I’m saying this as a realtor who has helped clients buy and sell properties that they use for short term rental (STR) investments: it’s long past time for us to reform STR laws.

When I was a legislator in 2016, I even voted for the law that centralized STR rules at the state level, created a structure for taxation and restricted how localities could make their own laws.

I regret that vote. At the time, I thought it was a good thing that regular people had an opportunity to make money renting out rooms in their own property and I had little concern that the Hiltons and Marriots of the world would have to forego that new yacht purchase as a result of regular people making money for a change.

I also remember at the time predicting that we would need to re-visit the new law to update it and adapt it with the times.

This is where we must squarely put the blame on Governor Ducey. I even agree with some of the most conservative members of the legislature who attempted to pass laws since then to allow localities more power to restrict STRs.

Never did I expect that the governor would resist the will of the voters, neighborhood leaders and housing experts.

Let’s review the damage that STRs have done:

1) Fewer Homes Means Higher Prices. The most damaging affect has been that STRs remove homes from the market so that families have fewer choices. Over the last decade purchases of STRs (and residential homes being turned in to long term rentals) have shrunk the over-all supply of homes to the tune of millions of homes.

Most homes come back on the market every 7-10 years. So, when you take a big chunk out of the inventory over the course of a few years, the price of the remaining homes goes up. People can’t afford to purchase a home. Older people who want to downsize don’t sell because they fear they won’t be able to afford a smaller home for what they paid for their larger home.

Let me say this as clearly as I can. Much of the housing crisis in America right now rests squarely STR investors. Millions of homes are no longer available for people because they are being used for commercial businesses. We can also look to the investors after the crash of 2008 who were buying homes 100 at a time to turn in to rental properties.

2) Damage to Neighborhoods. Healthy neighborhoods stay healthy when people know each other and respect each other. When upwards of a third of the homes in some neighborhoods are turned in to STRs, the health of the neighborhood is undermined. We’ve all heard about the parties and harm to peace and quiet. This has been particularly acute in historic neighborhoods. For an entire generation, people have been working to preserve historic homes only to find STR investors coming in with no respect for the historic beauty of the neighborhood.

3) Neighborhoods are not Commercial Zones. Have a look at this map of Sedona from 2019. This was presented to the city council and showed how many vacation rentals have been located in Sedona. According to Sedona Assistant City Manager Karen Osburn, “We never anticipated at the Capitol that someone would go into a neighbor­hood, purchase a home and basically turn it into a mini-hotel. So that’s the chal­lenge. You have a home that’s basically purchased as a business but you don’t have someone living on site, and managing it, I think you have a problem.”

4) Who is hurt the most? I spoke with a potential client once who was from Spain. He told me how the STRs in the middle of Madrid changed the entire town. The cute little corner shops nearly all closed down because the people who lived full time in those areas moved out. There was nobody left to buy groceries eery week. Similarly, when whole sections of town, which were previously affordable, are no longer affordable, the working population must move further our, or to less desirable housing.

5) Price escalation. The math is simple. The STR investor can pay quite a bit more for a home because they are making a lot of money from rentals. So, they drive prices up and families are left out –sometimes literally outside.

Have a look at this great open letter to the owners of AirBnB. As the author points out, the creator of AirBnB originally started the app because they needed a way to find people rent out a room in their expensive apartments in San Francisco. The app has moved away from just renting rooms and now has exacerbated the very problem that the founders of the company attempted to remedy.

I’m not judging, folks. I’ve use AirBnB and I’m going to re-think that.

Further, I understand the excitement of investing in a property that makes a lot of money for you and your family.

We are duty bound to work for our clients. If they want to purchase a home as an investment, we will work for them. But from here on, I will attempt to educate them about the damage that STRs do to neighborhoods and families.

I can recommend, perhaps investing instead in the growing renewable energy and battery technology industries. That’s growing and will help more than it hurts.

To be fair, I’m calling them “September Sales”, even though two closed in August and one will close at the beginning of September.

But, alliteration is always more fun than accuracy.

As usual, keep an eye on our live listings page to see all updates.

First, though, I want to reiterate our warning about “ibuyer” companies or investors who approach you with offers that seem too good to be true. An agent who promises to sell your home for a 1% commission most likely does not give you the quality of work that you deserve, or pushed most of the work off on you.

You may not be protected by an agent on your side who will protect your interests. That is our fiduciary responsibility to you. Investors don’t have that responsibility.

Sales

1) We sold this 2br/1ba, 1,008sf property, located at about 3rd Ave and Camelback, in just a couple weeks to a family with ties to the neighborhood who plan to renovate the property for themselves. The property sold for just under $400,000.

We expect this one to go quickly. The final list price has not yet been announced, but expect it to come on right around $400,000 later this week. The previous owner is an architect, who already prepared plans for an addition off the back of the property, to add a room and a bathroom.

The back yard also backs up to an abandoned alley. So all the new owner has to do is petition the city to claim half of that abandoned alley and they will add valuable square footage to the back yard –maybe enough for a guest house.

2) We went quickly under contract on a four-bedroom, 2 bath 1,858sf investment property with a pool in Tempe, which was beautifully renovated just a few years ago.

The seller had prepared the property to sell either to investors or buyers who wanted to a plug-and-play (or is that plug-and-live?) property.

Since purchase, the owners have made over $58,000 in improvements, including new exterior siding, pool resurfacing, pool heater and automation, panel installation , replacement of old Orangeburg sewer line, new washer and dryer, new pool pump and back yard landscaping with high quality turf installation. They have also added over $55,000 worth of home furnishings and accessories.

3) In mid-Augusts, we also closed on this 900sf 2br/2ba condo, across from all the great restaurants at Montebello and 7th St. This property went under contract quickly and above list price. It is nearly impossible to find a property at this price in this market, located next to so many great uptown restaurants and shopping. This shady condo community is stable and well-managed. The property has been partially updated with new flooring and paint, so you can make it your own.

If you have specific questions about these properties, please contact us at 602-456-9388.

Donna Reiner, a local historian and a good friend of Get Your PHX, has written many articles over the years for the Arizona Republic and others about Phoenix history and memorials.  This month, Donna tells us about the time that famous architect Ralph Haver saved some historic columns from demolition and incorporated them in to his building.

Do you have a favorite building here in Phoenix?  Or do you just love a certain part of a building? Now imagine that you learned it was to be demolished. What would you do?

That dilemma faced Ralph Haver, a well-known local architect in 1960. He had long admired a particular feature of the Lescher and Mahoney 1927-designed St. Joseph’s Hospital located on Fourth Street between Polk and Taylor. In that fateful year, Haver learned that the old hospital building was to be razed as it was no longer needed and the property had been sold. A new and larger St. Joseph’s Hospital complex had already opened on the north side of Thomas Road near Third Avenue in 1953.

Haver quickly set out to purchase twelve of the Solomonic columns that supported the arcade on the third floor of the building. Those magnificent twisted columns soon became his, but now what to do with them?

Haver’s name may be quite familiar to many valley residents, especially if you are fortunate to own or live in one of his homes. But he also designed a number of significant commercial buildings (think the former Arizona Bank that is now The Vig). Twice Haver tried to include these columns as an element of a new project. But both projects never materialized. So, he finally settled on a means to use these beloved pieces: design a building for his architectural firm.

And thus the new home for Haver and Associates came to be located at 1133 E. Missouri. It may seem odd to construct what we now label a midcentury modern two-story office building that features columns from a 1927 building; but Haver did just that.

These columns are definitely a noticeable feature on the two sides of the lower level and seemingly supporting the walkway of the second floor. You will see them much better if you are driving east on Missouri.

Haver compensated for the short stature of the columns by mounting them on a base and having them brace open beams. In a quirky way, this design works. In the long run, it’s nice to know that at least one person appreciated a piece of Phoenix’s architectural history enough to purchase items that most likely would have become rubble.

Today this building is the home of the Phoenix Boys Choir.

There is hope in our efforts to protect humanity against the damage it has caused to itself and to the planet. What does this have to do with real estate?

Well, if you are a regular reader of this newsletter, you know that I draw a direct connection between the future value of your home in Arizona, in particular, and how quickly we stop pouring carbon in to the atmosphere.

There are two rays of hope that I’d like to share with you.

New report indicates accelerated adoption of renewables.

I’m a big fan of this super-nerdy, quintessentially British YouTube channel called “Just have a think.”

You kinda have to say that channel title to yourself with an English accent to feel the full “Britishness” of it. Like, “just have a think about this detailed description of the difference between lithium-ion batteries and fuel cells while you chomp on some fish and chips and sip on a room temperature Bass Ale.”

In any case, the report that the host talks about is the most hopeful take on renewables that I’ve seen in a while. It takes on the issue of clean technology from the standpoint of disruptive technologies. Specifically, he considered how quickly other disruptive technologies throughout history took over the market once they hit a saturation point, such as cars and smart phones.

The report shows how much more quickly prices dropped for solar and wind over the last 10 years than ever predicted, and how batteries are not far behind. They believe that we could reach 90% carbon reduction by 2035.

It’s worth a look, especially if you are feeling blue about the rate of our current efforts.

Now, for those of you who might say, “See? We just needed to leave the markets to themselves and it all would have been fine.” Not true, we needed utility commissions and governments to lead the way in adopting these technologies to give the boosts to the industries, and, thus, the economies of scale.

Organizing to pass the Build Back Better Plan

A bunch of folks who were organizing in support of clean energy in 2020 are bringing the band back together to organize to educate decision makers about the importance of the Build Back Better Plan in congress. We have put together an Arizona chapter of the Clean Energy for America effort.

This plan is essential, both for clean energy but for infrastructure and new economy jobs. It incentivizes essential growth in clean energy production, electric vehicle adoption and reduction of methane gas use.

Here’s the hard truth. Because of climate change denial and the muscle of the fossil fuel industry, we are a solid 20 years behind where we could have been had we taken this seriously when we first learned about it. Very little of the technology in this plan is new or something we would not have adopted had we invested in R&D in 2001.

But, looking forward, Arizona is central to passing this act. So, please join us as we write letters to the editor, call our members of congress and educate them about the importance of a clean energy future.