Tag: Airbnbs

On some tests a failing grade is better

(Reading time: 3 minutes)

Sometimes you can stumble across the most alarming news in the most unexpected places.

Case in point: Staunton today put out its February activity report, which includes a regular update on how many articles and stories have mentioned Staunton in the past month, as well as how many eyeballs may have seen them. Fourth on the list this time, with a “reach” of more than 40 million, was a piece on Realtor.com headlined, “Best Mountain Towns Where Homes Deliver the Strongest Airbnb Returns.”

Care to guess which “mountain town” came in tenth on the list? That would be Staunton, of course, where homes have a median listing price of either $370,000 or $418,000 (Realtor.com couldn’t settle on a single figure) and an “average annual revenue potential” of $43,000. “We are seeing investors with proven track records buy strategically in Staunton, where they know they can implement their knowledge of the market with robust design and differentiated amenities,” Realtor.com quotes Sydney Robertson, identified as a real estate agent with Loring Woodriff Real Estate Associates—which, as it happens, is based not in Staunton but in Charlottesville.

Robertson may be good at tossing word salads (“robust design and differentiated amenities”?), but it should be noted—especially since it was ignored by Realtor.com—that she also is chief sales officer for Carriage House STR. Carriage House, as of a couple of years ago, was operating scores of Airbnbs across central Virginia, including more than two-dozen in Staunton proper, to which it gave a thumbs-up for the city’s lack of short-term rental restrictions. So, not exactly a disinterested observer.

The list of mountain towns so conducive to making money for “investors” was created by AirDNA, a firm that compiles and analyzes Vrbo and Airbnb data. What makes cities like Staunton so attractive to people who think in terms of balance sheets, according to AirDNA chief economist Jamie Lane, is that all the really hot mountain destinations have gotten too expensive. That makes second-tier cities like ours look like bargains. “The markets on this list tend to benefit from steady, multiseason demand and more affordable home prices than those in top mountain destinations,” Lane elaborated. “That combination can create a more balanced investment profile, with strong revenue potential relative to acquisition costs.”

Just how much of a bargain Staunton represents is encapsulated by AirDNA’s ranking system, which looks at five variables to generate a score between 40 and 100. A score of 90-100 is an A. Waynesboro merited only a 70, Lexington and Winchester notched a slightly higher 74, but Staunton roared to the head of the class with a list-making 93. Which all sounds terrific for Staunton, until you realize that what’s being assessed is Staunton’s attractiveness for people who view housing as financial assets, not as homes.

The five variables feeding into this grade include investability, rental demand, revenue growth, seasonality and regulation—or, more accurately, the lack of regulation. Or to put it in English, Staunton offers high curb appeal year-round, with under-priced real estate compared to what the short-term rental market will pay. That may come as a surprise to Staunton residents who can’t find a house they can afford to buy, but that’s what happens when our housing supply is being picked over by people who don’t have to live here.

All the handwringing about Staunton’s lack of sufficient affordable housing is pointless as long as there’s essentially no city regulation of short-term rentals. Without it, the transformation of homes into business assets will continue, largely unseen and unchecked, and articles like this one reaching as many as 40 million people will only accelerate the process. That may be something for the new Staunton Housing Commission to ponder as it plots its future course.

A glimmer of hope for housing

(Reading time: 5 minutes)

The new Staunton Housing Commission, the city’s attempt to address issues of homelessness and an inadequate supply of affordable housing, got off to a rocky start with its first meeting last week. Two of its nine members were not present, and the meeting itself—one of only four scheduled for this year—occurred two months later than initially scheduled. Moreover, much of the meeting was marked by red flags waved by city planner Rebecca Joyce, who asked commission members to trust her efforts over the next year to steer their work.  

“We have to stay in a certain lane,” Joyce cautioned, warning against scattershot thinking on the one hand and thinking there is a magic formula to fix everything on the other. “Guard rails” were mentioned repeatedly.

For all that, the 30 minutes or so of group discussion that took place during the 75-minute session were the liveliest on the subject since the commission’s progenitor, the Staunton Housing Strategy Group, started meeting 18 months ago. This was, in part, due to the addition of new voices and perspectives that were notably absent from the strategy group, including those of Robin Miller, a developer, and Hans B. Kettering, a young man searching for housing he can afford while working for Fisher Auto Parts. So perhaps there’s hope for some innovative thinking.

One hint of a possible clash of ideas and values came, interestingly enough, from city vice mayor Brad Arrowood, who was an early proponent of creating such a commission. Noting that Staunton has more cows than most cities its size because of its more than 2,000 acres (of less than 13,000 total) zoned for agricultural use, Arrowood suggested that this flat and gently rolling land could eventually be developed for housing.  That contrasted with an observation made later in the meeting by Miller, the developer, who noted that building out a road map—that is, building roads, curbs, sidewalks and utilities, including electric, water and sewer lines, plus storm drains—currently costs between $1,700 and $2,000 a linear foot.

Imagine what that means for an entire traditional subdivision. With the exception of Bell’s Lane, a narrow asphalt road, Staunton’s ag-forestal district has none of that infrastructure, so building housing there will be enormously expensive. So expensive, in fact, that there’s only two ways it can happen: either by building very large, very expensive homes, or by building lots and lots of homes within a much smaller footprint. Easier, cheaper and faster, Miller offered, would be to fill in what’s already here, building on vacant lots in the developed parts of Staunton. Indeed, he added, one of the quickest ways Staunton could generate more affordable housing would be to allow greater density overall, and to allow accessory dwelling units (ADUs) in particular.

ADUs have become exactly the kind of quick-fix housing solution that makes Joyce fret, universally offered as a sure-fire way to get more people housed by allowing property owners to build second or even third homes on their existing lots. They invariably come up in these discussions because they’ve become so widespread—elsewhere. Miller mentioned that Richmond just recently adopted an ADU ordinance, despite heavy opposition. A map I published back in November showed the stark contrast locally, with Staunton and Waynesboro as non-ADU islands surrounded by the ADU-receptive sea of Augusta County.

Although the Staunton Housing Strategy Group ostensibly embraced the ADU approach, the formal housing strategy it presented to city council last fall slow-walks the concept—and one possible reason was advanced by Arrowood, who told last week’s commission meeting that it’s fraught with possible unintended consequences. What if, he suggested, homeowners on large lots put up several ADUs, only to position them as short-term rentals, or Airbnbs?  Staunton would be helpless to prevent a transformation of quiet residential neighborhoods into beehives of transient activity, while scarcely increasing the amount of affordable housing for teachers, fire fighters and other essential workers.

The obvious response is not to obstruct ADUs but to regulate Airbnbs, as other Virginia localities already do. Albemarle County, for example, requires short-term rentals to be on a minimum of five acres with a rural zoning.  But a regulatory approach runs into another philosophical roadblock, which Arrowood also articulated and which goes a long way toward explaining why Staunton is in the spot it’s in: houses are private property. They’re not just homes, but financial assets.  Airbnbs are property owners’ entrepreneurial effort to better themselves, comparable to the boarding houses of yore, when widows would let out their spare rooms to working class stiffs who couldn’t afford their own homes. Any attempt to regulate such enterprise would be downright un-American.

Airbnbs, which are rented by the day, week or month to transient guests, are nothing like boarding houses, but the comparison appeals to a certain rosy nostalgia. It also highlights the tension, albeit not one that was further explored at last week’s commission meeting, between two opposing views of how we move from here. On the one hand, an assertive embrace of a higher density and infill strategy that builds on what already exists; on the other, a long-range contemplation of how a blank canvas, otherwise known as the ag-forestal district, might be shaped while avoiding upsetting the status quo.

As with many such tensions, the outcome most probably will lie somewhere between the two. But it will be interesting, in the months ahead, to see how clearly these differences are articulated by commission members and how they’re resolved. That could make for more of the animated conversation that showed briefly last week, before Joyce threw up those guard rails, and just might lead to a more durable and meaningful consensus.

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March 11 postscript/clarification: I’ve misstated Hans Kettering’s interest in local housing issues, as he wrote to let me know that he has decent housing and an amicable relationship with his landlord. As Hans further noted, “I was speaking for friends and people of the community that can’t find anything in Staunton at a reasonable price.” My apologies for my mistake.