What Makes a Home Affordable?

Some City Councilmembers have stated that they believe affordable housing can be created simply by converting existing single-family homes currently used as short-term rentals. This viewpoint is naïve. Affordable housing does not occur by converting existing homes. A 3-bedroom 2-bath, properly cared-for single family home does not begin to meet any kind of affordability standards. Affordable single-family homes just do not exist on the open market.

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Affordable homes are not your average houses. They are designed specifically for this purpose, whether they are apartment buildings, duplexes, ADUs or tiny houses. Affordable housing is subsidized by programs such as Habitat for Humanity, Peninsula Housing Authority and other such programs.

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Short-Term Rental Homes are Not Affordable Homes

Shutting down most of the city’s short-term rentals will do nothing to fix this problem. Given what house prices and loan interest rates are now, these houses will not end up being affordable housing if they are sold. Shutting them down will spin off numerous unintended consequences, creating collateral damage that will only add to our city’s economic plight.

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Short-term rentals support hundreds of the city’s labor force, from service providers such as cleaners, maintenance workers and lawn-care specialists to household goods suppliers. Closing most STRs will result in putting these people out of work. These workers will then join those struggling to pay their rent and provide for their families, ironically, swelling the ranks of those who need affordable housing.

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How about turning STRs into long-term rentals?

It’s far from a given that most STR owners forced out of business would simply turn their homes into long-term rentals. The median average home price in Port Angeles is currently $450,000, and when combined with other costs like mortgage interest, insurance, property taxes and other expenses, a home would likely require a $2,500-$3,000 per month rental rate just to break even—far from an affordable expense.

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An informal Olympic Peninsula Lodging Alliance member poll indicates that most would not turn to long-term renters, for a variety of reasons. Some properties are simply not appropriate for long-term renters, since not all STRs have a kitchen or a laundry. Adding to this, Washington State landlord-tenant laws favor the tenant, making it very challenging to be a landlord. You cannot easily get rid of bad renters without lawyers and a lot of money, and long-term renters are more likely to cause damages that can add up.

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Why don't STR owners just sell their homes?

It’s unlikely most STR owners would make the decision to sell their homes. Some may, but STRs are often multi-use properties that are used for rentals during the summer and used for family members, or left vacant, during other parts of the year. This community has a lot of snowbirds, and they need the flexibility that comes with short-term rentals.

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If STRs are sold, locals would buy them, right?

It’s far more likely these homes would be snapped up for top dollar by out-of-towners with deep pockets. Our more-moderate climate has been attracting a lot of interest from buyers in Arizona Florida, California and other hotter places. In addition, since the advent of COVID, flexible or remote workers have been moving here, as well.

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How Short-Term Rentals Can Help the Affordable Housing Crisis

There is no correlation between short-term rentals and the affordable housing crisis, but we believe that short-term rentals can and should be a part of the solution for this deeply entrenched problem.

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We support a bill that was reintroduced in the Washington State Senate in early January, 2024. SB5334 makes a direct connection between STRs and affordable housing. If made into law, this bill would allow cities and counties to create an excise tax of up to 10% on short-term rentals specifically for affordable housing agendas in our community. This money would be paid by our guests, collected by the city and provided to organizations such as Habitat for Humanity and the Peninsula Housing Authority.

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The Olympic Peninsula Lodging Alliance wholeheartedly supports this agenda, and we will be working with other STR alliances in the state to garner support from their members to show our congressional representatives how important this law would be for our communities. We encourage everyone to reach out to their congressperson to support this bill.

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BACKGROUND

Port Angeles Has Fallen Behind on Building Housing

According to Port Angeles' Housing Action Plan, to meet the city’s housing needs we would need to build nearly 3,000 homes between 2020 and 2030: This would be a rate of 300 houses per year—or at this point, since the city has fallen behind, it would require the building of more like 500 houses per year.

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What’s the average number of single-family homes built each year for the past 15 years?
Fewer than 50.

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How about multi-family apartments—exactly the type of housing needed for affordable housing?
Fewer than 10 units in 15 years!

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Making matters worse, while the building of homes has stagnated, our population continues to grow, albeit slowly. In fact, the current rate at which we’re building houses is less than half the population growth rate.

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Vacant and Blighted Properties: A Citywide Problem

While short-term rentals are the scapegoat in the conversation over the lack of affordable housing, there are vastly more vacant properties than short-term rentals: The 2017 American Community Survey estimated that 1,107 of the city’s 9,418 housing units—fully 12 percent—were vacant.

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The (2019) Port Angeles Housing Action Plan indicated there were 404 properties with inactive electric service, of which 234, or 58%, were residential homes. A public records request in December 2023 has revealed that there are currently around 700 properties with inactive electrical service—a much larger number than just a few years ago. If the same ratio holds, there are currently more than 400 residences in the city without electricity. For a home or apartment building to sit vacant and without electricity, possibly for years, is clearly not good for these homes or the community.

 

Vacant properties abandoned by an absentee landlord attract drug users. These rundown homes add to our city’s problem of urban blight and do not contribute in any way to either the housing crisis or our city’s tax base.

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Between short-term rentals, which make up only 3% of the city’s homes, and vacant, blighted properties, at an estimated 12% of the housing stock, which one is hurting the housing supply and the economy more?

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What are some solutions?

There is no single solution to the problem of affordable housing, but OPLA advocates for a series of solutions which, when combined, can help move the needle on this challenging problem. These include:

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1. ​Code enforcement and fines for vacant and blighted properties (12% of all city housing!) to encourage owners to fix up properties or sell

2. ​Incentives for local builders to turn vacant homes into affordable housing

3. Low-income vouchers to offset the expense of rent payments

4. SB5334, which was reintroduced in January 2024, proposes up to a 10% short-term rental tax paid for by short-term rental guests. OPLA supports this measure, which would create a significant income stream for affordable housing.