RALEIGH, NC (WTVD) — It was just before the pandemic hit that Justin Winter and his wife decided to convert their old home in Durham into a short-term rental.
For years they had rented out their apartment while out of town, so they figured why not make the jump to a full-time investment?
Fast forward two years and Winter manages nearly 50 short-term rentals in Raleigh and Durham.
After years of working in e-commerce and software, he started his management company, Pendleton Placesafter noticing the boom in short-term rentals and the need to manage this type of property.
“We’ve definitely seen a great need for people moving to the area just because it’s growing so rapidly with new businesses coming to the area,” he said.
Data from AirDNA, a site that analyzes short-term rental data, found rentals listed on Airbnb and VRBO increased 81% or nearly 700 units in the Raleigh area over the past two years.
Similarly, increases were reported in Durham (+537 units or 58%) and Fayetteville (+393 units or 131%).
The money behind the rentals
Real estate agent and investor Michelle Vega is another person who has decided to enter the short-term rental market.
Vega managed approximately 30 long-term rental properties across the Triangle. She has converted six to short-term rentals in recent months and is eyeing a handful more to convert soon.
A big factor in the change? Money.
Vega explained that she was making $1,400 a month on one of her properties and was able to generate $2,400 in 16 days on Airbnb.
“That same week, it was like three days later, she was like, ‘Okay, I’ve got another one. Let’s get another one,'” Karen Bello, Airbnb manager in North Carolina North.
Bello works alongside Vega to furnish, transform and manage properties. She has managed more than a dozen Airbnbs in North Carolina.
“In college, I rented my two-bedroom apartment. I rented the second bedroom and it ended up paying my rent and also putting money in my pocket and I was like, ‘Whoa, Mind blowing, if my one-bedroom, where they share spaces with me, makes that amount of money, what kind of money can a three-bedroom house make?” Bello said.
Setting up and managing short-term rentals can be more daunting than landlords anticipate. Upfront costs to furnish properties can be high and being available to clients 24/7 can be taxing, but if done right the financial return can be significant.
Like Vega, Winter said her own short-term rental property generates enough income to pay for real estate expenses and provide them with additional savings.
I-Team ABC11 analyzed Airbnb data provided by Inside Airbnba mission-driven activist project that provides data on Airbnb rentals.
The I-Team’s analysis found the average rate per night ranged from $102 to $142 for rentals in Wake, Durham and Cumberland counties. If these units were booked 90% of the month, they can generate between $2,700 and $3,800 for hosts. This is considerably more than the average monthly rent for each location. ApartmentEstimated list the average rent for a two-bedroom apartment ranged from $1,280 in Fayetteville to $1,520 in Raleigh.
While conversions may make sense to the landlord, some can’t help but wonder what effect an influx of short-term rentals has on the overall market.
“In a community like ours, where there’s such a shortage of affordable housing and housing in general that can make things worse,” said Roberto Quercia, a professor in UNC’s Department of Urban and Regional Planning.
Impact of short-term rentals on affordable housing
As short-term rentals expand across the country, numerous studies have attempted to identify their impacts on the overall housing market, especially for local residents.
The Economic Policy Institute, a nonprofit, nonpartisan think tank, found that “the costs of Airbnb expansion for tenants and local jurisdictions likely outweigh the benefits for travelers and landlords.”
The Analysis 2019 found that Airbnb’s biggest cost to local residents is the reduction in housing supply.
“A lot of these short-term rentals are close to downtown Raleigh, for example, NC State isn’t too far from there. It can affect students. It can affect people, workers, who may live in around and work at the university,” Quercia said. said. “So that has an impact beyond the immediate impact on the availability of that particular unit.”
Numerous studies have found that the biggest impact came from short-term rentals that offered guests the “whole house” rather than a room in an occupied house.
“The key is whether it displaces or pushes away other types of housing that we need as a community to be able to house our residents,” Quercia said.
AirDNA data shows that around 80% of rentals listed in Raleigh, Durham and Fayetteville are whole homes.
In 2020, a study found that a 1% increase in Airbnb listings would result in an annual increase of $9 in monthly rent and $1,800 in house prices. The researchers pointed to the difficulties of measuring the effect of a single factor on the entire housing market.
“However, measuring this impact is not straightforward. The main challenge is that the housing market is, of course, affected by factors other than Airbnb, such as gentrification and economic trends,” the researchers said. written in the Harvard Business Review. They said they took these factors into account in their study.
Likewise, a study by the New York City Comptroller in 2018, a 1% increase in short-term rental units in a neighborhood increased rent by 1.58% and cost renters an additional $616 million in 2016.
Locally, housing advocates aren’t sure short-term rentals are having such a negative impact on the market.
Winter said he thought it was important to protect the supply of long-term affordable housing in the area, but also argued there was a place and a need for short-term rentals.
While the idea of short-term rental sites like Airbnb typically freezes images of weekend vacationers, Winter said that’s not always the case at her properties.
He said many are traveling nurses or people who are in between housing situations and spend weeks or months in a rental building.
“We’ve had people here for weeks and months at a time who otherwise literally wouldn’t have had a place to stay and we can offer prices in some cases lower than a traditional hotel at more long term,” Winter said.
Nathan Spencer, the Executive Director of WakeUP Wake Countyagreed and stated that part of the growth of a city is the need for diversity in housing options.
“These short-term rentals are kind of a symptom of a bigger opportunity in the market. We really need to focus on the real causes,” he said.
Spencer also said he doesn’t believe the number of units converted to long-term rentals has an impact on the Triangle’s market.
“I think we have to keep looking at it and keep watching it, but I also think we have to understand the reality of the situation,” Spencer said. “We shouldn’t be in a situation where we focus on such a small thing and not on a much larger problem, which is that a small number of short-term rentals pales in comparison to the number of affordable units that we really need that in this region.
He expanded further by pointing out that many units that are rented out as short-term properties are not units that would be affordable for families who need more affordable options.
AirDNA has found that the majority of short-term rentals are concentrated in downtown Raleigh, Durham and Fayetteville. The same locations tend to have higher rental prices.
“If people are upset about this, we should focus their attention on getting involved in getting more affordable housing in their neighborhoods,” Spencer said.
Locally, government leaders are trying to control short-term rentals.
The City of Raleigh recently adopted a new short-term rental ordinance in spring 2021 which requires a zoning permit from each operator.
The city has 291 registered short-term rentals with 83% of units registered this year.
“If you look at the big picture, that kind of number won’t have any impact on our affordable housing needs,” said Tomas Barrie, director of the Affordable Housing and Sustainable Communities Initiative at NC State.
However, AirDNA reports over 1,500 rentals located in Raleigh, so the true extent of the expansion may be underestimated.
Barrie said communities should continue to monitor and track the impact and presence of these rentals.
“I think it’s reasonable to be concerned about all areas, all types of housing that could affect housing affordability, in Raleigh we should be watching those things, we should be very vigilant and make sure that ‘There are no unintended consequences otherwise, you know, good legislation and ordinances, so I think it’s very appropriate to ask those kinds of questions,’ Barrie said.
But, he also agreed that he doesn’t think at this point these units are causing much disruption.
Both Barrie and Quercia said more data is needed and governments should lead the collection as stakeholders continue to monitor the impacts of housing types on rent and the overall market.
“I wouldn’t blame a landlord for wanting to make more money, especially with inflation and everything that’s going on, but it’s the government’s job to keep an eye on that,” said Quercia.
The balance between the amount of short-term and long-term rentals is one that stakeholders and executives continue to seek.
“Should it replace the other option? Absolutely not. What does that balance look like? I don’t know. , you know, try to serve our communities,” Winter said.
Copyright © 2023 WTVD-TV. All rights reserved.
Comments are closed.