Affordable housing is an extraordinarily complex and sensitive issue. Due to my many years of being on the front lines of the issue I know to tread lightly. It has not been solved in the North Lake Tahoe area and seems to be an increasing problem in many places in the country, including Reno. There are a lot of good ideas and plenty of good people working on the issue, but I don’t know if we’re any closer to a solution. It’s a hot button campaign issue for politicians but solutions to housing problems are easy to promise and very hard to deliver.
The development group I work with provided several land parcels for affordable housing as part of entitlements for projects. Land was conveyed to regional affordable housing builders who move around the country with this set of expertise. They know how to build the right product for the market, and they know how to use tax credits to finance their construction.
There are many incentives set up by governments to promote the issue, but my observation is it takes quite a bit of institutional knowledge to know how to use the tools and how to unlock the value. I think there must be a high barrier to entry in terms of expertise needed and financial risk taken in order to operate profitably in this realm. Also, I’m sure the different sets of rules put in place by every locale you work in allow for the application of general principles but require addressing specific details in each.
Sometimes affordable housing gets built and doesn’t get used fully, either because it can’t compete in the market when it comes to cheap pricing, or it’s simply the wrong product and is not attractive.
NIMBYs are a major problem with affordable. Everyone says they want it, but only if it’s not in their neighborhood.
Environmental opposition groups won’t for allow for exceptions to their attacks to help get things done. They run by hard and fast rules which don’t allow for compromise. Their mission is to fight everything.
There’s a theory the prevalence of Airbnb and VRBO allow owners to rent for less total nights and achieve greater financial returns versus locking up their properties in old-fashioned ski or summer leases. I’m not sure if they’re even still a thing but I remember from my younger days when a group of folks would rent a beach or ski place for the season. It could be locals, living and working there, or it could be young people who would pool their resources to lock up a place to share. I don’t hear those terms any more. It seems so easy to rent what you need when you need on your phone that there’s no reason to make a big commitment.
It seems logical the result is there are less places available for long-term rent and there may in fact be less stable seasonal visitation and more peaks and valleys as allowed by easy short-term availability.
The Zuckerberg purchase of $60 million of real estate only highlights the competition for Tahoe housing. It’s great to see that the world’s wealthiest value Tahoe so highly when the world is their oyster, but it also reminds us that in order for Tahoe to be a great place we need ski resort operations, restaurants, yoga instructors, and housekeepers, not to mention police, forest rangers, teachers, firefighters and the trash man.
I don’t have any answers for this issue, but I am always deeply skeptical when I hear someone say they do. It’s going to involve broad representation in this problem-solving effort, and it must include developers.
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Ed Morgan Real Estate Fundamentals 