Ask anyone in Hamilton county, and you’ll likely both agree on one thing: Housing prices are as high as ever. In fact, local rents in Chattanooga are some of the fastest-growing in the country per recent studies.
In February 2020, rent for a one-bedroom apartment averaged at $900 per month. In February 2023, they averaged $1,372. If you don’t have a calculator handy, that’s around a 52 percent increase in just three years. Rents in Hamilton County are following a very similar pattern as our neighbors struggle to find affordable housing.
Homes for sale aren’t any better. According to Zillow, the average home in Hamilton County sold for $204,189 in May 2019. In May 2023, the average home sells for $314,894 — a whopping increase of over 50 percent.
Obviously, there’s a whole slew of factors that influence home and rental prices — housing shortages, work-from-home policies, and an influx of new residents, to name a few. But Hamilton County commissioners recently enabled another potential contributing factor: Short Term Vacation Rentals.
In a nutshell, an STVR is a residential property that the owner rents out for a small period of time, sometimes only a few days at a time. Think Airbnbs. For property owners, STVRs are a gold mine. For the rest of us — the hard-working residents of Hamilton County who just want a decent place to live — they’re another barrier to affordable rentals and homes.
Because here’s the thing about STVRs: Where they go, higher housing prices tend to follow. It’s called the “Airbnb Effect.” According to research from Harvard Business Review, Airbnbs may contribute to as much as 1/5th of the average annual U.S. rental increase and 1/7th of the average annual housing increase.
It’s not hard to understand the connection here. STVRs remove existing residential homes from the long-term housing supply. They misappropriate residential property into hotels, leaving existing residents to endure higher cost barriers to becoming homeowners, or finding affordable rentals. And Hamilton County’s new policy enables them.
The newest rules, as shared by The Chattanoogan in April, allow property in any zoning, except manufacturing, to become an STVR. They also allow absentee landlords. Meaning, out-of-state property owners can buy up houses throughout the county and remove rental opportunities for the hardworking citizens who live here. There isn’t even a limit to the number of STVRs one person, or company, can own.
What’s to stop a single corporation from buying up half the homes in a neighborhood, then renting them out as STVRs? This isn’t even a hypothetical concern. Some investment companies plan to purchase more than 1.5 billion dollars worth of properties, or around 5,000 homes, to turn into Airbnbs.
If one of these companies snatches up homes in your area, your complaints won’t make a difference. Hamilton County Commissioners recently removed the measure that allowed existing residents to voice concerns about neighboring STVRs before they hit the rental market.
Contrast this with recent changes by the city of Chattanooga, which doesn’t allow absentee rentals in residential areas. The city’s policy prioritizes residents, while the county’s policy does not. The regulations need greater restrictions to prevent inflating home and rental prices even further and pricing existing residents out of the county altogether.
County commissioners continue to emphasize the need for growth in our communities. They stress the current low stock of housing and the importance of new construction to meet the demand. Yet they enable policies that will remove homes from the current supply and encourage out-of-town investors to prey upon our neighborhoods. It’s hypocritical and nonsensical.
Linda Hunton