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Community Opinion of Short-Term Rentals is Changing, but are the Rules Keeping Up?

There are a handful of topics that have consistently, dependably, raised the hackles of northern Michigan residents over the last couple of years. But, we’re not here to talk about Trump, about recreational marijuana, or about the TCAPS school board; we’re talking about short-term rentals. 

Short-term rentals in northern Michigan have exploded in popularity, both from a renter and an owner perspective in the last decade, and it’s easy to see why. Short-term rentals provide a fantastic alternative to the hotel experience, giving vacationers more privacy, more room, and more opportunity to enjoy our community like a local would. This industry has been very beneficial for those who own rental properties as well. Many short-term rental owners are booked solid from Memorial Day to Labor Day, some of them netting tens of thousands of dollars every year. 

Yes, Even Hotels Have Benefited from Short-Term Rentals

Even though hotels might suffer some short-term losses in terms of the number of rooms booked, the support that this relatively new accommodation option brings to our overall tourism economy makes more money for restaurants, shops, golf courses, wineries, and the like, creating more of an opportunity for new businesses to open up, thus drawing bigger crowds to everyone, including hotels. 

The fact of the matter is, when it comes to the tourism economy – a major sector of the dollars needed to make many northern Michigan communities operate – a rising tide raises all boats, including the hotel industry. 

Not Everyone is a Fan of Short-Term Rentals

But, not everyone has been as excited about this trend. Property owners who happen to be neighbors with homes or condos that are now short-term rentals didn’t sign up to live next door to a commercial operation. New neighbors every weekend, elevated noise levels, and more severe wear-and-tear on properties can make living near a short-term rental challenging. 

And, property owners aren’t the only ones who are potentially negatively affected by the influx of short-term rentals. Those looking for long-term rental property to live in have found that more and more long-term rentals are turning to vacation properties, squeezing an already tight rental market. Many entry-level homes for first-time homebuyers are also being converted to short-term rentals, thus contributing to the already short inventory levels in our real estate market. 

A Community Response

So, how have our communities responded to these concerns? For one, there is a lot more new construction of short-term rental projects. It is obvious the demand is there, so rather than converting our existing house stock into rentals, we are building more. Developers like Cornerstone Homes and Socks Construction have dozens of units either recently completed or going up all over the region with the express intent of becoming short-term rentals. 

Also, thanks to COVID-19, many vacationers are weary of staying in high-density places like hotels, so homes rented through VRBO or Air BnB are attractive choices, throwing a lifeline to a tourism economy that depends on outside dollars.

Where Do We Go From Here?

Long story short, in many townships across northern Michigan, the desire, acceptance, and drive for more latitude on the short-term rental issue is gaining strength. But, are township ordinances keeping up with this changing sentiment? 

Some places like Blair Township in Grand Traverse County are much more permissive of short-term rentals. This is driving developers to these places, increasing the tax base, and creating a boom on bodies of water like Silver Lake for vacation rentals. Acme township (also in Grand Traverse County) adopted a regulation that specifically allows short-term rentals in districts zoned agricultural or commercial; requiring a permit to operate legally.

However, major population centers like Traverse City are seeing more and more restrictions, including a move to further restrict short-term rentals in the city center. Beth Milligan of the TC Ticker reported the following regarding the meeting and discussion of Traverse City Commissioners on Monday July 20th, 2020: 

“Traverse City commissioners voted Monday to change the city’s rules for short-term vacation rentals in two commercial zones, the C-1 (office service) and C-2 (neighborhood center) districts – just one of several items they tackled as part of a busy meeting agenda, with some issues being deferred to future meetings due to time constraints.

Traverse City’s C-1 and C-2 zones are primarily located in neighborhood areas just outside the city core, such as along Woodmere Avenue, parts of Garfield Avenue, south Union Street, Fourteenth Street, north Eighth Street, the far ends of East and West Front Street, and Randolph Street. While planning commissioners hoped to completely eliminate short-term rentals in C-1 and C-2, city commissioners modified the proposal to say that developers with two or more units on a property can use either one unit or 25 percent of units – whichever is greater, depending on the building size – as vacation rentals as long as the remaining units are long-term rentals. The new rules will only apply to new developments in C-1 and C-2 going forward, with existing licensed vacation rentals in those districts grandfathered in.” 


Your Turn

So, the question remains, if community sentiment is shifting towards favoring short-term rentals, why are many elected officials shifting away from it? Is there a balance to be struck between the two directions? Tell us in the comments below. 

Got a question about buying or selling a short-term rental? The Brick & Corbett Team would love to help. We specialize in residential real estate of all kinds, including homes perfect for turning into or already operating as a short-term rental. We know all the rules for each of our communities inside and out; let the Brick & Corbett Team walk you through your next purchase or sale. 

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