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Do You Know the Cost of NOT Owning Your Home?

by KCM Blog

Owning a home has great financial benefits, yet many continue renting! Today, let’s look at the financial reasons why owning a home of your own has been a part of the American Dream for as long as America has existed.

Zillow recently reported that:

“With Rents continuing to climb and interest rates staying low, many renters find themselves gazing over the homeownership fence and wondering if the grass really is greener. Leaving aside, for the moment, the difficulties of saving for a down payment, let’s focus on the monthly expenses of owning a home: it turns out that renters currently paying the median rent in many markets could afford to buy a higher-quality property than the typical (read: median-valued) home without increasing their monthly expenses.”

What proof exists that owning is financially better than renting?

1. The latest Rent Vs. Buy Report from Trulia pointed out the top 5 financial benefits of homeownership:

Mortgage payments can be fixed while rents go up.
Equity in your home can be a financial resource later.
You can build wealth without paying capital gain.
A mortgage can act as a forced savings account
Overall, homeowners can enjoy greater wealth growth than renters.

2. Studies have shown that a homeowner’s net worth is 45x greater than that of a renter.

3. Just a few months ago, we explained that a family buying an average priced home at the beginning of 2017 could build more than $42,000 in family wealth over the next five years.

4. Some argue that renting eliminates the cost of taxes and home repairs, but every potential renter must realize that all the expenses the landlord incurs are already baked into the rent payment –along with a profit margin!!

Every year, Gallup surveys Americans to determine their choice for the best long-term investment. Respondents are given a choice between real estate, stocks/mutual funds, gold, savings accounts/CDs, or bonds.

For the fourth year in a row, Real Estate has come out on top as the best long-term investment! This year’s results showed that 34% of Americans chose real estate, followed by stocks at 26%. The full results are shown in the chart below.











The study makes it a point to draw attention to the contrast of the sentiment over the last four years compared to that of 2011-2012, when gold took the top slot with 34% of the votes. Real estate and stocks took second and third place, respectively, while still in recovery from the Great Recession.

Bottom Line

As the real estate market has recovered, so has the belief of the American people in the stability of housing as a long-term investment.


Nearly 3,000 homeowners netted $32 million during this ski season, a doubling from the previous season, Airbnb says

Jennifer Dahir-Kanehl works 50 hours a week at a Breckenridge restaurant to pay her mortgage. This past winter she and her boyfriend eschewed a roommate, opting instead to rent a spare space through Airbnb, joining the ever-swelling tide of high country homeowners hosting short-term guests.

At the restaurant and at the hotel where her boyfriend works, it’s a struggle to keep employees who can’t find a place to live. Dahir-Kanehl knows she could rent her spare bedroom, with its separate entrance and private bathroom, to a local worker.

“But in my world, why would I have someone paying $700 when I can make $2,200 to $3,000 a month,” she said. “Long-term rentals around here are hard to find and when you do, they want $1,000 per room and no one making $10 an hour can afford that. It’s tough for the town, and its going to be way tougher before it gets better.”

Short-term vacation rentals in Colorado ski country are continuing on an explosive trajectory, generating record amounts of income for homeowners and tax revenue for municipalities.

The number of Airbnb guests in Colorado’s resort towns nearly doubled this season over the 2015-16 season, as did the earnings by hosts, revealing the relentless surge of short-term rental business that is vexing community leaders grappling with the emerging impact of the red-hot shared economy.

More than 121,000 visitors booked Airbnb homes in Avon, Breckenridge, Copper Mountain, Crested Butte, Dillon, Frisco, Keystone, Steamboat Springs, Telluride and Vail for the 2016-17 ski season. About 2,800 homeowners — a majority of them women — netted $32 million from those visitors, a doubling from the previous season, according to statistics provided by Airbnb.

Expedia-owned vacation rental platform Homeaway has seen tremendous growth in the number of homeowners offering their residences to short-term guests, with the number of Homeaway-listing hosts in towns like Avon, Frisco, Steamboat Springs, Telluride and Vail growing anywhere from 74 percent to 261 percent in the last four years.

Along with this growth comes impacts, both good and bad. The good: local homeowners banking more cash and communities harvesting windfall tax revenue as they corral renters into licensing and taxing programs. The bad: neighborhood changes as more homeowners embrace short-term over long-term and the pinched supply of rental housing for local workers as homeowners opt for the more lucrative short-term guests.

But statistics revealing those impacts are fleeting. The source of the housing crisis in the high country cannot be blamed entirely on short-term rentals, said Brian Waldes, the finance director for the town of Breckenridge, a pioneer in regulating short-term rentals.

“It does make sense, but we don’t have a ton of data to say that these short-term rentals are a major contributor for our housing crunch. It is a contributor, but we don’t think that droves of homeowners are switching over to short-term rentals,” Waldes said. “We’ve always had a large rental pool, and it’s always been hard to find housing in the mountains. We don’t think these online travel sites necessarily caused the problem.”

Breckenridge, a town of 4,750, has six hotels, three bed-and-breakfasts and 3,345 licenses for individual owners to rent their homes and condos. It’s been that way for years. The town has long leaned on its condo owners to supply housing for visitors to the second-most trafficked ski area in the country.

Taxes on those individually owned units accounts for 29 percent of the town’s total sales tax revenue, marking the largest contributor to the town’s coffers. Short-term vacation rentals are vital to Breckenridge, and the town has developed the most progressive regulations in the state. This year, the town budgeted $19 million for its affordable housing fund.

On the other side of the regulatory coin is Durango, where about 60 of the city’s 8,000 housing units are available for short-term rentals, thanks largely to policies designed to protect neighborhoods and prevent the commercialization of residential areas. Lodging taxes for the city account for about 7 percent of its total sales tax revenue, reaching $1.7 million in 2016.

And in the middle are more than a dozen high-country cities and towns — in addition to major cities across the country — tinkering with different levels of regulation for short-term rentals, from Estes Park to Georgetown, Aspen, Crested Butte and Vail. Most every community has convened a diverse task force to study the issue and every town closely examines each other’s existing regulations in a search for what fits for their community.

“There isn’t a magic bullet. This is one of these things where there are a variety of best practices and a variety of approaches, but they are as different as night and day. It’s not a cookie-cutter approach,” said Sam Mamet, the head of the Colorado Municipal League. “There are a lot of communities dealing with it, but they are doing it differently because of differing needs.”

Short-term rental taxable sales from privately owned units in Breckenridge climbed from $97.6 million in 2014 to $127.5 million in 2016. Airbnb shows 45,600 guests booked accommodations around Breckenridge for the 2016-17 ski season, delivering to area hosts $12.6 million, exponentially more than any Colorado ski-town hosts on the website. Homeaway shows the number of Breckenridge-area listings has grown 73 percent from 2013 to 2017.

Lois Montague and her husband, Kent, this past winter decided to rent out the ground-floor, two-bedroom apartment in the house they built 20 years ago just outside Breckenridge. They thought they could bolster their retirement income by hosting visitors. It rented nearly every night this past winter, allowing 73-year-old Lois to ski 100 days and 78-year-old Kent to get 111 days on the hill.

“We have had people from all over the world, every walk of life you can imagine,” said Lois, who handles all the cleaning and bookings through Airbnb. “Breckenridge doesn’t have enough hotels, so we feel like we are filling a niche.”

She’s read the newspaper reports on the dearth of local worker housing. She’d rent long term, but sometimes her kids and grandkids come up and stay for a week or two. Plus, there’s the money.

“I know that Summit County and Breckenridge in particular have asked repeatedly through the news media that we consider renting the property out long-term to employees,” she said. “But the employees can’t afford what we are getting for rent. I feel bad, but I guess I don’t feel quite that bad.”

Airbnb has partnered with 275 governments around the word to collect and remit local lodging taxes. In February, the site began collecting state taxes for the state of Colorado, building upon existing tax-collecting agreements with Boulder, Snowmass Village, Steamboat Springs, Colorado Springs, and Golden.

“We want to help hosts pay taxes. Our community of hosts want to pay their fair share,” said Airbnb spokeswoman Jasmine Mora.

Even with Airbnb’s release of data, it’s hard to get a good grasp of how short-term rentals are influencing Colorado’s resort towns. Ralf Garrison, whose Denver-based DesiMetrics group surveys property management companies and hoteliers across the West to identify lodging trends, called short-term rentals “a Rubik’s Cube.”

“Rental-by-owner these days is probably the most disruptive and least understood influence in the vacation lodging marketplace,” he said.

There’s no reliable indicators. Some owners rent their second homes all the time. Others rent when they aren’t using it. Owners with a high net worth tend to not rent at all. Then many owners list across multiple platforms, meaning the number of listings rarely mirrors the number of available units for rent.

There are several pistons firing off the same crankshaft, said Garrison, who in presentations to municipalities eager for statistical support of any impact from short-term rentals, tends to elevate short-term rentals as critical “hot beds” that can fuel a region’s economic vibrancy.

“The highest and best use of some of these units is as a short-term rental,” Garrison said.

Now hotels and property management companies are listing properties on Homeaway, VRBO and Airbnb, and those sites are becoming distribution channels for traditional lodging.

“For those of us who love puzzles, we are having fun,” Garrison said. “It’s really hard to solve until you get the hang of it and we all are slowly figuring it out.”

Summit Real Estate's Recommended Service Providers List

by Allison Simson

People are always asking us for recommendations of who to use for everything from carpet cleaning to window replacement to who does the best nails!  Over the years, we have worked with many companies and have put together a list of people we've worked with who are just great. Plain and simple. 

We've had so many requests for this list that I thought I would pass is along to you here:

Please share with us your experience, if you do decide to utilize a provider from our list. We love hearing confirmation that these are indeed valuable recommendations.

If this list doesn't have the service you are looking for, please contact us! Chances are “We gotta guy” for you. We are fortunate to have an embedded team with a wide network in Summit County.

We are in the business of helping you anyway we can. It is our pleasure to share with you those who have our team’s seal of approval!

P.S. If you are in Summit County, and are not on the list, give us a call. Let's chat. 

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Summit Real Estate
The Bright Choice
330 Dillon Ridge Way, Suite 10
Dillon CO 80435
Fax: 970-468-2195

Allison Simson, Owner/Broker, is a licensed Colorado Real Estate Broker