Limiting STRs could be key to housing market

As we have been publishing a series of stories about affordable housing (or the lack thereof) in Fredericksburg, one thing has become clear: There isn’t any, at least not for working-class people.

Fredericksburg has struggled with the affordability of homes for many years and the situation is only getting worse, especially in this post-pandemic buying frenzy that is happening everywhere, not just here. The average sales price of a home in Fredericksburg crossed the half million-dollar mark this year and is continuing to rise.

This is a problem on many levels, but mostly because the people who wait tables, teach children, drive buses, clean hotel rooms, cook meals and perform thousands of other vital roles in the community cannot afford to buy or rent a home here. Even many of the long-time residents couldn’t afford the home they live in if they had to buy it at today’s prices.

It’s a simple matter of supply and demand. The supply is low and the demand is high. The supply is low because we cannot build new homes fast enough and because a high number of homes that do come on the market get snatched up and converted to a bed and breakfast, or short-term rental (STR).

The demand is high because we have a lot of people freed from the constraints of having to report daily to an office now fleeing big cities in search of a tranquil, rural way of life where they can work remotely. We also have a lot of people moving in from other states (primarily California) where the cost of living has become unreasonably high. When they move here, what we see as expensive home prices are cheap compared to what they left, so they can pay more and drive prices up.

Although it is highly unlikely that housing prices will drop to an affordable level, there are steps that can be taken to decrease the rapid rise in prices.

The main thing is to increase the inventory of homes on the market. The key to making that work is to limit new ones from becoming STRs and consider a cap on the number of STRs already in existence here.

That last thing any Texan wants to be told by the government is what they can and cannot do with their property. It’s a sacred right highly valued here. And we know one restaurant owner whose business was shuttered during the pandemic and her STR was an important source of income for her family.

But consider that we have reached a threshold where property values are doing more harm than good. If — or when — we reach the point where more businesses close and the service industry suffers from a lack of workers, many of these STRs will sit idle, costing their owners money.

There are a few steps the Fredericksburg City Council can consider in this regard.

The first is a moratorium on new STRs to help stabilize the situation.

The second is to encourage the development of affordable homes with a homestead requirement, meaning they must be owner-occupied or at the very least used as long-term rentals where the occupant uses the home as a primary residence.

The third proposal would require a change to zoning laws to prohibit STRs in certain residential neighborhoods. Existing STRs would be grandfathered in, but lose their STR status if there is an ownership change or frequent violations of current noise and nuisance laws.

Acknowledging that STRs do play an important role in our community, we don’t want to deplete the inventory. That’s why there should be a sunset evaluation of the rules every five or 10 years to see if they are still necessary.

The purpose of these proposals isn’t to encourage government control of private property but to protect those negatively impacted by current prices and practices.

STRs are a relatively new thing in the last few years and their popularity is growing. Regulation of STRs must also increase to keep the playing field level. We support efforts to find solutions to this issue, in both regulating them and increasing our housing supply.

Right now, the laws are very lopsided on the side of STRs and we’re seeing the harm that causes, as some neighborhoods have few permanent residents. We need to make changes or all of us will continue to suffer the consequences. – J.S.

(This editorial ran in the June 23, 2021, edition of the Fredericksburg Standard-Radio Post)