VT proposing restrictions on Short Term rentals

[SnowRock]

Stowe is insane right now... There is just no inventory available in the 2/3 BR condo range. We had started looking semi-seriously before COVID with plans to buy in the spring. Then with COVID, we were uncertain with what the future would hold and didn't move forward on a unit we were close on. I wish we had... similar units have already sold for 40-50K above the price we were at.

We have put in a few offers during this time and have been outbid or lost to all cash offers on each... last one we lost to was all cash and no contingency which seemed insane given build date.

Now if you want to buy above 1M... it is more a buyers market. Lots of inventory that seems to linger, lot of price drops. Don't like the idea of this bill... while we wouldn't really be planning on renting I'd want the option but part of me hopes it may scare some folks and help normalize the market.

There was a pretty big battle in Jersey City in 2019 with AirBnB... the most money ever spent on a local referendum. Hotel lobby on one side and AirBnB on the other who have very sophisticated lobbying and grassroots operations in their own right. In JC something like 80% of "owners" had 2 or more listings (and a high percentage had 3 or more). In fact, there were some buildings that were supposed to be rentals that had essentially been turned into AirBnB hotels. And a lot of the rental stock in JC is owned by REIT's who prevent tenants from sub-leasing and using AirBnB, but would themselves do that with vacant apartments. Those types of things can have an impact on housing/rental price IMO.... but it is also different than what I would expect in a ski or beach location with more individual owners.

 

[abc]

there are a few reasons why this doesn't workout well. Please consult your tax advisor.

There're a few more reasons why it would work out well.

Those who did it had consulted their tax advisors.

 

[2Planker]

If you are married you can do it no prob. One spouse each has a different primary residence.

Exactly. That's what we have. A "Commuter Marriage"

Our houses are in different states, so it was our Tax Attorney that suggested each can be sold as a Primary Residence when the time comes.

 

[kingslug]

Glad we bought when we did.

 

[drjeff]

Glad we bought when we did.

My wife and I were talking about this very topic last night, not necessarily about when we bought our place in VT 14 yrs ago, but that one of the local Mount Snow real estate agents just listed a unit about 10 down from our place, and my wife, who to her credit does a great job with visualizing new design concepts and then making them happen, after looking at the pictures the agent posted, started to think about buying it and flipping it.

The biggest issue would be the current price point it is at (which is a solid 50-60k above where similar units were listing a year ago), renovation costs, and could/would the market be supporting what the post flip sale price would have to be? And the reality is that that is very doubtful, as it would be about a 25-30% premium over what the list price currently is, and that list price is close to what the highest listed same sized unit in our complex has sold for in the last 6 months and as which is at a point that we can't ever remember since we've own there. I wouldn't be surprised at all to see some continued appreciation in listing/sale prices over the next few months, however I am guessing that we're nearing the top sooner than later, especially given for what we'd have to sell a flipped unit for, is getting into the price point range ($400K and above) where potential buyers are looking at a real estate pool currently in that Mount Snow area where it switches over from more of a sellers market to more of a buyers market......

 

[kingslug]

We looked at another one at SB last month. 3rd floor walkup (uhg)...it was nice but selling for at least 20% higher than normal. Plus over there you don't get any summer rental. So it was just not worth it. I think in a few years when this all dies down it will come back to normal when a lot of people realize they really didn't want one but bought in the frenzy.

 

[abc]

I think in a few years when this all dies down it will come back to normal when a lot of people realize they really didn't want one but bought in the frenzy.

Real estate is one of the few (or only?) investment that has dual functions. It's also a place to live!

People tend to mix up the two function. They justify the price because they can see some use for it. So it's not easy to figure out what's the real "worth" of a house/condo. It has a lot to do with how the buyer visualize their personal view of the usage. Plenty of people buy at the top of the market, get plenty of enjoyment out of it, and couldn't care less if they don't make money 10 years down the line. They may come to grieve if they had to sell for a lose though.

Real estate had gone steadily up for so long many people lost their perspective. They just buy when they feel like it (and could afford the mortgage) believing they can always sell it for at least what they pay for it. This is why all the recent frenzy. A lot of people need extra space during the lockdown. So they bought even knowing they're paying an inflated price.

 

[kingslug]

And when they go to sell..maybe at a loss. I'm pretty sure ours will keep its value and go up. Stowe is always a hot market. Having a cool town helps.

 

[Killingtime]

Real estate is one of the few (or only?) investment that has dual functions. It's also a place to live!

People tend to mix up the two function. They justify the price because they can see some use for it. So it's not easy to figure out what's the real "worth" of a house/condo. It has a lot to do with how the buyer visualize their personal view of the usage. Plenty of people buy at the top of the market, get plenty of enjoyment out of it, and couldn't care less if they don't make money 10 years down the line. They may come to grieve if they had to sell for a lose though.

Real estate had gone steadily up for so long many people lost their perspective. They just buy when they feel like it (and could afford the mortgage) believing they can always sell it for at least what they pay for it. This is why all the recent frenzy. A lot of people need extra space during the lockdown. So they bought even knowing they're paying an inflated price.

Been there done that. Also, first whiff of the word "recession" and these vacation properties lose value faster than anyone could imagine. I had a great 14 year run with a home in Vt and saw all the ups and downs. At the lowest point around 2010 there were foreclosures all over the place and I could have bought bank owned condos dirt cheap. I always rationalized that I could turn it into a rental if something happened like job loss or illness where I couldn't work. Anyway, I think the current high prices will continue as long as banks keep giving mortgages. When that ends, look out below.

 

[icecoast1]

I always rationalized that I could turn it into a rental if something happened like job loss or illness where I couldn't work. Anyway, I think the current high prices will continue as long as banks keep giving mortgages. When that ends, look out below.

I saw an interesting documentary a couple months back that mentioned banks are back to giving out sub prime mortgages again, although they call them something else for obvious reasons. Will be interesting to see how that ends up, probably not good for many

 

[tumbler]

I think this market will keep going for a while for a few reasons. As long as borrowing money is cheap which will be TBD with the new administration but I can't see interest rates skyrocketing. I think that people's mentality has changed with a year+ in this situation and want/value having a second home or condo. More quality time will be valued over the insane drive to have kids doing 14 different sports and activities. Also the old way of working in an office 5 days a week is done (unless you are a dentist ) and people will be using their second home for longer periods of time and not just the weekends. I also agree with abc that you cannot put a dollar amount on your enjoyment of using a second home. If you are that worried about the value going down from what you purchased it at, you probably should not have bought it.

 

[1dog]

I saw an interesting documentary a couple months back that mentioned banks are back to giving out sub prime mortgages again, although they call them something else for obvious reasons. Will be interesting to see how that ends up, probably not good for many

Just good to recall that it was the government that started that whole mess. In the 80's they started with the ' You must have at least 20% of your loan portfolio loaned out to minorities and it was they, thru GSE's of Fannie and Freddie that mandated super low ( or no) down payments and favorable rates, below market ( that ostensibly you and I funded)

 

[SnowRock]

Just good to recall that it was the government that started that whole mess. In the 80's they started with the ' You must have at least 20% of your loan portfolio loaned out to minorities and it was they, thru GSE's of Fannie and Freddie that mandated super low ( or no) down payments and favorable rates, below market ( that ostensibly you and I funded)

Yes sure... but what would have happened if people defaulted on those loans?

The securitization and creation of synthetic products that no one really understood which the ratings agencies then somehow slapped investment grade ratings... which then lead to those MBS and CDOs being bundled in everything may have had an impact on things. I don’t think that was the “government”.

 

[deadheadskier]

Just good to recall that it was the government that started that whole mess. In the 80's they started with the ' You must have at least 20% of your loan portfolio loaned out to minorities and it was they, thru GSE's of Fannie and Freddie that mandated super low ( or no) down payments and favorable rates, below market ( that ostensibly you and I funded)

Well considering that the banks had been screwing minority communities for decades through redlining and that really didn't stop with the fair housing act of 1968, the portfolio mandates of the 1980s were warranted.

 

[abc]

Well considering that the banks had been screwing minority communities for decades through redlining and that really didn't stop with the fair housing act of 1968, the portfolio mandates of the 1980s were warranted.

Has that mandate outlived its usefulness?

 

[deadheadskier]

Has that mandate outlived its usefulness?

If audits reveal racial discrimination in lending practices still, then yes. I don't know the answer to that question, I was just pointing out why those mandates came about.

Mind you the last housing crash was at least partially caused by predatory lending; often to low income minorities by shady mortgage companies. They didn't so much care what would happen if the borrowers defaulted when introductory rates reset as values were increasing at a fast enough rate to make up for any losses. I at least listened to a job offer from one such company in Florida in 2004 that would literally go door to door and convince people to refinance for home improvements or to buy toys like boats. I asked the question about ability to repay and the guy just laughed. He said usually they would have sold off the mortgage before that happened making it someone else's problem or simply foreclose and sell the property at a higher price to cover any losses. I knew right then and there we were on an unsustainable path that would lead to ruin

 

[jimmywilson69]

it will be curious to see what happens. I just refi'd for 2.5% for a 15 year. that is a whole point lower than the 30 year that I started in summer of 2016. Nothing like buying 10.5 years and dropping a point. Im sure lots of people are leveraging another 30 year and either renovating or buying toys...

 

[kingslug]

Lot of people lost a lot of money this year.
Lot of people made a lot of money this year.

 

[tumbler]

Vt. lawmakers set sights on short-term rental market

Tourism is a $3 billion industry in Vermont and a lot of that money is spent on lodging. While hotels and many bed and breakfasts are regulated by the state, there are also many private, short-term rentals that are not. Now, some lawmakers say it’s time to get everyone on the same page.

www.wcax.com

 

[slatham]

After looking into this more and hearing some of the horror stories I think some form of regulation would be good, and is unavoidable. I am against the requirement of having to be a VT resident to rent out short term, but think the rental registry can work and is a good idea. I say this as I have first hand experience with a family beach home where the village recently required identification of renters with contact details etc. This allows the local authorities to know who is in the house at any particular time should issues arise. It also helps to ID and better manage "party" houses (and party renters). It hasn't been a burden on our family to provide the information needed. And by better managing (if not preventing) renters who violate local rules it increases the quality of life and hence property values.

The worry with VT of course is they will go overboard with regulation.......