Real Estate Crash thread

[summit]

Colorado is proposing doing away with most local land use controls in "mountain resort zones" and cities in order to get people to build housing, ostensibly "for workers." A major focus is allowing any SFH to build an ADU even tiny house/glorified heated shed style.

Parking? Who cares!

Water? Who cares!

Transit? Who cares!

Walkability? Who cares!

Inability to require deed restriction? Who cares!

Building spacing, utility access, and snow removal? Who cares!

A bunch more AirBnBs get built? Who cares!

Every single mountain town saying this is FUCKED? Who cares!

Front Range City Dem Politicians know what is best for your community, citizen!

It personally helps me cuz I'll build an ADU, move into it, and Airbnb my place.

Let Locals Decide

Sign the petition opposing the CO state taking over land controls:

www.LetLocalsDecide.com

[schuss]

Eh, even as someone that enjoys the local control of zoning etc. - mountain towns haven't done themselves any favors from all the whining I've seen here.

[summit]

Eh, even as someone that enjoys the local control of zoning etc. - mountain towns haven't done themselves any favors from all the whining I've seen here.

There are tons of deed restricted units under construction and more planned. I see a fevered effort to build tons of deed restricted units in progress. But they pay attention to things like: is there transit? is there water? is there parking? can the roads handle the extra traffic?

What the front range politicians are proposing is absolute wild west mayhem for mountain towns without any expectation that this housing will benefit workers in the mountain communities. It will actually make the problems worse. Building ADUs that are going to be affordable to working class people, and I mean affordable for the renter and the owner, means building a tiny homes at best. But what owner would do that when they could finance a larger ADU and AirBnB it, or live in it when they AirBnB their house? Then those AirBnBs have infrastructure and commercial needs that require spending and workers that don't exist.

And what about the unplanned density causing insane infrastructure spending requirements that would be spread out on all people in the community? If you have to build new water plants and pumping stations and everyone's water/sewage bills double, that fucks the all the workers in order to benefit the homeowners who build ADUs.

Hell this allows the building of ADUs on rural SFH zoned properties 2 miles up dirt roads where there is no transit, no walkability, no bikeability to town. Wear and tear on roads? Is this desirable densification?

It's unplanned fuckery spewing for from the asshole of city-borne-good-ideas. Central planning sucks donkey balls. There is no nuance or rationale consideration. The bill expressly forbids such things.

Building freestanding ADUs is expensive as fuck. There is a reason why all workforce housing is condos/apts and occasionally townhomes, and still it is more expensive than most can afford.

Mountain politicians who are huge supporters of workforce housing universally oppose this bill as written.

Do you know who supports it? DEVELOPERS... and people who don't live in the communities that will be affected! <-there's your clue!

[J. Barron DeJong]

Not a comment on the CO proposal (haven’t read), but letting locals make the decisions is responsible for, like, 90% of the housing issues in this country.

[Mazderati]

Reality checks don't matter. There will always be a bogeyman to blame.

[summit]

The CO bill is a city oriented solution for densification of zones that have run out of developable land where densification is the only solution and zoning prevents it.

The mountain zones have NOT run out of land, like the cities. There's tons of room to build workforce condos in the mountains. Those can be built in quantity sufficient to actually have a large effect on the need at a more efficient price point.

You want to solve the problem, focus on making the local worker competitive to the market forces:
1. Stop allowing wage suppression by the resort
2. Downpayment support
3. Allow and legislatively motivate construction of new workforce housing developments on the gobs on undeveloped land that does exist, much of it owned by the resorts that demand someone solve the housing problem for the workers they exploit (but the companies and developers would rather develop it into open market condos).

The problem with housing in mountain communities isn't a lack of density in SFH zones, where they exist, nor will free market ADUs be a solution and will likely worsen the problem and create new ones. Deed restricted ADUs won't get built in any number unless they are tiny homes, and is that what we really want?

[neckdeep]

On what do you base this and over what period of time? I'd like to see it happen but hard to see how it does.

Around here, approximately 25% of all housing is now tied up in short term vacation rentals. The market is saturated and getting competitive. A price war is starting and hosts with high ownership costs are going to get squeezed. For example, a guy down the street thought he'd be getting at least 50-60% occupancy at $1000/night during ski season; he got 10%, a two week booking over the holidays. My neighbor, who rents at a more reasonable $250/night and has five years of repeat guests to draw on saw his occupancy drop from appx. 85% to maybe 40-50% for the season. Airbnb is doing its hosts just like Uber did its drivers. They're making bank on volume and the host/driver gets hammered by the dilution.

Once capitulation starts in the short term market, stagnation or a slight decline in price will trigger the flippers to start panicking. Then potential new buyers start sitting tight and waiting for for the bottom. Owner/investors with high ownership costs then start to panic as their mortgage goes underwater. Developers with unfinished projects and their financiers shit the bed as prices drop below their break even. Panic ensues.

I recently overheard a conversation between a Jackson architect and an interior designer. The architect confided that his firm was "shifting resources" from Jackson to Denver and SLC because the mountain town boom days are on the wane.

[summit]

Around here, approximately 25% of all housing is now tied up in short term vacation rentals. The market is saturated and getting competitive. A price war is starting and hosts with high ownership costs are going to get squeezed. For example, a guy down the street thought he'd be getting at least 50-60% occupancy at $1000/night during ski season; he got 10%, a two week booking over the holidays. My neighbor, who rents at a more reasonable $250/night and has five years of repeat guests to draw on saw his occupancy drop from appx. 85% to maybe 40-50% for the season.

Once capitulation starts in the short term market, stagnation or a slight decline in price will trigger the flippers to start panicking. Then potential new buyers start sitting tight and waiting for for the bottom. Owner/investors with high ownership costs then start to panic as their mortgage goes underwater. Developers with unfinished projects and their financiers shit the bed as prices drop below their break even. Panic ensues.

Fascinating and very logical

[neckdeep]

Fascinating and very logical

Airbnbust.

The Superbowl is literally peak demand for short term rentals but 40% of vacation rentals were unoccupied in Phoenix over Superbowl weekend. The other 51 weekends are much more grim.

Its happening everywhere. The dream of easy passive income is being replaced with declining occupancy and stiff competition on price, quality and location, location, location. Hosts who bought in at the top of the market are in for a rude surprise: just like Uber, Airbnb only cares about its stock price.

Uber diluted its driver's pay and then told them they needed to spend on expensive vehicles to compete. Airbnb is in the process of doing the same but with real estate.

[XXX-er]

"My neighbor, who rents at a more reasonable $250/night and has five years of repeat guests to draw on saw his occupancy drop from appx. 85% to maybe 40-50% for the season. "

wow ^^ who would have known that an STR LL actulay competes for their tennants just like any business ?

I don't charge enough for my LTR but I have had full occupency for 12 years and I don't do anything

[Kevo]

Around here, approximately 25% of all housing is now tied up in short term vacation rentals. The market is saturated and getting competitive. A price war is starting and hosts with high ownership costs are going to get squeezed. For example, a guy down the street thought he'd be getting at least 50-60% occupancy at $1000/night during ski season; he got 10%, a two week booking over the holidays. My neighbor, who rents at a more reasonable $250/night and has five years of repeat guests to draw on saw his occupancy drop from appx. 85% to maybe 40-50% for the season. Airbnb is doing its hosts just like Uber did its drivers. They're making bank on volume and the host/driver gets hammered by the dilution.

Once capitulation starts in the short term market, stagnation or a slight decline in price will trigger the flippers to start panicking. Then potential new buyers start sitting tight and waiting for for the bottom. Owner/investors with high ownership costs then start to panic as their mortgage goes underwater. Developers with unfinished projects and their financiers shit the bed as prices drop below their break even. Panic ensues.

I recently overheard a conversation between a Jackson architect and an interior designer. The architect confided that his firm was "shifting resources" from Jackson to Denver and SLC because the mountain town boom days are on the wane.

Very well said.

Interesting to see the stats from your neighbors and the guy down the street. I had heard bookings were down- those numbers are pretty substantial.

There is so much new development going on at the moment here- 30 new 500 sq foot studio apartments in downtown Driggs that are being rented for $1500 per month, a new affordable housing apartment complex new door to the studios, 30 or 40 new townhomes on the south side of town with $800k asking prices. My little neighborhood in town had 7 new SFHs in the past year and countless houses being built in other neighborhoods inside and outside city limits.

How many people are there that want to spend $6K per month to live in a tightly packed townhome 20 feet off to the busiest road in the county? What are the chances that people STRing said townhomes would be able to come close to covering the mortgage payment? I really feel like something has to give.

That said, this whole hypothesis goes out the window if Targhee ends up on the epic/ikon shitshow.

[Jax]

Agree with Neckdeep and Kevo here. I'm seeing it in smaller B and C towns in NM and CO. All those Texans and Okies are starting to dump their vacay homes and condos. I think too many ppl are giving airbnb too much leeway and personally I think they should be restricted. Some towns, albeit not in CO, are starting to figure this out, though too little, too late overall. But the saturation is there and mom n pop second home owners are starting to bail as word on the economic street calls for tightening. Desirable resort towns will continue to be insulated from this I think but time will tell.

Summit- you're part of the workforce you know, you just happened to get yours before it was too late. It's all relative. Newcomers won't be allowed to profit off their home (if they can afford one), unlike people who got there before them. All new affordable homes, townhomes, condos being deed-restricted is whack. American dream is dead as the classes get further divided. It's totally fucked.

Since NM legalized weed there are more than a few homes for sale on the cheap in Weed Town, USA (Trinidad). Apparently, it's the newest hotspot, if you like wind and old and/or homeless people. Lots of trail building going on down there apparently.. See, opportunity still abounds, you just have to be comfortable living within a 3-mile radius of over 60 sexual offenders. Lol.

Personally, I think HOA's need to be reigned in a bit. I don't have my head in the sand, have always avoid HOAs up to this point, but this was kind of eye-opening to me on a different level, just watched it last night. It's a bit long, 25 min.

[fastfred]

oh shit
I been working from home all morning in a ski town still wearing my pjs sitting in front of the computer posting on tgr

that makes me a bad guy I guess

[neckdeep]

Very well said.

Interesting to see the stats from your neighbors and the guy down the street. I had heard bookings were down- those numbers are pretty substantial.

There is so much new development going on at the moment here- 30 new 500 sq foot studio apartments in downtown Driggs that are being rented for $1500 per month, a new affordable housing apartment complex new door to the studios, 30 or 40 new townhomes on the south side of town with $800k asking prices. My little neighborhood in town had 7 new SFHs in the past year and countless houses being built in other neighborhoods inside and outside city limits.

How many people are there that want to spend $6K per month to live in a tightly packed townhome 20 feet off to the busiest road in the county? What are the chances that people STRing said townhomes would be able to come close to covering the mortgage payment? I really feel like something has to give.

That said, this whole hypothesis goes out the window if Targhee ends up on the epic/ikon shitshow.

IMHO, the Covid exodus and STR market are just new wrinkles. The real driver here is the same as it was 2005-2008: rapid appreciation feeds on itself. It's not based on organic supply and demand for housing, which factors in the incomes of locals. Its wholly based upon a demand for easy money in real estate and a supply of lax development regulations. Once the seemingly "guaranteed" big profits stop, the whole thing falls apart until prices come back in line with incomes. In 2008, that was a 60% price decline.

Something probably similar will happen again or else Jackson businesses will soon be paying $40/hour for entry level jobs. As it is now, worker can't afford to drive the pass and pay $1500/m on anything less than $30. That's assuming anyone wants to work 40, drive 2 hours a day and live in a shoebox ont the highway just to break even. Shit, most of those employees at the grocery store in driggs are getting bused in from Rexburg and the workers at the Albertsons in Jackson are being shipped in from Turkey and Romania.

[summit]

All new affordable homes, townhomes, condos being deed-restricted is whack. American dream is dead as the classes get further divided. It's totally fucked.

We agree on this. That is why I support downpayment assistance and oppose appreciation caps.

[AdironRider]

There are tons of deed restricted units under construction and more planned. I see a fevered effort to build tons of deed restricted units in progress. But they pay attention to things like: is there transit? is there water? is there parking? can the roads handle the extra traffic?

What the front range politicians are proposing is absolute wild west mayhem for mountain towns without any expectation that this housing will benefit workers in the mountain communities. It will actually make the problems worse. Building ADUs that are going to be affordable to working class people, and I mean affordable for the renter and the owner, means building a tiny homes at best. But what owner would do that when they could finance a larger ADU and AirBnB it, or live in it when they AirBnB their house? Then those AirBnBs have infrastructure and commercial needs that require spending and workers that don't exist.

And what about the unplanned density causing insane infrastructure spending requirements that would be spread out on all people in the community? If you have to build new water plants and pumping stations and everyone's water/sewage bills double, that fucks the all the workers in order to benefit the homeowners who build ADUs.

Hell this allows the building of ADUs on rural SFH zoned properties 2 miles up dirt roads where there is no transit, no walkability, no bikeability to town. Wear and tear on roads? Is this desirable densification?

It's unplanned fuckery spewing for from the asshole of city-borne-good-ideas. Central planning sucks donkey balls. There is no nuance or rationale consideration. The bill expressly forbids such things.

Building freestanding ADUs is expensive as fuck. There is a reason why all workforce housing is condos/apts and occasionally townhomes, and still it is more expensive than most can afford.

Mountain politicians who are huge supporters of workforce housing universally oppose this bill as written.

Do you know who supports it? DEVELOPERS... and people who don't live in the communities that will be affected! <-there's your clue!

Let the NIMBY consume you

[XXX-er]

oh shit
I been working from home all morning in a ski town still wearing my pjs sitting in front of the computer posting on tgr

that makes me a bad guy I guess

beware the open kimono

[summit]

Let the NIMBY consume you

Bullshit ad hominem because you don't have any counter arguments to my points?

I already said I stand to benefit hugely from the proposed legislation. And yet I oppose it for the reason I provided, which are not NIMBY, but practical.

This legislation is supported by developers and the city folk, not the mountain towns.

[Mazderati]

STR market turn over seems like an issue most impactful to destination areas and not something applicable to 'most MLS regions.' Even so, the glut of would-be buyers is deep and the number of new starts to population growth historically low. I think that keeps prices up this year at least. Lots of pundits thought 2023 was a year of reckoning and here we are again with bidding wars and sales over ask.

[Danno]

With apologies to those who own homes right now, I hope neckdeep's scenario plays out.

[fastfred]

Bullshit ad hominem because you don't have any counter arguments to my points?

I already said I stand to benefit hugely from the proposed legislation. And yet I oppose it for the reason I provided, which are not NIMBY, but practical.

don't worry bud
keystone will be its own city pretty soon and all the issues will be solved

that 1.7 mllion dollar a year budget will go pretty far
thats what you get when a bunch of retirees and realtors and trust funders get together and think they can build and run a city govt

[fastfred]

when real estate became a get rich quick scheme instead of putting a roof over ones head things went down hill from there
when the avg joe could pump and dump their house it became a game

[summit]

don't worry bud
keystone will be its own city pretty soon and all the issues will be solved

that 1.7 mllion dollar a year budget will go pretty far
thats what you get when a bunch of retirees and realtors and trust funders get together and think they can build and run a city govt

Highly accurate. It will be a fascinating train wreck, sucks when you are on the train though. It still strikes me as weird that the BOCC provoked it and then did nothing to try and prevent it. Whether Keystone struggles through inefficiency or finds success, the loss of revenue to the county coffers is going to be hard.

I heard they cancelled a mill levy increase ballot item in Eagle because they think residential taxes will rise 70% with the valuations coming out.

Rent is going up.

[snapt]

Very well said.

Interesting to see the stats from your neighbors and the guy down the street. I had heard bookings were down- those numbers are pretty substantial.

There is so much new development going on at the moment here- 30 new 500 sq foot studio apartments in downtown Driggs that are being rented for $1500 per month, a new affordable housing apartment complex new door to the studios, 30 or 40 new townhomes on the south side of town with $800k asking prices. My little neighborhood in town had 7 new SFHs in the past year and countless houses being built in other neighborhoods inside and outside city limits.

How many people are there that want to spend $6K per month to live in a tightly packed townhome 20 feet off to the busiest road in the county? What are the chances that people STRing said townhomes would be able to come close to covering the mortgage payment? I really feel like something has to give.

That said, this whole hypothesis goes out the window if Targhee ends up on the epic/ikon shitshow.

That's just the tip of the Iceberg. 150 units are going in behind road and bridge (some deed restricted), 150 units going in between the courthouse and Bates (Tributary will likely get dibs and a good chunk for employee housing and because it falls within their design zone), 88 condos in Tetonia and the 4 story Mariott next to the Broulims. The Mariott is one of their off shoots with suite with kitchen type set ups to compete with STR's. The land the city of Victor sold that used to house their maintenance fleet is also slated for a very large development. We'll be swimming in impact fees but like you say, all bets are off when Geordie sells out.

[AdironRider]

Bullshit ad hominem because you don't have any counter arguments to my points?

I already said I stand to benefit hugely from the proposed legislation. And yet I oppose it for the reason I provided, which are not NIMBY, but practical.

This legislation is supported by developers and the city folk, not the mountain towns.

No they are just the same tired points all NIMBY's use as cover for saying no to new development.

In Victor or Driggs the impact fees to tap a new house into water/sewer are north of 40k. That money goes towards building the infrastructure you say never exists. It does, but almost all infrastructure improvements lag well behind when they are actually needed, and its hidden, unlike that shiny new bike path. Kinda like the argument against new highways you always hear. "They just fill up with cars!" Yeah no shit, because they should have been built 20 years ago before we ran well over max capacity for the prior stuff.

ADU's need to be a part of the solution regardless of whether you, the guy who got his already, would prefer to house the undesirables in a craptastic apartment complex down by the transfer station or not.