The Average Home sale price in Old Town jumped $97,000 over this time last year. In August 2017, the average sales price was almost $500,000, coming in at $494,000, with a median price of $485,000.00. In August 2016, the average was $397,000 and the median was $396,000.00.
On a related but separate note. This year, City Council voted to restrict the zones wherein a home owner can operate a Short Term Rental, (STR). There are three zones: 1) Yellow: The zone where you do not need to live in the home in order to operate 2) Green: The Zone where you DO need to live in the home to operate the STR, and 3) White: The zone where short term rentals are not allowed at all. The City has also offered an amnesty period which provides those operators that do not conform to these zones to apply to continue operations. However, they had to be operating before March of this year, and be paying their lodging taxes, or agree to make back-payments for these taxes.
The reason I bring this up is that I have seen first-hand how this policy has impacted pricing. Here’s a story to demonstrate. I sold a duplex this month, in a non-primary zone (which means that under current code, the owner could only operate the STR if they also lived on site), but because this owner had been successfully running a STR there for several years, and had been paying taxes, they were able to obtain a license to continue to operate as an STR, even though they do not live on-site. The demands of operating an STR, I’m told, can be quite taxing, if your property is popular. These folks decided they wanted to sell their home and scale back their workload, because they basically lived on site! We put the home on the market, and it sold in two weeks, cash, for $65,000 above our list price of $750,000.00! The new owner bought it specifically to operate it as an STR, and they were well aware of the City’s move to greatly restrict these operations.
Here’s the point of my story. The swift action of Council to reduce the zone districts has a significant effect on values. Because of supply and demand, the prices of the grand-fathered in STR’s or those that are allowed to operate without an owner-occupant, will and are sky-rocketing.
My personal feeling on the matter is that the zones are overly restrictive, and that there possibly could have been a trial period to see how it was working. I know a main driver of this policy was to open up the housing stock for renters and owners, but my sense is that the market would have done that on its own. Many operators get weary after a couple years of operation, and prefer to either sell or rent their homes to consistent tenants. Also, if the market is flooded, suddenly with STRs then because of supply and demand, some will be popular and some will not, thus regulating itself.
The new policy ensures that duplexes, like the one I just sold on Grant Avenue, will never be owner occupied again, as the prices become so prohibitive, they need to stay a Short Term Rental to make the numbers work for the owner. This is some food for thought, as I see daily, the direct impact some of our policies have