Oh vey. I’m going to start with the obvious background that I’m a real estate professional and a lawyer, and I believe in and stand for personal property rights. So, as I watch our local government officials enact restrictions on personal property, picking who gets to keep their bundle of property rights and who loses certain rights, without a vote and without listening to the real estate community, I’m discouraged and really baffled.
Here is how things have changed in the last couple weeks.
Summit County Unincorporated
In what I can only describe as a “monumental surprise” to the real estate community, the Summit County Commissioners (3 people), on May 24, put a 9 month moratorium on short term rental licenses in “neighborhood zones” in unincorporated Summit County.
You can see my previous videos and articles on my blog to understand what areas this covers. Wildernest, Peak 7, Dillon Valley and Summit Cove are all included in this moratorium. Overall, around 10,000 of the ~35,000 properties in Summit County are now unable to get a short term rental license for the next 9 months.
This moratorium is to give the County Commissioners and Summit County staff time to examine next steps. We do not know what will happen after the 9 month moratorium expires. The county’s goal is to stop properties from turning into STR’s, and hopefully make them available for locals either to purchase or rent. But with many of our properties being multi-million dollar homes, it is unlikely that a large portion of them will turn into local’s housing. Plus, a newly released study shows that STR’s are not eroding locals’ housing and actually contribute greatly to resort communities. The problem isn’t that STR’s are taking away housing, but that there is greatly increased workforce needed to support growing resort communities – and there is nowhere to house them.
Just a few months ago, in December, the same County Commissioners spent a very long time recreating the short term rental regulations in their jurisdiction and created three levels of licensing. What they found, however, was that the exercise of creating more rules around STR’s just increased the amount of STR license applications. (People were getting ahead of being restricted from using their properties as STRs.) What county leadership hasn’t deciphered is how many of the licenses are actually being used versus how many were people just getting their license to protect their rights once there is an indication that more rules are coming down the pipeline. In an informal poll, I have many friends who got their license “just in case” but aren’t using it because they are actually living in their home.
So now what? If you are operating a STR in unincorporated Summit County, you can continue to do so. PLEASE don’t let your license expire. I don’t think you have a fighting chance of getting it renewed if you simply fail to pay a fee or fail to submit the appropriate taxes and reports. If you own in an unincorporated Summit County neighborhood zone, then it’s going to take longer to sell your property. Generally we see around 20-25% of buyers being local, and the rest being second home owners. While many second home owners don’t rent their places short term, they certainly want the option to do so. Therefore, the buyer pool has just been cut by ~75% and the remaining 20-25% aren’t going to be willing to pay the prices that assumed STR capability. I suspect that properties in this moratorium will be on the market for longer, and this sector’s pricing will soften. How long and how much remains to be seen.
Breckenridge Town Council also effectively stopped issuing Short Term Rental licenses in September 2021. But then shortly thereafter put together a task force to review their actions. This task force is still working but examining what additional areas to include to be able to obtain short term rental licenses.
In an event with the Realtors on May 24, the Town Council noted that while they were allowing STR licenses for people doing 1031 exchanges, they “learned” that these transactions don’t necessarily require a STR license so now they aren’t going to automatically give STR licenses to 1031 exchange buyers. Instead, the burden of proof is now on the Buyer to show that they must short term rent to accomplish their 1031 exchange in order to be eligible for a license.
We keep a document with all STR information and articles here.