HomeMy WebLinkAbout08-10-23 Public Comment - J. Pisel - STR Restrictions will help with long term rentals in a meaningful way.From:Josiah Pisel
To:Agenda; Christopher Coburn; Jennifer Madgic; I-Ho Pomeroy; Cyndy Andrus; Terry Cunningham
Subject:[EXTERNAL]STR Restrictions will help with long term rentals in a meaningful way.
Date:Tuesday, August 8, 2023 3:31:41 PM
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Hello Bozeman City Commission, thank you for taking the time to consider my position on
additional ordinances and restrictions on short term rentals in the city of Bozeman.
First I want to acknowledge that Bozeman Tenants United and the people that they representare correct. We do need more housing and to make that housing affordable. This can happen in
a multitude of ways, reduced parkland requirements, expedited development process,eliminating or exponentially increasing the cash in lieu of for developers, higher density
housing, reduced sq ft. minimums, increased wages, more units coming on to the market(affecting supply and demand) etc.
As a resident and business owner (Short Term Rental Manager), further restricting STR's will
only have a minimal at best impact on affordable housing (lots of studies showing this acrossthe country) however, it will have a notable impact on the economics of Bozeman with less
jobs (cleaning companies, handyman, lawn care, snow removal, property managers etc.) beingcreated and less visitors coming to Bozeman due to lack of lodging and affordability of that
lodging (Hotels/motels don't have the capacity nor the amenities that most STR's have).
For the short term rental properties that we manage I can confidently say that none of ourowners would turn their homes into long term rentals AND even if they were it would not be
at a rate that most would be able to afford.
Let's take a look at the current market of real estate in Bozeman city limits:Median Single Fam. Home Price as of July 2023 = $795K
Mortgage Rate Assuming 30 year fixed at 7.2% with 20% down = $4,317Average home size per bedroom = 3.72
That's $1,160 per bedroom before taxes and insurance (conservatively say $400/month) =$1,560.
This would be a 0% cash on cash return to the home owner/investor (assuming $0 for vacancy,$0 for maint. and $0 for Capital Expenditures)
Using a 31% housing expense ratio (What a bank may require), an individual would need tomake $60,387 just to afford 1 room in that house.
Now let's consider the fact that most STR's are more expensive than the median home in
Bozeman....
It's obvious that further restrictions on STR's is not the answer. If for some reason that it is notobvious then there is an abundance of research available showing that eliminating/reducing
short term rentals does not equate to the affordability of long term rentals.
Bozeman is an amenity rich community and those amenities are what bring more and morepeople to the area, which drives up the cost of housing (supply and demand).
-- Josiah Pisel (Realtor and STR manager)
406.223.9958