Longtime Boiseans remember a time when the North End was chock full of affordable rentals.
Cathy Steuart Sherman rented several houses in and around the tree-lined neighborhood for years before she and her husband purchased a home on 5th Street in the late 90s. They moved out of the small house in 2005 and decided to rent it out at an affordable rate, joining several other homes and apartments for rent in the few blocks nearby.
That’s not so much the case anymore. Slowly, she said many of the rentals she remembers near her property turned over from long-term rentals to short-term vacation rentals listed on sites like AirBnb or VRBO. She didn’t realize how tight the housing market had gotten until Sherman listed her rental a few years ago and dozens of applicants flooded in, many of them coming to the showing with cash in hand.
After looking around the neighborhood, she discovered the boom in short-term rentals where low-income renters used to live.
“Then, it was about that time too I realized in the neighborhood there was an apartment house that flipped all the units in it to an Airbnb,” she said. “…That one I think would have been one of the first ones and later out of curiosity I checked and now there are six within spitting distance of my house.”
Short term rentals have been springing up worldwide in recent years. They offer a more unique travel experience than booking into a hotel and allow homeowners struggling to make their mortgage or property tax payments another source of income as cost of living rises. But, the new industry isn’t without its critics.
Homeowners have raised concerns about flurries of short term guests in residential neighborhoods, parties and other disturbances. Beyond that, housing advocates are concerned the proliferation of vacation rentals is reducing the number of homes available for renters and home buyers. They say changing residential homes and apartments to crash pads for tourists further constricts an already tight housing supply and drives up prices.
Boise is hot, hot, hot
Demand for long-term places to live isn’t the only thing powering the Treasure Valley’s housing boom.
Short-term rentals have become more popular in the last five years, with listings popping up across Boise and the surrounding cities. The options range from mother-in-law suites tucked behind homes, to “cozy cottages” in the East End, entire homes in West Boise subdivisions and even an internet-famous potato-shaped getaway outside the city.
The City of Boise does not license the operation of short-term rentals and an Airbnb spokesperson declined to release data on the extent of the company’s operations in the area. But, according to vacation rental investment website Airdna.co, there were 824 active Boise short-term rentals during January 2021. They were renting at an average daily rate of $131.77 with an average occupancy rate of 60%, according to the company’s analysis.
This number isn’t insignificant, but it’s smaller than it used to be. The Airdna data says Boise’s short term rental market slowed down 26% since January 2019 when the market had 1,037 active rentals. At the time, occupancy was slightly below 50% and the average daily rate was $112.39.
What are the impacts?
As the sharing economy booms, researchers have been looking into how short term rentals affect housing markets across the country.
An October 2020 study published by the Institute for Operations Research and the Management Sciences in Maryland found introducing short-term rentals into the market increased home prices and rental prices. This was due to increased rental rates after some landlords turned their long-term rentals into vacation rentals. The study also found the short-term rental market made owning residential property more valuable because of the possibility of earning more money from them, driving up prices.
This study examined Airbnb listings from the entire United States from 2012 and 2016 and compared it with home prices and rental rate data from real estate listing website Zillow and other information on individual zip codes collected by the U.S Census Bureau. The study found the higher percentage of homes in a zip code occupied by their owners, the less short term rentals impacted prices because owners were less likely to convert their homes to short-term rentals.
Airbnb says differently. Company spokesperson Mattie Zazueta said short-term rentals run by the company represent a small fraction of Boise’s overall housing stock and much larger economic factors impact rents, like the ongoing COVID-19 pandemic.
“Countless families depend on Airbnb to pay their rent and stay in their homes, which has become even more important amidst the current crisis,” Zazueta wrote in an email. “As our data confirms and a number of experts have concluded, home-sharing has little impact on housing affordability, this applies to Boise as well.”
She cited a few studies to back up her point, including a 2016 post from Zillow where they surveyed economists about the potential impacts of vacation rentals. The post found only 5.1% of economists the company surveyed who had an opinion on the matter thought vacation rentals would have a long-lasting impact on the overall housing market.
Zazueta also nodded to studies indicating the ability to home share helped low-income families earn extra income and stay in their homes, particularly in high-cost areas like the Bay Area. She also linked to an August 2020 study from University of Pennsylvania Assistant Professor Sophie Calder-Wang about short-term rentals in New York City. In her research, Calder-Wang found Airbnb did overall increase rental prices in the market, but it was most likely to hit high-income, white renters who would be more likely to rent in neighborhoods desirable to tourists.
Airbnb gives a boost to Boiseans
Dallas Gudgel used to only rent to long-term renters, until he tried out short term renting with his own house.
A few years back, Gudgel listed his family’s North End home on Airbnb while they were out of town for an extended period of time. It worked out so well he started slowly converting some of his long-term rental units he owned in the neighborhood into vacation rentals instead.
“I did the math and if I could keep them occupied about 20 days out of the month, it would break even for what I made with a long term renter,” he said. “If I kept them occupied a little more than that, I would be making a little more than that. I also liked that because I got to see (the units) every few days or every week. Whereas with my long term rentals I would get surprised when tenants moved out when they weren’t taking care (of the unit).”
He’s stopped running his short-term rentals now due to the COVID-19 pandemic, both because the demand dropped off and so he can use the units to house elderly family members and for a home office. Before he stopped at the beginning of 2020, Gudgel operated up to seven Airbnbs of his own along with one or two others for friends of his.
Gudgel works in affordable housing development in his day job and is concerned with the impacts vacation rentals have on affordability. But at the same time, his costs are rising too.
“My property taxes have gone up 12,13,14, percent some years so that’s a little hard to take and they’re going up because the home prices are artificially inflated,” he said. “I kind of almost feel bad because I’m renting out mother-in-law cottages for an extraordinary amount of money in the North End.”
Will Boise make changes?
Airbnbs have been a hot topic in the City of Trees recently.
In September 2019, former Mayor Dave Bieter proposed an ordinance regulating short-term rentals. His proposal included requiring owners to live on the property, a registration process for new short-term rentals and a limit on one short-term rental per property.
The proposal got a mixed reception, including strong opposition from Boise Regional Realtors that argued restrictions would be an infringement of private property rights. Bieter opted to form an advisory group to study the issue further and he announced prior to his loss in the mayoral runoff to now-Mayor Lauren McLean he would not pursue the changes after all.
McLean supported changes to the regulations of short-term rentals during her campaign, calling for “common-sense licensing practices.” A year into her term, she has not taken any action on the issue.
But, that could change soon. McLean said in a recent briefing with the press her administration has started planning this month for an ordinance to require licenses for short-term rentals.
“If you’ll remember, I talked about it (during the campaign) and will continue to talk about it now about creating a common-sense way to know who has (short-term rentals), where they are and to help us collect some data to determine how they are impacting our rental market in the community,” McLean said.
The vacation rental next door
Gudgel never had problems living near short-term rentals in the North End, but not everyone is enamoured with the concept.
Chris Runyan has short-term rentals popping up near him in the East End, and he is concerned about the impact on the community and the safety of his kids who play nearby. He said the rentals in his neighborhood cause problems with disruptive parties, cars overflowing driveways and blocking the sidewalk and trash barrels left out on the street days after pickup.
His frustrations with living near Airbnbs led him to research online about their impacts on the housing market. Runyan, a member of pro short-term rental regulation citizen group Protect Boise Neighborhoods, is worried about out-of-state investors buying up properties instead of Boiseans running them out of their homes.
“I think most people think it’s ok to rent out a room in your home, but the problem is when you get outside investors or people investing in multiple properties and the property goes to short term rentals a lot of the times you can’t get that far (arguing against it) because they throw out ‘if you get any regulations you will force some person out of their home’ and that’s not true because most cities allow homeowner occupied short term rentals.”
In response to concerns from neighbors like Runyan, Zazueta said Airbnb issued a ban on “party houses” in 2019 and launched a neighborhood hotline to report disturbances to the company. Reports on the hotline have led to suspensions from the service, the company says. There is also a cap on 16 people per booking.
The company also has an automatic system to scan listings based on the size of the listing and “hundreds of other factors” to flag some bookings as “high-risk” and proactively cancel them to prevent parties. Zazueta said Airbnb also runs background checks on guests and hosts who provide their legal first and last name and birthday, which includes sex offender registries.
Runyan said Protect Boise Neighborhoods is hoping for regulations from the City of Boise requiring short-term rental hosts to live on the property they are renting out. So far, he said the group has 90 people pledging support for an ordinance requiring the change.
Sherman, the landlord in the North End, agrees with Runyan. She understands why someone would want to rent their properties out as vacation rentals to make more money, but she’s worried about how the market incentivizing those types of rentals over units for long-term tenants could impact neighborhoods.
“I think if we had the model of ‘it has to be in your backyard’ I don’t have as much of a problem with that, but I do think that when we turn whole neighborhoods and whole buildings to a defacto hotel that doesn’t do your neighborhood any good,” she said. “The neighborhood cohesiveness and what we all love about neighborhoods disappear in that model. That’s what we need to protect.”