Lake Tahoe's Short Term Rental Debate

Posted by Jackie Ginley on Thursday, July 4th, 2019 at 4:01pm.

The growing popularity of short-term rentals has sparked a homeowner backlash in the Tahoe region, leading to restrictions in some parts of the Basin and even new home developments in Reno. So far, those restrictions do not seem to have had a dampening effect on the real estate market.

From South Lake Tahoe, which found itself in court after trying to phase out short-term rentals, to Washoe County, which is considering regulations that could affect Incline Village and parts of Reno, public officials are grappling with the same question: Should you be allowed to buy a home or condo and run it like a motel?

Back in the days before “Airbnb” became a verb, that question never really entered the public arena.

Short-term rentals (STRs) have long been part of the Tahoe landscape, so much so that lakeside condo developments such as Tahoe Tavern and Tahoe Shores have in-house property management offices to handle them.

On one hand, vacation bookings in Tahoe historically tended to be so seasonal that it was almost impossible to get a great return on that business model. On the other, who had time in their regular work week to manage the comings and goings of a nightly pack of guests?

Airbnb made that process pretty seamless. And in communities like South Lake Tahoe, long a sleeper town for the casinos, the shoulder season now practically doesn’t exist. Airbnb offerings have almost quadrupled in South Shore over the past five years.

As STRs gain a foothold in more traditional neighborhoods, the revolving door of guests tends to bring added noise, extra cars, and a vibe that sometimes fails to resonate with resident homeowners.

Consider the example of Truckee, a town with more than 13,000 single-family homes, more than half of which are vacant most of the year.

Interestingly, there aren’t a lot of STRs in Truckee. According to the Mountain Housing Council, a public/private collaboration looking at workforce housing issues in Tahoe, 1,720 homes, approximately 13%, are rented out short-term.

More than half of them are in Tahoe Donner, a neighborhood of some 6,000 properties in the hills above Truckee. With amenities like swimming pools, golf, and an outstanding cross-country ski area, Tahoe Donner is a one-stop vacation hangout (and it’s less than three hours from most of the Bay Area).

A couple of egregious examples of partying, packing large crowds into homes, and cars overflowing into the streets inspired Tahoe Donner to implement new rules this year, limiting the number of people and cars per rental and requiring STR owners to register with the homeowner’s association to ensure a contact person is available to respond to complaints within 45 minutes. Failure to comply can subject the owner to fines.

The rules largely codify what had been good-neighborly behavior — keep the noise down at night, turn off your outdoor lights so they don’t shine into your neighbor’s bedroom, and respect the fact that you are in the forest.

As a realtor, I know that short-term rental options make a vacation home possible for those who might not otherwise be able to afford one. But I also know that those who can afford it choose not to STR because the wear and tear, as well as the inconvenience of locking up your belongings, can be a hassle.

In luxury communities, restrictions on rentals have long been the norm.

Gated communities like Lahontan in Martis Valley limit the rental of one’s home, requiring a term of at least one month. The neighboring golf course community of Schaffer’s Mill restricts STRs to a minimum of one week, plus owners may only rent their home 12 weeks out of the year in total.

Even more exclusive communities like Fleur du Lac (the former Kaiser Estate on Lake Tahoe’s West Shore) require at least a six-month lease, which is down from the previous policy of one year.

Even in Reno, new housing developments have taken the bold step of banning STRs. Sterling Ridge, a nicely appointed townhome development near the University of Nevada, Reno, limits rentals to a minimum of 30 days. Upstream, a collection of townhomes on the Truckee River adjacent to the Oxbow Nature Center, requires at least a six-month commitment.

Interestingly, none of this seems to have hurt sales.

In South Shore, the median single-family home sales price for the first quarter of this year was $550,000, up 15% over last year at this time. Tahoe Donner saw a 4% increase over Q1 last year, and the pace of sales at luxury communities like Lahontan was up 41% in 2018 compared to the previous year.

In Reno, über-restrictive rules like Upstream’s six-month minimum also have had no apparent effect on sales. The community is close to sold-out, with riverfront homes selling for well north of $400,000.

For the near-term at least, quality of life issues in the debate over STRs seem to be trumping short-term profits with no apparent detriment to the real estate market.

*This article was originally published in Moonshine Ink, Tahoe's best independent newspaper

Full disclosure: Jackie has owned property in Tahoe for 20 years, and recently purchased a condo on the Truckee River at Upstream

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