Phew- how the market has changed over the past few months! Summit County progressed from an aggressive Seller’s market to what now feels like a market that is gaining balance. This is partly due to changes to interest rate increases and also to Short Term Rental Regulation changes that have already happened (and even those that have been promised). Short term rentals are any that are less than 30 days. Read on to learn more . . .
What’s already happened?
Let’s talk about the Town of Breckenridge, as they were really the first domino to fall here in Summit County. Last October, the Town voted to place a cap on the number of non-exempt licenses at 2,200 (there are currently 79 people on the waitlist as of July 10, 2022). Exempt licenses often fall in the resort zone, which includes areas like Beaver Run and at the base of Peak 8 where resorts are, and include properties that really run like a hotel rather than an Airbnb or VRBO. The larger resort properties could internally resolve guest and facility issues on site without involving town resources like the STR hotline or calling the Breck Police Department for non-emergency issues.
A Tourism Overlay District task force was created with members from all different areas of the community (real estate, property management, local business owners, and other community members) to discuss the impact rentals have in neighborhoods, main street, and resort areas. The Town of Breckenridge and the Task Force’s goal is to create zones that help maintain the character of the community while still encouraging the tourism that helps Breckenridge thrive. This means really defining three zones- Zone 1 which is the tourism overlay, Zone 2 including historic areas of Breckenridge, and Zone 3 being all other neighborhoods in town.
As of now, with 79 people on the waitlist for new STR licenses, it is unclear as to how many months it would take to obtain a new license.
Next, encompassing a large portion of Summit County, we have changes in Unincorporated Summit County. Effective May 24, 2022, the County Commissioners approved a nine-month moratorium on obtaining new Short Term Rental licenses. This means new licenses cannot be obtained during this time period. This will allow the County time to propose new regulations to address the increase in STRs in the Neighborhood Overlay Zone and their impact on local workforce housing, as well as to address inconsistencies and conflicts within the Land Use and Development Code (“Code”) regarding commercial lodging operations and short-term vacation rentals. Unincorporated Summit County encompasses Dillon Valley, Wildernest, south of Blue River, and all other areas outside the individual town limits.
Since this moratorium began about five weeks ago, we do not yet have any insights into what changes are being proposed- stay tuned!
What regulation changes are coming?
The Town of Silverthorne is in talks to change their regulations, and likely moving toward a 10% per neighborhood / 50% high density multi-family cap, which would put total licenses available at about 642, but those licenses will be spread out depending on what the percent of STRs is in each neighborhood or complex. Silverthorne is considering public input, and has or will create a survey to send out along with holding two Open Houses for comments. There are currently no cap or percentage restrictions in place.
The Town of Frisco is weighing options, but it seems like they’re heading in a direction that leaves less than 50 licenses available to grab, though the council members have requested more supporting data for the cap percentage being suggested. They’re also going to talk more seriously about a “use it or lose it” policy, which would likely free up more licenses than that, and would increase the periodic turnover rather than having to wait for a license to free up only through attrition as we are seeing in Breckenridge. There are currently no cap or percentage restrictions in place.
Where are rentals NOT restricted?
You can still obtain a short term rental license without restrictions in Keystone, Copper Mountain, the Town of Blue River, and the Town of Dillon. Though Keystone Resort and Copper Mountain are technically part of Unincorporated Summit County, they are in the Resort Overlay Zone- an area intended for short term lodging/ use.
What do STR changes mean for the real estate market?
While Short Term Rentals can help cover costs, or even provide a source of monthly income for second home owners and investors, there are other options as well. Rentals over 30 days are still allowed without having to obtain a short term rental permit. Seasonal rentals (30-120 days) and long term rentals (120+ days) are still very popular options among our visitors, and can bring in more reliable, consistent income throughout the year.
Sellers can promote seasonal rentability when placing their mountain home on the market in an area where short term rentals are currently being restricted. Buyers hoping to purchase an investment can often see the benefit of 30+ day rentals along with the great year-over-year appreciation we see here. Even though there are restrictions in place, and with more coming, real estate can still be win-win for all involved!
Where can I read more?
If you’d like some light bedtime reading tonight, our team has compiled a great resource HERE that not only outlines current regulations in Summit County, but the surrounding areas as well.
If you have questions I didn’t answer, or don’t have time to read everything in the link above before bed, please email us at Team@COMtnRealty.com !