Editor’s note: This is the first story in an ongoing series covering the housing crisis in the North County.
Most residents who were here in 2006 remember Paso Robles and the entire North County area being a great place to live but not very popular with anyone. A place to stop, gas up, get a bite to eat and move on down the road. But now, in 2017, the entire region is ranked as one of the nation’s top “food and wine destinations” by USA today. The area not only attracts visitors from all over the world but transplants from all over the country looking for the quintessential place to raise their families and retire.
As of today there are more than 300 vacation rentals listed in the city of Paso Robles alone and while Atascadero boasts exactly 10, that number is sure to rise. Many local residents are bemoaning this new found fame, becoming frustrated with trying to find decent housing at affordable prices.
Nicolette Harley is the owner of the Harley Group in Paso Robles, a real estate broker and a vacation rental owner since 2006.
“There was just a small handful of us back then, three to five people had them and we kind of all started it together and then collectively paid Kathy Pinelli (Paso Robles Vacation Rentals) to help promote them and do the marketing,” Harley said.
That small handful of local, long-time residents has turned into investors and forward thinking, soon to be retirees who are anxious to get their hands on property that they see as only rising in value before they’re priced out of the market.
“There are some that want to buy because they want to come and book it for themselves for a weekend here and there and then in the meantime make money on it,” Harley said. “There’s a combination. Some people are wanting to retire here so they buy a house and put it under VRBO and have it as a placeholder for themselves. Mostly, it’s a place to hold for them. The prices have gone up so much that they are worried that they won’t be able to afford something down the road.”
But what about the local residents who are already priced out of the market due this huge influx of investors and future retirees?
“It’s definitely put a huge squeeze on everybody,” Harley said. “It’s so hard to get a rental now. You have 300 homes that could house tenants and regular housing. And the affordability for rent — eight to ten years ago you could rent a house for $800 a month, now it’s $2,000 a month. Because of tourism there are so many vacation rentals and a shortage of housing. Well, not 100 percent obviously but a large percentage of it.”
There is a huge housing boom happening in San Miguel right now, houses selling for what a little house in Paso used to sell for because the prices here have gone up substantially, 25-30 percent, said Harley.
The outcry has been heard loud and clear. Paso Robles Mayor Steve Martin recently issued a press release calling for new affordable housing.
“It’s time to build homes in Paso Robles,” Martin wrote. “Since I returned to the Paso Robles City Council in 2012, many local residents have reached out, asking me to reduce the high cost of housing in our city. Rental rates are high and going up. Home and apartment rental opportunities are few and far between.”
According to Atascadero Deputy City Manager Terrie Banish, while Atascadero has not suffered the impact that Paso Robles has in regard to tourism and the influx of investors in vacation rentals, they have been making an effort to be proactive in regard to the recent housing boom and influx of new residents.
“The city is focused on having a balance with affordable housing available to residents,” Banish said. “In fact, from 2010 through 2016, the City of Atascadero constructed 201 affordable housing units by private developers and nonprofit organizations. On top of the 201 affordable housing units, the City has exceeded the amount of market rate home targets established by the state. This has been going on since 2010.”
In regards to vacation rentals depleting the housing market for locals, “It wasn’t even until three or four years ago that it even become a political issue and a real concern in residential areas,” said Warren Frace, Atascadero’s past Community Development Director, holding the same position in Paso Robles since 2015.
In response, the city has created a task force to look into the issue.
“We wanted all sides of the issue to be represented,” Frace said.
Frace sees the influx of investors as both a problem and a boon.
“Well, we have been looking at the issue and we know it can be a concern,” he said. “We have seen two things: some housing being turned into investment rentals, but also really run down properties being improved. So there are two sides to it. We will, however, be looking into limiting apartment projects being converted into short term rentals because that’s definitely having an impact on housing for the work force. I think the City Council direction is to find a balance point. The task force will be doing a public outreach process. We want to craft something that works for the whole community as we go through the whole process.”
When it comes to the vacation rental market competing with the region’s hotel industry, Harley believes the vacation rental market is so successful because you can get twice as many rooms, bathrooms and a kitchen for the same price as one hotel room in the area. And while the city of Paso Robles alone has approved at least five new hotels recently and Atascadero is looking forward to a new addition from Madonna Enterprises, “as long as the vacation rental people don’t price themselves out of the market they will always be sustainable,” Harley said. “The vacation rentals will keep the hotel rooms in check.”
Perhaps the incoming competition will put a damper on incoming investors. Thereby making homes, both old and new, within reach to the average, full-time resident homebuyer again. Because in regards to the local governance there is no end in sight. As noted by the “short term rental” task force in their latest draft, “In one of our last sessions, the task force committee agreed that including language pertaining to density and numbers in the draft ordinance was beyond our responsibility and expertise.”
As for the vacation rental market effecting the hotel industry in the city of Atascadero, Bannish said, “A service has been hired by the Atascadero Tourism Business Improvement District (ATBID) to identify vacation rentals vs. regular rentals. If one is identified from the service, a complaint form is submitted to the City and it is investigated further to see if it is a vacation rental. If identified, they have to get a business license and have to admit for TOT Tax (Transient Occupancy Tax) as well as their operation as a vacation rental. But as of now we have not received any complaints from residents or hotel owners.”
“It’s a double edged sword in our community,” Harley said. “The people coming here bring money into our towns and help our economy so we have to welcome them but at the same time have some restrictions on how they treat our town. I worry about [our having become] a town based on tourism because tourism is something people do when they have disposable income. But if the economy gets tight we could get ourselves in a situation where it could be a really hard time for everyone. Fortunately the city is finally becoming more favorable to construction. So we are finally going to get some more houses and that will definitely help with the housing rental market.”
The favorability Harley is referring to is the recent reduction in fees to home builders, but builders admit reducing fees will not necessarily lower home prices because houses are sold at “market value,” and the demand for housing continues to keep that value high.
According to Martin, affecting the free market by increasing the variety and inventory of housing is what will reduce costs. In Martin’s recent press release he stated, “The bottom line is this: The City of Paso Robles has heard the pleas of citizens to remove obstacles to home construction, increase the inventory of residences and reduce the cost of housing. The City has responded and will continue these efforts, but the City does not actually build housing. For that, the City and its residents now look to builders to see how, after all of this work, they will respond. And the message to them is clear: It’s time to build homes in Paso Robles.”
Then the next question is: How will the region continue to welcome its economic growth in regard to tourism, yet quell said tourists’ desire to transplant and or invest in what they see as a boom town, devouring whatever comes on the market? Even Harley, when asked what she plans to do with her and her husband Doug Barth’s (a local real estate appraiser and developer) recent home projects responded, “I don’t know. We haven’t decided yet. Maybe turn one into another vacation rental and the others long term, we’ll see.”
You may contact reporter Madeline Vail with comments or questions at [email protected]