We are seeing an interesting trend in the short term rental market throughout Colorado. Cities like Breckenridge, Boulder, etc… have led the charge for short term rental regulation. Now counties like Summit County and Eagle county are putting countywide regulations in place. Why are counties now involved in short term rentals? What is in Eagle County’s new regulations? What does this mean for real estate? What is Eagle County implying that might radically alter the nightly rental industry?
Why are counties now involved in short term rental regulations?
The best data I have seen on the explosive growth in unincorporated areas comes from Summit county where in 2017, there were 635 short term rentals which has exploded to 10,425.
As cities began further restricting nightly rentals through caps and imposing more taxes, nightly rentals have quickly spread outside of the core areas like Vail and down valley. Pre covid nightly rentals were not a huge topic in unincorporated areas. Fast forward 5 years and counties throughout the state are being forced to now confront the issue as nightly rentals have greatly increased into non-traditional areas.
What is in the proposal from Eagle county to regulate short-term rentals?
The proposal is in draft form, but below is general information on what it could look like
- County wide licensing in unincorporated areas
- Registration fees for funding the new regulatory system they are implementing
- Additional taxes on short term rentals in unincorporated areas are on the table.
When you read the fine print, big changes in store for nightly rentals
Here is what Eagle county said to explain why they are proposing the new ordinance, focus on the highlighted words:
“Licensing short term rentals would help the county receive more information about the number, type, and availability of rental units in unincorporated Eagle County. A license could require short term rental operators to register regularly with the county, maintain uniform health and safety standards, and pay annual fees to the County. A licensing program could better balance economic vitality with visitor impacts, ensuring short term rentals fit in more holistically with the community”
Long and short, the last sentence is alluding to caps or bans on nightly rentals in certain areas so that they do not become a nuisance to full time residents. Other counties like Routt county have gone this direction banning nightly rentals in certain unincorporated areas. This is a likely outcome from the new regulations
What are other counties in Colorado doing on short-term rentals?
Other mountain counties have been considerably more aggressive on nightly rentals outside of cities in unincorporated areas. Here are the two Eagle county neighboring ski counties
- Summit County (home to Breckenridge): The new rules limit the number of properties that can hold short-term rental licenses in the unincorporated county’s various basins, ranging from 5% to 18%. There is no limit in areas defined as “resort overlay zones,” such as Copper Mountain. Furthermore, they placed a cap on 35 bookings a year
- Routt County (home to Steamboat): Routt county has implemented a ban on nightly rentals in unincorporated areas, but they have done very little if anything to enforce it
What does this mean for property values in unincorporated parts of Eagle county?
The way the current rules are being proposed, I would not expect any big changes in real estate values in Eagle county at the present time unless you have been banking on operating a nightly rental in an unincorporated area. The proposal opens the door for bans/regulations to ensure that nightly rentals fit more “holistically” into the areas.
Summary
Although currently I don’t see any huge impacts from the Eagle county proposals, the million dollar question is what happens next. As we have seen in every ski town, there is a huge push towards less tourism. This has been exacerbated by the changing demographics of each mountain town. Prior to Covid, there were more full time residents that worked in the tourism industry. As Covid changed the work from home paradigm and prices increased substantially, the voters also changed considerably and we are seeing these changes first hand at the ballot box.
The new Eagle county initiative is just the beginning of increased regulation and taxation in unincorporated areas. Based on the changing demographics, this trend will continue to accelerate so even though the real estate impact is limited if anything now, the more important question is what happens next.
Additional Reading/Resources:
https://www.eaglecounty.us/government/draft_short_term_rental_ordinance.php
https://www.eaglecounty.us/government/draft_short_term_rental_ordinance.php#collapse70140b4
https://www.summitdaily.com/news/short-term-rental-regulations-challenging-homeowners/
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Glen Weinberg personally writes these weekly real estate blogs based on his real estate experience as a lender and property owner. He is the owner of Fairview Commercial Lending. Glen has been published as an expert in hard money lending, real estate valuation, financing, and various other real estate topics in Bloomberg, Businessweek ,the Colorado Real Estate Journal, National Association of Realtors Magazine, The Real Deal real estate news, the CO Biz Magazine, The Denver Post, The Scotsman mortgage broker guide, Mortgage Professional America and various other national publications.
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