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The Frisco Town Council is considering an overhaul of its short-term rental regulations after receiving estimates that only half of town properties listed on sites like Airbnb and Homeaway are in compliance with current licensing rules.

The most likely change, which could take effect by November, would scrap "umbrella licensing," which allows property management companies to list their entire short-term rental portfolios under a single license. That leaves thousands of revenue dollars on the table and prevents the town from precisely monitoring STR numbers.

A recent third-party analysis found approximately 850 short-term rental listings in Frisco, but only 237 active vacation rental licenses — 25 of which were umbrella licenses. Town staff estimate that even if umbrella licenses account for 200 units, the town has still only achieved a 50 percent compliance rate.

"We've known about this for a couple years, we haven't put the resources into it, but I think now we need to get more staff involved and start looking at it pretty closely," Frisco Mayor Gary Wilkinson said during a council work session on Tuesday.

More stringent measures like capping STRs in town are on the table, but council seemed more inclined to strengthen and better enforce the current licensing system rather than strictly curtails rentals. More public hearings will precede any rule changes, council said.

There are plenty of benefits to short-term rentals, which keep the lights on in town and generate foot traffic on Main Street. And while recent tax revenue data suggest they may be taking a bite out of the hotel business, lodging isn't necessarily a zero-sum game. Renting out a spare room can also help local homeowners stay afloat financially.

Perhaps the most important question for short-term rentals, however, is their impact on housing for locals. While STRs have taken on a sort of symbolism for residents who chafe at the lack of long-term housing options, their actual impact on the rental market is unclear.

"Do we know that, if we limit short-term rentals, those owners are going to turn them into long-term rentals or just sit vacant?" councilman Rick Ihnken asked. "I don't know if we can get that answer, but that's the big unknown for now."

If owners can make more money renting to vacationers day-to-day, the thinking goes, they're less likely to lease their units to locals year round. But testing that theory is almost impossible. Historical data are lacking or incomplete, and there are a slew of factors influencing how owners choose to make money off their properties.

"Impacts on long-term employee housing supply are incredibly difficult to quantify as historical data sets are unavailable as to how many units were once available for long-term rent, how many of those units were actually rented by local employees, and how many of those units may have converted to short-term," Frisco town staff noted in a report to council.

Academic research indicates that short-term rentals can limit local housing. One study by an affordable housing advocacy group found that STRs reduced New York City's housing stock by 10 percent. A paper published in the Harvard Law and Policy Review similarly found that STRs were exacerbating Los Angeles' housing crisis.

Frisco, of course, is no coastal metropolis, and it's unclear how STRs might impact the rental market in a town where roughly 70 percent of properties are second homes.

Breckenridge, like all of Summit County, has a high proportion of second homes as well. In 2016, the town commissioned a study that found STRs had a "significant" impact on local housing, reducing the available stock while increasing the demand for workers. The findings, however, were approximate and limited by data availability.

Nick VanDer Sluis, who lives in Denver but rents two condos in Breckenridge short-term, bought his first unit four years ago to avoid Interstate 70 traffic. Renting it out on Airbnb allowed him to use it whenever he liked while still making money off of it, something he couldn't do with full-time tenants.

Breckenridge is not considering new regulations. However, Sluis said that if he were dis-incentivized to rent short-term — perhaps through a cap system that made licenses expensive — he would probably sell his units rather than rent them long-term.

"It's a two-fold problem," he said. "There's a shortage of affordable housing but there's also a shortage of hotels and rooms to rent to drive the industry there. So that's a tough call. If you start limiting short-terms, you're helping one market and hurting another."

Paty Frost, who also lives in Denver and rents a unit in Breckenridge short-term, also enjoys the flexibility of Airbnb, which allows her to bring in some extra money when she isn't staying at her place.

"We haven't discussed doing long-term, so the economics of it wasn't even really part of the decision," she said. "We just wanted to still be able to use the place."

There are probably many owners like Sluis and Frost, whose units would be empty most of the year if they weren't being rented short-term. And while some units that might otherwise be rented to locals have certainly been converted to short-term, it's an elusive number.

One of the stated goals of the town's STR regulations is to "preserve and build Frisco's sense of community as a place where people live year round." But in a town with so many second homes, short-term renting may actually add life to blocks that might otherwise sit empty.

"Whether it's good or bad for neighborhoods, at least there are lights on in these communities and people going to our businesses," councilman Hunter Mortensen said. "I went for a walk with the dog today and walked by four driveways that had not been plowed all winter. To me, that's more of a concern than short-term rentals."

Bringing the Olympics to the Rockies may be a tall order for Summit and neighboring mountain communities — 12 to 15 stories tall, to be more exact.

The Denver Olympic Exploratory Committee recently met with Summit housing officials and set out the needs for an Olympic village for athletes, coaches and staff in the mountains. Summit Combined Housing Authority executive director Jason Dietz presented the Olympic village requirements to local town and county officials at the authority's regular meeting on Wednesday.

"The site will need to be 35 to 50 acres of 'flat' land," Dietz announced, and was met with a smattering of chuckles from around the table. Finding a contiguous, flat parcel of land is a steep ask in the mountains. A current property listing on LandWatch.com has one 26-acre flat parcel in Breckenridge selling at $1.75 million.

Dietz added that any such site purchase and infrastructure development would need to be privately or publicly funded, as the Olympics would only pay to rent space while the games are being hosted.

“We want to see what legacy makes the best sense for Denver and the mountain towns.”Ramonna RobinsonSpokesperson for Denver Olympic Exploratory Committee.

For a 35-acre site, Dietz said, housing would need to be dense and cover a smaller footprint in order to accommodate the 2,000 rooms needed to house all the athletes. That would necessitate the construction of a 12- to 15-story residential tower in the middle of a village complex. For a 50-acre site, the building would be 2- to 4-stories tall on a much larger footprint. The villages would also need new infrastructure such as roads, plumbing and electricity.

Summit County manager Scott Vargo said that the county is not at all thrilled about the first proposal. "I don't think a huge tower block would be appropriate for our community," Vargo said, adding that the shorter 50-acre complex seems more feasible, though finding appropriate flat land remains a daunting challenge.

Vargo also said that aside from housing, three new sports venues will need to be built in Denver and the mountains for Nordic skiing (the Nordic centers in Frisco and Breckenridge do not meet Olympic specs), the ski jump and a sliding track for the luge/bobsled.

Ramonna Robinson, spokesperson for the Denver Olympic Exploratory Committee, said that the housing requirement is necessitated by International Olympic Committee requirements. "The IOC requires enough housing for 5,500 beds for the athletes, coaches and staff," she said. She added that the committee is looking at the possibility of building separate villages in Denver, Summit and Eagle to spread out the residential need.

Robinson sees lasting benefits to bringing the Olympics to Colorado. She said that the villages and other infrastructure development could become permanent improvements and address some critical needs in mountain communities.

"There are a lot of infrastructure and capital improvements that aren't being funded in Colorado," Robinson said. "We really believe that the Olympics can be a catalyst to attract much-needed federal funds and help with major issues in the mountains, such as workforce housing and expanding and improving I-70. It could be a benefit for everybody."

Robinson said the exploratory committee is listening to as many local voices as they can to see what solution best fits their communities.

"We want to see what legacy makes the best sense for Denver and the mountain towns," she said, adding that affordable housing could be one such legacy.

The exploratory committee has met with officials from mountain towns including Breckenridge, Frisco, Georgetown, Vail and Winter Park. The committee is also encouraging public input through an online survey that closes at midnight Saturday. The survey can be accessed through the exploratory committee's website, SharingTheGold.org.

Mortgage Rates on FIRE! Home Prices Up in Smoke?

by KCM

 

Mortgage interest rates have already risen by over a quarter of a percentage point in 2018. Many are projecting that rates could increase to 5% by the end of the year.

 

What impact will rising rates have on house values?

Many quickly jump to the conclusion that an increase in mortgage rates will have a detrimental impact on real estate prices as fewer buyers will be able to qualify for a loan. This seems logical; if there is less demand for housing then prices will drop.

However, in a good economy, rising mortgage rates increase demand as many prospective purchasers immediately jump off the fence to guarantee they get the lower rate.

Let’s look at home prices the last four times mortgage rates increased dramatically.

In each case, home prices APPRECIATED and did not depreciate. No one is projecting as dramatic an increase in rates as the examples above. Most are projecting an increase of approximately 1% by the end of the year.

The last time mortgage rates increased by 1% over a twelve-month period was January 2013 (3.41%) to January 2014 (4.43%). What happened to house prices during that span? They appreciated by 9.8%.

Just two weeks ago, Rick Palacios Jr., Director of Research at John Burns Real Estate Consulting explained:

Mortgage rates have risen 1% or more ten times in the last 43 years, with little impact on home sales and prices when the economy was also strong…Historically, rising confidence, solid job growth, and higher wages have more than offset reduced demand for housing resulting from higher mortgage rates.

Bottom Line

When mortgage rates increase, history has shown that prices appreciate (and do not depreciate) during that same time span.

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