With the failure of proposition HH, the Colorado legislature is on the hunt for tax…
Last summer was a tipping point with mountain towns overflowing with tourists and their impacts becoming more noticeable including traffic, crowded trails, etc… As more people move to the mountains full time there is a bigger push to diversify the mountain towns away from a free for all tourist economy. This is not unique to Steamboat you are seeing the same struggles play out in every mountain town throughout Colorado. Steamboat is merely at the forefront due to its recent “discovery” that has amplified the impacts.
At the last city council meeting in Steamboat, the counselors proposed a moratorium on nightly rental licenses to try and mitigate the impacts of tourism. Essentially the city would take a “break” from issuing anymore short-term rental licenses until it can develop a plan going forward. This would be a 6-month break where no new rental licenses would be issued until regulations can be developed.
By placing a moratorium, the city is acknowledging that there are various issues because of “over tourism” including loss of affordable housing, traffic, impacts on residents, etc…
What is the impact of a nightly rental moratorium on real estate?
If you were buying a property with the intent of renting it heavily, the impact of the moratorium is huge. Fortunately for the entire real estate market in Steamboat, the moratorium will have no impact. Many of the newcomers to the mountains are not buying for investment purposes but for personal use. In Steamboat and other ski towns there is zero available inventory and considerable pent-up demand which will lead to zero impact on real estate prices or sales.
This is just the beginning salvo over nightly rentals.
Although Steamboat is unique in their moratorium in Colorado, the tug of war between tourism and residents is playing out throughout the country from Nantucket to California and everywhere in between. The trend of regulating nightly rentals is just beginning as many “resort” communities become year-round communities and housing shortages abound for workers while at the same time real estate prices skyrocket. I’m also seeing some rumblings at the Colorado capital as there have been proposals to reclassify nightly rentals as commercial properties. Look for the trend of tighter regulation of nightly rentals to only accelerate.
Who will win the battle over tourism and nightly rentals?
It is ironic that Steamboat is pumping the brakes on over tourism while at the same time the chamber of commerce (which the city funds 500k a year) and Alterra (the owner of Steamboat resort) are going full bore to attract more visitors. Resort communities are changing and no longer just tourist destinations as more full-time residents move in. The struggles playing out in Steamboat are just beginning as resort towns begin to balance residents needs with tourism impacts. As more full-time residents move in, the trend to regulate tourism will supercharge; remember, only residents get to vote for the town council.
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Written by Glen Weinberg, COO/ VP 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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