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Fine Balance Needed between Property Rights, Regulation of Short-term Rentals

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WASHINGTON (May 13, 2016) – Mobile and online technology and evolving consumer tastes are changing the dynamics of renting property, and the debate on whether the regulatory response from state and local governments clashes with individual property rights will likely continue, according to speakers at a panel discussion on the current issues surrounding short-term rentals at the 2016 REALTORS® Legislative Meetings & Trade Expo.
The timely conversation on the increasing popularity of short-term rentals and whether or not they infringe upon property rights was debated by a panel consisting of prominent, but differing, voices in the industry. Providing their insights were Matt Kiessling, director of coalitions and grassroots for the Travel Technology Association; Craig Kalkut, vice president of government affairs at the American Hotel & Lodging Association; and Brian Blaesser, a partner at law firm Robinson & Cole LLP.
According to co-moderator Christopher McElroy, a Realtor® from Colorado and chair of NAR’s State & Local Issues Policy Committee, owning property comes with a “bundle of rights,” which includes the ability to rent an owned property to another individual. However, in recent years, advancing technology has expanded choices for consumer travel and changed rental market time frames from what was traditionally six months or longer to much shorter periods. In addition to obstacles related to taxes and regulation, issues can arise when rentals are used in ways that aren’t in alignment with the character of a neighborhood.
“The increased popularity of short-term rentals puts additional pressure on availability and affordability [of lodging options] in tourist communities, and now local governments are looking at ways to tax them in a similar way as hotels or bed-and-breakfasts,” said McElroy.
Blaesser, who leads the real estate development practice at his firm’s Boston office, explained that local governments are seeking to regulate rental housing in various ways, including through registrations and inspections. He said a disturbing trend is that communities are placing limits and being more restrictive. “Fundamental property rights state that you should be able to buy, rent or sell a property. Limiting renting is taking away one of those three rights, and further regulations beyond registration and inspection can be dangerous.”
Kiessling and Blaesser both agreed that renting out a home for less than 30 days is a residential use. Homeowners are simply taking advantage of popular platforms that allow them to rent out their property for supplemental income. As long as nuisance isn’t a problem, the right for them to rent out their property – regardless of the timeframe – is their choice.
Kalkut, acknowledging that seeking out residential properties for vacation and weekend getaways is becoming more popular among travelers, stressed that there needs to be a legal and level playing field between the lodging industry and the many short-term rental platforms available today. In some cities where these rentals are very popular, it is currently illegal for a homeowner to rent out their property for less than 30 days if they aren’t home. Another issue is the equal payment of taxes. Whereas hotels are very heavily taxed – paying up to 15 percent or more in occupancy taxes to state and local governments – the same cannot be said for some of the social rental platforms.
Added Kalkut, “There’s also mounting evidence that people are buying multiple properties just to rent them out for short-term purposes. This in turn drives up home prices for traditional buyers and brings up the question on whether this act is a commercial activity.”
From Kiessling’s perspective, he stressed the overall need for continuity and a level of fairness among state and local governments. Inciting laughter from the crowd, he joked that restricting short-term rentals is a law from a bygone era, and regulations need to change to support short-term rental activity. “We should be creating laws with purpose,” he said emphatically.
Blaesser believes the regulatory response regarding short-term rental issues is not going away any time soon. The growing appetite to both rent and rent-out properties for short-term purposes will cause state and local governments to review and potentially introduce more regulations that may threaten personal property rights.
Data from NAR’s 2016 Investment and Vacation Home Buyers Survey proves Blaesser’s point that short-term rentals are becoming more popular. According to the survey, 42 percent of recent investment buyers did or tried to rent their property in 2015 for less than 30 days and plan to do so again this year.
Blaesser advised Realtors® to read the recently released white paper on residential rentals prepared in consultation with NAR. The paper analyzes the issues raised by different regulatory approaches, provides Realtors® with ways to address short-term rental obstacles, and outlines best practice approaches to rental housing that Realtors® can use in discussions with local government officials.
“Ultimately, as long as nuisance isn’t a problem, the person coming in or out the door doesn’t matter,” concluded Blaesser. “Realtors® should use this argument as their starting principle when discussing short-term rental issues with their clients and local officials.”
The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing 1.1 million members involved in all aspects of the residential and commercial real estate industries.
Source: National Association of REALTORS®.

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Millennials Changing Face of America, Heavily Impacting Homeownership, Say Experts

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WASHINGTON (May 13, 2016) — Millennials are bucking trends, changing the landscape of America, and sharply different from previous generations in many different ways. One of the most visible and consequential ways is through millennial homeownership numbers, according to experts on generational trends and homeownership presenting at the 2016 REALTORS® Legislative Meetings & Trade Expo.
While all generations have their own hardships, opportunities and defining features, millennials are coming of age in a time of deep demographic transformation, experts say. In a session titled “The Minds of Millennials—Motivation, Mobility and Making  Home,” presented by REALTOR® University and moderated by National Association of Realtors® Chief Economist Lawrence Yun, panelists discussed what the shift means for the American way of life.
“America in the near future will look nothing like the America of the past,” said Paul Taylor, executive vice president of the Pew Research Center and author of the book “The Next America: Boomers, Millennials, and the Looming Generational Showdown”. “These shifts are creating big generation gaps that will put stress on our families, our politics, our pocketbooks, our entitlements programs and perhaps our social cohesion.”
Millennials, Taylor said, are different from their parents and grandparents in ways that are already impacting all aspects of life. For example, he noted that millennials (those born after 1980) are less religiously affiliated and slow to marry and have kids. They grew up with cell phones and on social networking sites while also obtaining a high level of education, but are still struggling financially because of the economy. Politically, half of the generation identifies as independent, more than ever have before. While seemingly small differences, these characteristics have very real effects on homeownership. After all, he noted, 39 percent of millennials are still living with a parent or relative, citing the record share of young households holding student debt.
Jessica Lautz, managing director of survey research at NAR, agreed that homeownership among millennials is taking a hit. Student loan debt, flat wages, rising home prices (making it harder to get into the homeownership game) and rising rents (complicating the saving process), are delaying milestones such as marrying and having children – major events in life that often cause young people to buy a home.
The real estate industry is already feeling the impact of these factors on millennials in regards to home buying.  First-time buyers have in the past accounted for about 40 percent of homebuyers; however, NAR data show that number has trended downward since 2011 and currently sits at 32 percent. And while married couples are the largest group of buyers (currently 67 percent of all buyers), single females make up the second largest group of buyers, and that share has also dropped from 22 percent in 2006 to 15 percent in 2015.
Still, one big thing hasn’t changed, according to Lautz. “Even with all these statistics showing how things have changed for millennials and the fact that they are worse off financially than previous generations had been, the median age of first-time buyers has stayed relatively unchanged at 31,” Lautz said. “This means that they are ready and willing to buy if they can in fact break into the market. It’s getting more difficult to get to that point, but the desire to do so hasn’t changed.”
And while the path to homeownership is harder now for millennials carrying student debt, dealing with rising rents, and experiencing stagnant wages, NAR research shows that millennials still see the value in owning and home and once they are ready, they are looking to a real estate agent in higher numbers than ever before.
“We are seeing that millennials are using agents at much higher rates,” Lautz said. “You might assume that they would prefer to take on a purchase or sell on their own, being raised in the digital age, but instead, we have found that these buyers and sellers want someone to help them through the process, not unlike the way their parents have helped them through their young adult life. Not having been through the process before, they rely on real estate agents to get them through the competitive market and to the finish line.”
The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing 1.1 million members involved in all aspects of the residential and commercial real estate industries.
Source: National Association of REALTORS®.

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Existing-Home Sales Rise in April for Second Straight Month

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Despite low inventory and faster price growth, existing-home sales continued to rise for the second consecutive month.

Read the full news release.
View supplemental market data (Excel: 44 KB)
See the summary of March 2016 Existing Home Sales Statistics (PPT: 2.12 MB)

The Existing-Home Sales data measures sales and prices of existing single-family homes for the nation overall, and gives breakdowns for the West, Midwest, South, and Northeast regions of the country. These figures include condos and co-ops, in addition to single-family homes.
Source: National Association of REALTORS®.

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