The primary argument in nightly rental regulation debates is that locals who rent their properties would not be able to stay in the community so any regulations would drastically hurt locals. How true is this argument? A new study sheds substantial light on this argument and the answer will surprise. Who really owns the nightly rentals in the largest Colorado ski town rental market? How does this impact future regulation on nightly rentals? What does this mean for property values?
Why focus on Summit county and Breckenridge
Summit County is one of the largest nightly rental markets in the country and by far the largest market in Colorado. Furthermore, Breckenridge is the largest nightly rental market of any Colorado ski town. So whatever happens in Summit and Breckenridge is a good indicator for other ski towns in Colorado.
Furthermore, Breckenridge is a significant hub for short-term rentals within Summit County, accounting for about 45% of the market share. Currently, there are approximately 6,145 active short-term rental listings in Breckenridge, with the vast majority (96%) being entire homes. This dominance of entire home rentals aligns with the preferences of most visitors, who seek the privacy and comfort that these types of properties offer. Only a small percentage (4%) of listings are for private rooms, with no shared rooms available.
With good data on who owns nightly rentals in Summit county, I would think that other ski towns would follow similar trends.
What does the data say on who owns the largest share of nightly rentals?
The data shows 57% of Summit’s vacation rentals are owned by Coloradans and only around 10% of those Coloradans are Summit locals. Among the 43% of owners that live elsewhere, only 1% are international.
The bulk of the out-of-state owners are from Texas, Illinois, Florida, New York and California.
| Who owns nightly rentals in Colorado | ||
| Location | % owned | |
| Colorado | 57% | |
| Local | 10% | |
| TX, CA, IL, FL, NY | 43% | |
| International | 1% | |
Denver and the front range largest holders of nightly rentals
In Breckenridge, based on sale statistics, the largest buyers of real estate are from the front range (from CO Springs, Denver, Ft Collins, etc..) which means they too are the largest owners of nightly rental real estate in Summit County. I’ve written a past article about the correlation in Denver prices and Breckenridge prices which this new information further confirms my theory.
Why does it matter who owns nightly rentals in Colorado?
With almost 90% of all nightly rentals held by non locals there has been a backlash in every Colorado ski town. Furthermore, with less locals owning nightly rentals, the nightly rental regulations in every Colorado ski town will continue to increase. We have seen this in Breckenridge along with Steamboat and every other ski town. This trend will likely accelerate over the next few years as locals are less directly tied to the nightly rental industry.
What does the data on nightly rentals mean for real estate prices?
Breckenridge’s high correlation to Denver is one of the primary reasons for the disparity in pricing amongst ski towns. Due to its proximity to Denver, Breckenridge has a large correlation to Denver along with Winter Park. Look at the graph, Winter Park is almost identical to Denver while Breckenridge is following a similar trend with a peak and then a drop off.
Essentially as Denver’s real estate has plateaued/declined the same is happening in Breckenridge and in Winter Park as opposed to Vail or Steamboat which attract wider national buying as opposed to having a huge direct relationship with the Denver metro area. We saw this in the last cycle as well.
Furthermore with Denver residents owning the largest share of nightly rentals in Summit county, as the nightly rental markets soften as we are seeing today prospective buyers become more nervous and in turn real estate values begin to fall. This combination of huge number of nightly rentals and high correlation to Denver is leading to a reset in prices in places like Breckenridge and Winter Park.
The argument that locals are most impacted doesn’t hold water
In every debate I have seen on nightly rentals, there is always an argument about the local who would be unable to live in their house without the ability to rent nightly rentals. Although this argument is always used, the reality is that the impact is far less than the arguments would make us believe. At most 10% of all nightly rentals are owned by locals which means the impact of nightly rental regulations is considerably less on locals than the 90% owned by out of area owners.
Summary
Living in a ski town, I was a bit surprised at the numbers. Based on the presentations at various council meetings how the nightly rental regulations impact locals, I would have predicted a much great share of local ownership. With only 10% or less of locals owning nightly rentals this explains the huge push for increased nightly rental regulation in every Colorado ski town.
Furthermore the data of 57% of nightly rentals in Summit County owned by Colorado residents further explains the high correlation between Denver and Summit county so as Denver hiccups so does Breckenridge as opposed to markets like Steamboat or Vail.
Regardless of your take on nightly rentals in Colorado ski towns, this data above will continue to drive the trend of higher regulation/limitation of nightly rentals as less locals have direct impact through nightly rentals.
Additional Reading/Resources:
- https://www.summitdaily.com/news/how-many-of-summits-short-term-rental-owners-are-actually-local-new-data-gives-insights-on-that-and-more/
- https://coloradohardmoney.com/summit-county-sued-for-caps-on-nightly-rentals-who-won-the-lawsuit/
- https://coloradohardmoney.com/did-breckenridge-implement-rent-control-did-summit-county-take-property-rights/
- https://coloradohardmoney.com/why-is-breckenridge-underperforming-other-ski-towns/
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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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