FEATURED ARTICLE: The New Path Toward Tomorrow's Real Estate Profits
that more than 300,000 Airbnb res- ervations allegedly violated zoning laws. Those same reservations also generated host revenues worth $304 million. Such laws raise a question: Why were short-term rentals banned in the first place? There’s obviously a demand for such lodging. Airbnb estimates that two million people a night find accommodations through its system. Moreover, it’s obvious that the bans are holding down real estate values and rental rates, which is hardly a normal zoning goal. The answer comes in two forms. First, the hospitality industry — ho- tels and motels — have long sought to protect their interests as any special interest would. Their argu- ment is that, with the use of zoning to restrict competition, they can attract more investment, hire more employees, and pay more taxes into local treasuries. Second, there are winners and losers with zoning changes. Stron- ger sales prices and higher rental rates are good for owners but hurt home buyers and renters. So how has the battle for the over- night traveler turned out? Airbnb – which bills itself as “a new resource for middle class families” – has led the attack on restrictive zoning with support from legions of homeowners seeking bigger incomes and higher sales prices. Importantly, these are homeowners who vote. In many cases the company has been able to work out accommoda- tions with local governments by as- suring that occupancy taxes will be paid. As to the hotels and motels which once had a zoning monopoly, they’re now involuntary members of the sharing economy. Where’s the opportunity? Ride the wave. Short-term rentals are not going away. Look for trav-
el-destination properties with separate master bedrooms and accessory units in jurisdictions where such rentals are taxed and not banned. RESILIENCE ITEMS While it used to be that “sea- sons” meant such things as spring and summer, the new definition includes the hurricane season, the fire season, the flooding season, and the tornado season. Climate change is both real and costly. According to the government's National Centers for Environmen- tal Information (NCEI), there have been 246 billion-dollar weather and climate disasters since 1980. The total cost in today's dollars? More than $1.6 trillion. "Natural disasters are occurring with growing frequency and intensi- ty, and across the United States res- idential development has expanded in recent decades closer and closer to vulnerable wildlands," said Zillow senior economist Aaron Terrazas. "The result is that more and more Americans are discovering — some- times painfully too late — that their homes are at risk.” “Policymakers,” Terrazas contin- ued, “are struggling to find solu- tions to protect their communities and often face a difficult trade-off between new building regulations and infrastructure investments that can drive up housing costs and tax- es, or requiring insurance that also raises costs to homeowners and, in some cases makes taxpayers liable for the bill. There are no easy solu- tions, but the one outcome that is clear is that residents of the most at-risk communities will ultimately pay the cost in one way or another." Much of the U.S. housing stock is built to older standards, constructed
“It's no surprise that the U.S. saw an uptick in multi-generational living as a result of the Great Reces- sion, when living with multiple peo- ple under one roof provided certain economic advantages, but there are other trends that have caused this increase,” explains ValuePenguin. “Immigration is one. Two groups who comprise more than 50 percent of immigrants living in the United States today, Hispanics and Asians, are more likely to live in multi-gen- erational homes than white fami- lies, at a rate of 22 percent and 25 percent, respectively, compared to 13 percent for whites.” If it sounds as though multi-gen-
story of shifting norms,” says The Atlantic . “Fifty-plus years ago, a one-bathroom house or a bedroom that slept multiple siblings might have felt cramped — but it also probably felt normal. Today, many Americans can afford more space, and they’ve bought it. They just don’t appear to be any happier with it than with what they had before.” Where’s the opportunity? There’s no reason big houses must only be shared by families. Shared homes and apartments are entirely common in high-cost areas. Think of big city townhouses with “En- glish basements” code for rental units. In a sharing economy, the
same concept can work with Mc- Mansions – especially if that’s the best way to sell or rent them.
erational living might provide too much closeness, consider how times have changed. According to the University of Michigan: • In 1950, the typical home included 983 sq. ft. and was occupied by 3.37 people. That’s 292 sq. ft. per person. • In 2017 the typical new home had 2,599 sq. ft. and was occupied by 2.54 people. That comes out to 1,023 sq. ft. per person.
THE ZONING GOLD RUSH Zoning regulations — once virtu- ally impossible to overturn — are now in flux. The result is a real estate gold rush where once-mun- dane residences are turning into cash cows. Airbnb and similar companies have forced an end to long-stand- ing zoning bans on short-term rentals. The results have been illu- minating. A 2014 report by the New York State Attorney General found
“The story of American home sizes in the past half century is a
8 think realty housing news report
september 2019 9
Made with FlippingBook Online newsletter