Truckee’s Housing Crisis: Analysis

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Truckee’s Housing Crisis: Analysis

Truckee is experiencing a well documented housing crisis, and doesn’t have a plan to deal with it. We have a general idea of what the crisis is (renters being driven out by high prices), and what’s causing it (housing demand outstripping supply), but we lack a framework to evaluate potential interventions. Left with only a broad sense of helpless urgency, we’re more likely to take actions that produce unintended consequences, while leaving the core problem unaddressed.

One idea accepted universally in Truckee is that our housing crisis is related to our staggeringly high demand for short term rentals. Fully half of our residential units are occupied on less than a year-round basis. The sudden ease of renting on a short term basis means that people who can’t commit to being here year-round can now compete with long-term tenants, increasing demand and driving up prices.

Beyond this, we have little widespread philosophic or strategic agreement in what to do to drive down prices.

  • Lack of supply? We should build more housing. But how much do we need to “fix” our imbalance, and do we even have enough developable land to do it? Or are we too small to absorb all the demand to be here, and would we ruin what makes this place special if we try?
  • Not all “housing” is the same. We should stop building 10-bedroom mansions on the edge of town that can only be reasonably used as second homes, and build more apartments and co-housing in walkable/transit-rich areas that are more affordable by design. But again, do we even have enough land to attempt this, and how do we keep these new attractive units from being rented to visitors?
  • Stop letting outsiders push up demand. We should limit occupancy of new construction to locals. Ok, but what’s a local? Our economy depends on seasonal contract workers who don’t qualify as “local” by our housing eligibility requirements. Also, because locals-only requirements are unique to Truckee, many developers and their financiers see them as an unnecessary risk. And finally, are we doing a disservice to ourselves by relying on such divisive rhetoric? Our locals were here in the buildup to our housing crisis and weren’t able to circumvent it, so we need new residents to bring new ideas and energy.

Short term rentals provide ample room for disagreement, as well.

  • Property owners with no connection to the surrounding community treat these houses as investments, not homes. Renters drive noise complaints, keep lights on at night, and leave food out that attracts bears. Neighbors feel mistreated and unwelcome in their own community.
  • Some people rely on income from their short term rentals. A retired couple might rent out an accessory dwelling unit (ADU) to cover their kid’s college tuition. Another couple might rely on renting out a room to cover their mortgage. Our rents and mortgages are high because of the demand for short term rentals, so many of us must participate in that market to afford to be here.

Housing should be a human right. But for now it’s a commodity, and many people with significant power have made choices on the assumption that this system will continue. Politically, we have to consider this reality when we plan a better system.

An Airbnb listing in Truckee for $1,450 a night.

Methodology

This memo works towards a framework to evaluate housing crisis interventions in three steps.

  • Listing common archetypes of the types of housing available in Truckee.
  • Listing the kinds of impacts, positive and negative, of these archetypes.
  • Evaluating the town’s current policies in regards to housing supply and short term rentals by their impacts. 
  • Suggesting performance measures so we can ensure we’re on the right track.
  • Recommending changes to town policies that would create more desirable impacts.

Archetypes

What kinds of housing exist in Truckee? Start with the basics.

  • Long term, owner. Someone buys a house and lives in it full time. They’re the only one living in it, and this is their exclusive residence.
  • Long term, renter. Someone buys a house and someone else lives in it full time. The renter is the only person living in it, and this is their exclusive residence.

Then introduce short term rentals.

  • Full time, short term rental. Someone buys or rents a house, and rents it to other people year round. People book for a few days at a time. The primary occupant might stay in it for holidays or powder days, but they have a primary residence somewhere else.
  • Full time, ski lease. Someone buys or rents a house, and rents it to other people year round. Each lease is months long. The primary occupant might stay in it for holidays, but still maintain a residence somewhere else.
  • Occasional, short term rental. Someone buys or rents a house, lives in it part of the time, and rents it to other people whenever they go on vacation (weeks at a time). The house is their primary residence.

And now add other space configurations.

  • Full time, short term room. Someone buys or rents a house, and rents a room or portion of the house (like an ADU) to multiple other people year round. The primary occupant lives in the house year round, too, and interacts with their guests.
  • Full time, roommates. Someone buys or rents a house, and lives with their long term tenants year round.
Zillow showing no rentals available for less than $1,500 a month.

Impact

How can housing impact Truckee?

  • Community participation. When the primary occupant lives in Truckee, they’re more likely to know their neighbors and become part of the community. We want more of this.
  • Housing supply. Long term rentals better meet the needs of local wage earners than short term rentals. We want more of this, too.
  • Noise and other nuisances. Properties with owners on site, such as ADUs, are less likely to have noise complaints, because someone is on site to manage tenants. We want less of this.

Evaluation

How do the archetypes perform against these impacts?

🌲= Great!😐 = Fine❌ = Not great
ArchetypeCommunity ParticipationHousing SupplyNuisances
Long Term: Owner🌲😐🌲
Long Term: Renter🌲😐🌲
Full Time: STR
Full Time: Ski Lease😐 
Occasional: STR🌲😐😐 
Full Time: Room🌲😐 🌲
Full Time: Roommates🌲🌲🌲

From a housing perspective, the best thing someone can do to increase the housing supply is to build an ADU for year round tenants or take on year-round housemates. This makes sense – it’s creating opportunities for more people to fully join the community. Even renting these spaces as short term rentals is still pretty desirable – nuisance risk is low, and the primary occupant is still part of the community.

It also makes sense that year-round short term rentals are the least desirable. Ski leases are slightly less bad, only because after a few months the tenants will eventually figure out their bear box and may even meet their neighbors.

Living in your own home or rental is literally fine: not doing harm, but not amplifying benefit either.

The last case (occasional short term rentals) is interesting, though not usually part of the rental conversation in Truckee. The primary occupant is still part of the community most of the year, and is likely to know their neighbors should nuisances arise. Their rental is unlikely to be their primary source of income, but perhaps still enough to impact their mortgage or fund a family vacation.

A five-bedroom house in Truckee listed for $1,100,000.

Performance Metrics

Five years from now, how would we know that we were on the right track? There are things that are easy to measure, things that are impactful, and these aren’t always the same. These are most useful when they directly assess the impact, rather than capturing secondary effects. Here are some suggestions.

  • Reducing the number of unsuccessful housing applications. Landing Locals, Facebook, and other message boards are full of people looking for housing, and many are unsuccessful. How many requests for housing go up each month, and how many posters are successful in finding the local housing they need?
  • Reducing the waitlist for locals-only housing. Some housing developments in Truckee are restricted to only “locals”, and these are in high demand with waitlists. Do the waitlists get smaller?
  • Reducing the number of local service jobs that remain unfilled. Many businesses now are having trouble finding people who are able to secure their own housing. Are restaurants still closing early due to short staffing? Are there enough ski instructors and bus drivers?

Recommendations

Based on the analysis above, it follows that Truckee should encourage these types of rentals:

  • Long term roommates
  • Short term home shares (including both ADUs and rooms)
  • Occasional short term rentals (some number of weeks/months a year)

While discouraging these types of rentals:

  • Year round rentals
  • Absentee owners

These recommendations precisely conflict with the new short term rental program enacted by the Town of Truckee in late 2020. This program prohibits STRs in ADUs constructed after 2020, and creates new annual fees and inspections that most significantly impact occasional hosts. To reverse this incentive structure, the Town should:

  • Allow short term rentals in all ADUs and JADUs.
  • Cap the number of nights an entire home can be rented annually. The precise number should be based on quantitative analysis, but assume something like three months a year.
  • Create a vacancy tax for homes that are unoccupied some portion of the year. The precise length of time, again, needs analysis, but assume something like six months a year.
  • Engage the community to learn what the town could do to incentivize more people taking on roommates.
  • Actively support co-housing, and other arrangements that more efficiently house people on limited space.

How does new construction play into this? If every STR became long term housing overnight, would we need new homes? The conventional wisdom is that the large second homes that make up so much of our housing supply are hard to retrofit into anything other than vacation homes. Hard, but not impossible. Ambitious approaches that are worth exploring include:

  • Making it easier for owners of very large homes to physically and legally subdivide into duplexes and multiplexes. This help could include streamlined permitting processes, publishing model designs/guidelines, and coaching local contractors on this kind of project.
  • Organizing people who are looking into shared living arrangements. More than just offering a platform, but actively promoting it by offering forums for people to meet and discuss. Coordinating with seasonal workers before they arrive in Truckee or interview for their job.
  • Coordinating access to the things that people need when they downsize. Living in a quadplex means maybe having fewer vehicles or needing to borrow a truck every now and then. People in big houses take driveways and storage for granted, so how can we make it easier for neighbors to share? What can be provided externally that makes it easier for people to downsize.

One thought on “Truckee’s Housing Crisis: Analysis

  1. I like your analysis and recommendations. Truckee is very different from Alameda, where we live, but the crisis is very real, very severe, and there are no quick fixes anywhere…

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