Impact on the real estate market
By Ben Geanetta, REALTOR®, Team Lead
Ah, the memories of our childhood! As we grow older and reminisce with our own kids, it's hard not to notice how dramatically things have changed. My family and I would go out every Friday night for pizza, and after dinner we would head over to Blockbuster. We would choose one to two movies and pray that the last renter rewound the movie. My kids still don’t understand the pain of waiting—what seemed like forever—for a movie to rewind. Another concept my kids just can’t fathom, there was a time when you couldn’t pause live TV. Instead, you had to wait for a commercial to make a mad dash to the bathroom.
But you’re not here to read about the changes to the entertainment business but rather the evolution of where you stay when you’re traveling; the rise of short-term rentals through platforms like Airbnb and VRBO and how it has changed the lodging accommodations when traveling and the effects on the real estate market.
This is part one of two in a mini-series. In this article we are going to lightly cover the history of short-term rentals and discuss a few reasons on the negative impact they bring. In the second installment, we will objectively look at these claims so you can formulate your own opinion on the impact of short-term rentals in Sandpoint.
The Birth of Airbnb and Its Revolutionary Impact
Back in 2008, an ingenious idea emerged that forever altered the way we explore the world: Airbnb. Initially created to provide affordable lodging during a sold-out conference, Airbnb's founders revolutionized the travel industry. They developed a platform connecting travelers with unique, locally hosted accommodations, transforming humble beginnings into a global phenomenon. Nowadays, Airbnb offers personalized lodging options that go beyond cookie-cutter hotels, providing guests with authentic and unforgettable experiences. Even renting an RV is possible under the same platform!
A New Avenue for Homeowners and Investors
The emergence of short-term rentals opened up a world of opportunities for homeowners and investors. Suddenly, property owners had a chance to maximize their investments by sharing their spaces with travelers from around the globe. Rather than leaving your property vacant while you're away or during periods of low use, you can now transform it into a desirable accommodation that attracts visitors seeking a unique and immersive stay.
This was an opportunity to either expand an investor’s portfolio or start one when otherwise the homeowner would have never thought about it. We will touch more on this a little later.
The Steady Rise of Short-Term Rentals
Fast forward from 2008 to 2023, and it's clear that short-term rentals are firmly embedded in our travel culture. Undoubtedly, they bring many positive impacts to communities, such as increased property values through home renovations or the construction of dedicated guest houses. However, we must consider whether short-term rentals are inadvertently causing harm to the housing market here in Sandpoint.
The Impact on Sandpoint's Housing Market
One significant consequence of the popularity of short-term rentals is the reduction of available homes on the market. Many homeowners and landlords have chosen to convert their properties into short-term rentals, enticed by the promise of higher profits. Landlords can make more money over long-term rentals, and homeowners can keep an asset which will appreciate—all while having their mortgage paid for and typically have spare change. This is called cash flow. However, while this decision may be financially advantageous for individual owners, it has led to a limited housing supply in Sandpoint.
As demand for housing in the area rises, home prices and rental rates have soared to unprecedented levels. Unfortunately, this surge in costs has resulted in the displacement of long-term residents. Local individuals and families, who have called Sandpoint home for years, are often priced out of their own neighborhoods. Their only options are to move in with other family members or friends, or in more distressing cases, to leave the area entirely.
How about the neighborhood impact? With the frequent turnover of tourists in short-term rental properties, this can disrupt that community’s cohesion, making it a challenge to establish and maintain a long-lasting relationship among neighbors. If cars are coming and going, like mosquitoes at a picnic, the negative impact on the sense of community will certainly be present. You can’t go to the Jones’ for a cup of sugar because every couple of days there are new cars in the driveway and new people staying the night.
Balancing the Benefits and Consequences
The growth of short-term rentals undoubtedly presents a complex issue. On one hand, they provide economic opportunities for homeowners and contribute to the vibrancy of tourism. On the other hand, the resulting housing shortage and increased prices pose challenges for local communities, potentially compromising the long-term livability of Sandpoint.
