After attending a routine affordable housing meeting at the Teton County courthouse yesterday, I thought I would follow up and share my view with my readers.
Back in 2014 a survey was taken to determine the extent of affordability problems for housing and the local workforce. It of course showed that housing is difficult to find, is too expensive for the workforce, and that overall living conditions were crowded and less than ideal (all true). Regardless, at the time, I felt like the information was retrieved with a small portion of frustrated tenants. I now feel like the information is probably outdated. I would anticipate the average income has increased, but so have rents. The report also seems to mesh affordable home ownership and lack of affordable rentals, a big difference as pointed out by a commenter in yesterday’s meeting.
Now that you have an overview and understanding of the problem, the question becomes, what is the solution? Build affordable homes both for rent, and for sale. There are two problems that I can see with this tactic.
1) Obvious. Who pays for it? Construction costs exceed the necessary cost to complete a home that will ultimately be affordable, and if it were affordable, who pays for it? I suppose it would be an easier proposition for a developer and investor at that point, however.
2) At the meeting, I played devil’s advocate and brought up the second concern. What is the housing crisis is not as bad as we think it is, we find a way to build the necessary supply ***side note, one commenter mentioned the number of needed units to be in excess of SIX HUNDRED units*** at which point we create a localized bubble and oversupply of homes for purchase and homes for rent. This could have a lasting negative impact on existing homeowners who rely on rental income for their investment. I also mentioned that being in both the real estate and property management business, I did not believe that this number was accurate based on the business that comes through my door. This comment was brushed aside as inaccurate data that could not be measured based on my experience as a business owner, and that they would rather rely on the 5 year old report.
I should note that despite the problems, there was also another issue being discussed during the meeting that according to their analysis was exacerbating the problem. That is short-term rentals. They said that because of the increasing number of short-term rentals, we are taking away from affordable housing supply. I commented that I felt short-term rentals, or even higher quality long-term rentals have very little to do with affordable housing. Affordable housing does not make a great short-term rental, and a second homeowner or investor (or someone who owns a home and moved out of the area) are not going to forego higher rents to help solve an affordable housing crisis. I mentioned this, because it was brought up as part of the solution, which is what I’ll discuss next.
SOLUTIONS: No one at the meeting was threatening to restrict short-term rentals to strong-arm homeowners into renting on a long-term basis, hopefully an affordable one. I believe it was being discussed because of the lack of owners not operating a legitimate rental and paying their proportionate share of local city taxes. I suppose it could be argued that these taxes could help support a housing authority for low-income housing, but I believe this is a totally separate issue that should not be a part of the discussion at hand because it’s simply creates tension with those who are pro-property right and or own a short-term rental, further convoluting the issue at hand.
Even if the local government were to capitalize on tax income to help support the problem, it certainly doesn’t solve it. Another potential solution was to create deed restricted housing that could only be used for low-income purposes. This does help solve one of my two concerns above, that it could create an oversupply problem. If the units are restricted to a certain group of people who actually need the product, both for sale and for rent, it isolates itself and will likely have less impact on market priced homes. It may, in part, help with the second major problem, funding. If these units are restricted to low-income use, it may be feasible that there are available grants to help fund the project.
With the above being said, taxation and grants don’t solve the elephant in the room of funding a project like this in a market where construction costs are exceedingly high. However, discussions are a start. I just think it needs to be an approach that addresses all of the issues, including potential negative impacts. It also needs to be a solution that can be bipartisan from a political standpoint. That may seem silly in a small community like this, but I heard two very clear voices during the meeting. One stated that regulation of short-term rentals, of property rights, and taxation are not the solution to the problem. Another stated that we live in a community with many second homeowners, and even multiple homeowners. I believe the commenter’s exact words were that a person who owns their 7th home needs to participate in funding the problem. While I have no political agenda, I can see the handwriting on the wall. One commenter got it right, he said that both locals who have been here for generations, second homeowners, and even the workforce are here for one primary reason, and that is the opportunity to live in one of the most beautiful places on Earth, with it’s unique sense of community. We all want to preserve that. However, it relies, in part, on the workforce who needs this housing. The 7th homeowner needs those services, and the commenter believes that many of them will take steps to help ensure it remains this ways for generations to come, even if that means providing financial assistance.
If we can find a way to approach this without battling conservative State legislature which is in place to promote property rights, and without creating future problems for ourselves, while supporting a problem that we all can recognize, we should absolutely try. It to happen efficiently, effectively, and it needs to be based on real time, accurate data.