As a general rule, I try not to express opinions when ignorant on an issue even when it may affect me directly or indirectly. Instead, I try to gather information learning from those who may be more informed.
Short-term vacation rentals in Chattanooga is such an issue. I do not reside in the city. However, I believe that the issue will impact not only Chattanoogans, but also to residents of the surrounding areas. I am going to violate my own rule and throw out some ideas though not fully informed.
Interestingly, based on polling by this publication, two-thirds of homeowners do not want STVRs in their own neighborhoods. The city council appears to have taken notice and has discussed permitting new STVRs only in commercial areas. Notably, the poll does not differentiate between owner-occupied STVRs and STVRs in which the owner does not reside which have been referred to as absentee owner STVRs.
The “not in my backyard” posture may be short-sighted. This concern seems to miss the larger problems regarding STVRs in which the owner does not reside. Won’t the effects of permitting STVRs, especially absentee STVRs reach much further?
I recall something from economics at UTC a few decades ago called supply and demand. Apologies to my former professors because I am going to go from my rusty memory here. To start, the supply of homes in Chattanooga is not unlimited. Those who desire to buy homes create the demand for that limited supply. With the advent of STVRs, the demand for Chattanooga’s limited housing supply is driven by competition between individuals, couples or families who wish to purchase homes as personal residences and investors who, well, do whatever it is investors do. It used to be taught that the prices of limited resources increase as demand increases. In other words, if investors are permitted to consume the limited supply of housing options for STVRs, they are directly competing with individuals and families wishing to purchase the same stock. Doesn’t this competition for homes drive up the prices? The result will be either the well-funded investors prevailing or the individuals and families paying an inflated price. Where does that leave those who wish to own their own homes?
There may well be legal and practical implications for permitting STVRs. And, generally, I would say let the market bear what it will. But, isn’t housing a basic human need? It seems to me like individuals and families who are trying to survive and yes, attain the American dream, are being negatively impacted. So many face obstacles and barriers to homeownership already. Many will be increasingly barred from homeownership unable to compete in an artificially inflated market.
What does it look like for a community when desirable housing is purchased by investors in STVRs blocking the individual homeowners? I struggle to see who in the community benefits from STVRs other than investors who may or may not be part of the community. Do the arguable benefits outweigh the costs? I won’t even get into the troubling notion that STVR permits are commodities that belong to the investors to be traded on the open market rather than issued and controlled by a regulating body.
I have watched housing prices increase, read articles and opinions about the difficulties people are facing in getting into a home, and wonder what this means for the community. The obstacles facing young people, couples and families in pursuing home ownership must seem daunting even without the artificial barrier to ownership created by absentee investor owned STVRs. Recently, I heard a news story on the radio bemoaning the lack of affordable housing and suggesting that affordable apartments are the solution. There is an ongoing fight to turn former hotel rooms into apartments with one opponent opining that putting people into such small units is “inhumane”. Is it the new reality that home ownership is a thing of the past with renting and leasing from investors as the new normal? Is that what the average American is moving to? Maybe, but if so it should be by choice not necessity.
As I get older, I find myself more and more concerned about our future generations. This may not impact all of us during our lifetimes, but it may well effect our children and grandchildren. Chattanooga’s city council appears to have some concerns. I just hope they are not limited to keeping the STVRs out of their constituents’ backyards, but also looking to the impact on the community as a whole. I imagine there is tremendous tension between doing what the deep pocket investors want and what is right for the community. I remain concerned though cautiously optimistic.
Scott Davis