Portland Short-Term Rentals Impact the Real Estate Market
There has been a lot of talk about short term rentals in the Portland area lately. What are the latest rules, and how are they being enforced? Most important, how might short term rentals impact the process of buying or selling a home in Portland?
Portland Cracks Down on Illegal Short-Term Rentals
Initially, there were virtually no rules around short-term rentals in Portland, but when hundreds of them started popping up on websites like Airbnb, Vrbo and HomeAway, the city officially created a permitting process in July 2014.
The required permit is just $180, but most users of the site went on renting homes and rooms without getting it. As of last year, only 656 of the estimated 3,200 hosts had permits, according to Portland’s Bureau of Development Services.
Now, the city is working harder to enforce its rules around these rentals. It has increased fines for hosts who don’t comply with the permitting process, and the companies have attempted to make their users follow the rules as well. However, there is still some legal contest over whether hosts should have to pay lodging tax. In addition, Portland has required that homeowners live in the home they are renting out at least nine months out of the year, but this rule has also proven difficult to enforce.
In January, 2017, Airbnb said it would start assisting with that enforcement by only allowing one rental per user of the website. Although intrepid hosts will surely find workarounds, it seems that short term rental companies want to keep big cities like Portland happy by encouraging users to follow the rules.
Short Term Rentals Around Portland
Most areas outside Portland city limits have not created specific rules banning or permitting short-term vacation rentals. Or, the practice is technically illegal (because it would fall under commercial use of a home) but enforcement is complaint-driven.
That’s the case in Lake Oswego, which has seen a recent boom in short-term rentals and is looking into creating regulations. According to the Portland Tribune,
“Due to the growing presence of Airbnb and similar services in Lake Oswego, the City Council recently directed staff and the Planning Commission to determine if the City should develop a new approach, such as creating a regulatory framework to allow Airbnb hosts to officially register and operate within the city.”
The Lake Oswego City Council is expected to look at the issue this June.
Do more short-term rentals mean fewer homes for sale in Portland?
The real estate company Estately released a report recently that attempts to answer the question of whether short-term rentals help or hurt the real estate market in urban areas.
The answer: it’s not clear. Yes, there is a correlation between the number of short-term rentals — like those available on Airbnb and HomeAway — and the competitiveness of the real estate market in a given city. But is one driving the other?
In Portland, for example, there are 4.5 homes available to rent on Airbnb for every one that is listed on the real estate market. That brings it into the top five list of the cities with the highest ratios of short-term rentals to listings. (If you were guessing that San Francisco is at the top, you were right. There are over 17 units for rent in SF for every one on the market!)
The top four most competitive real estate markets also have the highest proportion of Airbnb rentals compared to homes for sale.
According to Estately, “The fact is one makes a lot more from a homestay in a tight real estate market than in a less competitive one. This only causes more people to trying buy homes in these competitive markets with the intent of turning them into Airbnb units.”
What short-term rentals mean for Portland home sellers
Selling a home in Portland? Buyers may be interested in learning about its potential as a short-term rental.
While some homeowners do rent out individual bedrooms, most home buyers prefer to use a self-contained or semi-contained area of the home for short-term rentals. This could be a basement suite or a detached dwelling like a mother-in-law unit or ADU. If your home has any of these features, be sure your real estate agent mentions the short-term rental potential in the listing.
Does your agent offer home staging consultation? My Portland real estate team does, and it’s doubly important for short-term rental units on your property. Your backyard cottage or converted garage unit should look like a place that potential buyers would spend their vacation!
Short term rental tips for Portland home buyers
Maybe you already used Airbnb or one of the other sites to visit Portland and spend some time looking at homes and neighborhoods!
If you think your pocketbook might enjoy the extra income of a short-term rental, be sure to check out the Short-Term Rental Frequently Asked Questions on Portland.gov to learn about permits, lodging tax and more.
If you still think you want to do it, be sure to let your buyers’ agent know. Real estate search engines might not always turn up results for homes with ADUs or other rentable spaces. Your agent can comb the listings for the perfect home with facilities for short-term rentals.
Not sure yet? A larger lot may be all you need to plan for adding an ADU down the road. Portland’s new residential infill rules are making zoning changes in many neighborhoods to allow for this.
As long as you’re looking at short-term rental income, why not long-term rental? Short-term rentals can be a lot of extra work; there’s the time spent to list the space and communicate with renters, not to mention cleaning in-between guests! Traditional rentals spare the work of finding new tenants every week, and they can contribute to a more stable neighborhood feeling. With rental rates in Portland higher than ever, the side income off having any kind of rental can make a significant dent in your mortgage payment on your Portland home.
Have more short-term rental questions? Ask your Portland real estate agent team! We are here to help — long-term!June 2, 2017