strangers sleep in your bed?" exclaims Michele Halderman, who's been renting homes across Oregon as vacation rentals for 30 years. "And I'd laugh and say, "Honey, for $500 a night they can do whatever they want in my bed. It's their vacation."

Halderman began Bend Vacation Rentals in 1999 after a 10-year stint in Hood River, when the idea of renting out your own home was, as she puts it, a looney prospect. "I would walk around and ask people if they wanted to rent out their homes," she reflects, "half thought I was crazy and the other half would pause, run the numbers and say yes...but they probably still thought I was crazy."

She started with one house, then four, then approximately 45 when she sold the business last year. "Bend's always been a tourist town, and I know some locals don't want vacation rentals, but this is the way of the world. What some people might not realize is that it's been happening for more than 20 years." Halderman estimates there are 600 vacation rentals in the Bend area run by property management companies such as hers. That was once the norm, but the market has been overtaken by enterprising locals —and yes, even Bay-area transplants—using Airbnb-type platforms.

Halderman was part of the 2014 task force organized by the City to tackle the burgeoning short term rental industry and its impacts on the housing market. With a less than 1 percent vacancy rate reported by the U.S Department of Housing and Urban Development, Central Oregon is deep in the throes of a housing crisis.

In 2015, the City Council, on recommendations from the task force, implemented a short term rental permitting process. Since 2016, the City has garnered a 10.4 percent transient room tax on every reservation, part of which goes into the City's general fund. The City expects to garner approximately $13.1 million of the projected $19.6 million from these taxes in the next two years.

This money is spent on projects ranging from public safety to yes, fixing those darn potholes. Still, another large portion, about 31 percent goes to promoting tourism, with entities such as Visit Bend garnering a significant portion of this leftover tax. Some say that with a housing crisis afoot, more of the pie should go toward supporting local housing solutions and less toward tourism promotion. To that end, the City successfully appealed to the State of Oregon to allow them to put more of the TRT toward the general fund, as of 2015. State rules prohibit an even bigger share of the pie.

Embracing changing trends

A

s the ease of technology increases, the traditional rental market and consumer travel trends have changed. Long gone are weekly vacation rentals. "In the summer, yes, you'll definitely get a week rental, but in the winter or shoulder seasons, you'll be lucky to get two days at a time," says Halderman. She says that in her 20 years in the vacation rental industry, the term "shoulder seasons" wasn't applicable to Bend until Visit Bend began pulling in events in the fall or spring seasons four or five years ago. "Cyclo Nationals (in 2010) was when we started seeing an influx of people here in the fall, but it's still relatively quiet here in those months."

A quick look at the vacancy rate on Airbnb for this upcoming Sept. 28-29 weekend confirms her observations; 241 rentals are still available for a two-day period. Though Airbnb spokesperson Laura Rillos was unable to confirm the total number of Bend area rentals, she does say, "The typical listing is booked just 46 nights a year—fewer than four nights a month." The average Bend host earns $9,700 a year.

Could those same availabilities be open for long term tenants instead?

C

arol, the Airbnb-turned-Uber driver, says her room wouldn't be open to long term roommates anyway. "I wouldn't have given up the comforts of my master bedroom and invested in a separate entrance for a long term roommate. My mother is ill and I don't want to burden her with someone here full time. Airbnb allows me to rent just 10 days a month for the same price of a monthly roommate."

screen_shot_2017-09-28_at_12.45.55_pm.png

After this past winter's heavy snowfall, Halderman says short term rentals were a saving grace for locals who became victims of ice dams, roof collapses and floods, using vacation rentals as temporary shelter while their permanent dwellings were fixed. "I think this winter was an anomaly; we had folks renting for two months while they waited for their homes to be fixed."

Added to the influx of those looking for a lifestyle change, retirees and traveling nurses, it's all added to the housing pressure. "Of course, there's also the relocation aspect that has greatly increased, I'd say in the last three years or so. Everyone wants their kids to be within biking distance of Summit (High School) or Pacific Crest," Halderman says, laughing, "I mean, one day I had two Tanyas call me, and their story was exactly the same. I thought I was losing it, but it turns out they were two different people.

"For those thinking renting out your home is just quick and easy cash, you're dead wrong, it is a job," says Halderman. "First, you're taking a huge risk. Yes, it may pay off greater than having a long term renter, but it's still a huge gamble. I mean, if the economy tanks, the weather turns or a disaster occurs, you're left without an income." She notes that the entire town came to a standstill when the Sept. 11, 2001, attacks occurred. and again during the recession. "People lost a lot of money and that's something you can't predict."

Still, it's a gamble, which if it pays out, can pay out huge. "A small 1-bedroom mill house used to go for $60-100 a night, now it's up to $300 a night," she says. "An upscale property can go for $500," she says. "But if you look at Tetherow, they're renting their properties up to $800 a night, so I mean, the squeeze is already there. And they're exempt from short term permits."

screen_shot_2017-09-28_at_12.46.28_pm.png

A recent City Council debate, and an "emergency"

D

uring the Sept. 20 City Council meeting, a first reading on an emergency text amendment to the Bend Development Code for Short Term Rentals in Deschutes Landing passed unanimously, allowing several properties in the subdivision to be exempt from the short term rental permitting process — similar to the Mt. Bachelor Village and Broken Top subdivisions. Of the 36 houses, 33 are already exempt and eight are rentals. A pending real estate transaction, according to Councilor Justin Livingston, drove the need for an "emergency" statute, meaning once passed on its second motion, the amendment would come into effect immediately, instead of within the regular 30-day window.

Councilor Barb Campbell raised concerns regarding the motion and initially abstained from the vote, citing the dilemma this posed in light of the current housing crisis. "It's about us actively trying to create housing for residents on the one hand, but then taking three units of residential housing and converting it away from residential housing into a hotel. You know, that's where it comes down to."

Livingston, who's also a real estate agent, countered, "I appreciate you trying to protect the affordable housing, but these are $1-million-plus units, these aren't affordable housing units."

Councilor and Mayor Pro-tem Sally Russell agreed, citing her participation on the 2014 task force during which they "identified certain areas throughout the city that would allow for type-1 short term permits. We knew we might be missing certain areas. ...For me, this change makes tons of sense."

Mayor Casey Roats agreed, noting that Deschutes Landing probably should have been designated this way in the first place, "If they (the landowners) would have approached us before (the April 15, 2015, change) it would probably been cleaned up then, and these poor folks have been hanging around in limbo for years now, months and months since they approached us."

"Hold on, Mr. Mayor," Campbell interrupted. "You just pointed out they were "poor folks," when Justin just said they are $1 million apartments. (laughs) I'm sorry. This is my dilemma, that we're actually giving away land, in order to try and get affordable units, and then we do this."

With increased pressure from the mayor, Campbell agreed to vote, sighing, "An emergency it is then."

See the video of the interaction, here.

Regulation and Enforcement

F

rom 2014 to early 2016, the City of Bend cited exactly zero homeowners operating illegal short term rentals.

According to Julie Craig, the City's code enforcement officer, there have since been just two citations for operating illegal dwellings this year. In 2016, there were five listed formal complaints. That figure has skyrocketed in 2017. Craig says she has received 48 complaints of illegal operating units this year. "I don't receive too many complaints on legal STRs," she says, but "when I do, they are related to noise, a non-responsive 24 hour contact person and occupancy." Still, of the two citations, one homeowner who did not show up to court proceedings was fined a whopping $28,500. "That's for two violations," says Craig, "operating an illegal STR without the proper land use permit, ($750 a day for 19 days) and operating without a STR operating license ($750 a day for 19 days)."

Williams of the City of Bend says there hasn't been much talk about regulating short term rentals any further, noting the drop-off in applied permits. Rillos of Airbnb also notes that "with 42 percent of Airbnb guest spending done in the neighborhood in which the guest stay[s], this brings economic benefits to businesses that have not traditionally benefited from tourism."

So the housing crisis won't improve from the uptick in vacation rentals, but the community as a whole might.

Brian Blaesser, a real estate attorney notes, "Fundamental property rights state that you should be able to buy, rent or sell a property," he said. "Limiting renting is taking away one of those three rights, and further regulations beyond registration and inspection can be dangerous."

Halderman adds it's the American way to not interfere with people's choices. "How do you tell people you can't make a living the way you want to make a living?" She says, "There's so much more positive out of this than negative, and sometimes those in Bend can feel entitled... but a lot of people want to live in Bend and the reality is, not everyone can afford it, so if renting out a room in your house means you can live here, then why not? You've got to change how you feel about your community and allow for new, progressive ways to make a living flourish... just remember to be neighborly when you do it."


Add a comment