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Imagine that you're a bit older than you are right now. You have some lovely grandchildren who come over and visit you several times a week. They look forward to coming to Grandma's House, the same house you've been living in for the last 40 years, the place where your kids grew up, rich with memories and still an emotional center for your family.
Except.....
Two years previously, the house next door sold, along with two right across the street on your cul-de-sac. Nice 60's ranch-style homes with basements, they were all bought by investors, who converted them to student rentals. Easy conversions - throw some bedrooms and a bath in the basement, and with 5 bedrooms at a going rate of $350 - $400 per bedroom, even being several miles from campus, it's a cash flow machine.
Of course, with about 20 new residents on the street, that's also about 20 cars that need to be parked, and the lawns will only hold a few, so the cul-de-sac is now all choked up with cars all the time. It's not safe for the grandkids to play out there anymore - too much traffic. It seems like there are loud parties until the wee hours every night, and there's trash everywhere now.
It's just not the same neighborhood anymore. As painful as it is, it's time to think about selling Grandma's House.
The above scenario was pretty common in Fort Collins in the early 00's, at least until the city passed an occupancy limit ordinance and got serious about enforcing it. The ordinance basically prohibits more than 3 unrelated individuals, excluding dependents, from living in the same dwelling unit. It did make allowances for rooming house situations within a constrained area close to campus, available by permit if necessary conditions relating to safety were met.
As you may imagine, this was a very controversial bit of law-making, and pitted family neighborhood residents against the investor and real estate community. The local Board of Realtors came out against it, of course - a knee-jerk reaction to anything that might affect a potential sale. .
It wasn't real estate's finest hour - there was a lot of concern about the sanctity of property rights, with not much acknowledgment given to the huge impact that was occurring in neighborhoods all across the city. It seemed that only some property rights were important. The stance was seen as crass and insensitive, a typical single issue, pocketbook interest trumping one of the things that makes the city a special place to live.
The ordinance passed, and has been in place for a while now. It has done what it was designed to do - protect the character and quality of family neighborhoods. There is very little incentive for investors to convert these homes at this point - at $400 per bedroom, these investments are now borderline or worse. There is still a bit of kiddie condo action - parents buying a place for their kids while they are in school, renting to a couple of roommates, and selling after graduation - but that's a different spreadsheet and a much smaller portion of the market. And it tends to comply with the ordinance.
In retrospect, the ordinance probably didn't cost the real estate community much in lost revenue. With the housing crisis and a lessening of available easy funding, this portion of the market would have suffered anyway. The demand for student rental housing hasn't diminished, but private investment to meet this demand has moved to more socially responsible solutions and the University has responded by developing new student housing projects.
Most importantly, the re-sale market in these neighborhoods has remained solid - they have retained their character as nice places to live and home values have been protected.
The real estate community got this one wrong. It's certainly okay to lobby for our interests, but sometimes it's difficult to understand exactly what those interests might be, especially in the long run.
Mary & Dick Greenberg Elevations Real Estate LLC 106 East Oak St. Fort Collins, CO 80524 970-689-4663 www.maryanddick.com
I can go along with occupancy limits within reason. There is a point where there are just too many people. The key is balancing property rights and property use.
We are facing the same thing here in Tucson. Over the last few years, we've seen 'mini dorms' popping up in the neighborhoods around the University of Arizona...in much older neighborhoods. Of course the neighbors are up in arms about it and (to make a long story short) our city council recently enacted this very ordinance. Instead of limiting the area to just around the university, they made it city wide. (I do believe, however, they are re-looking at it.)
All municipalities in my area have occupancy restrictions. Many adopted them along with minimal housing standards as a way to keep property values up and make homes "safer" for residents. Of course there are the notorious communities that go overboard but for the most part this standard has helped keep some fringe neighborhoods desirable to both owner and investor buyers. The initial reasoning for occupancy restrictions, families of 6 or more moving into 864 sq ft houses with 2 bedrooms and one tiny bath that used to be a closet built in the late 1800's, early 1900's. Initially I wasn't a fan of the programs and requirements but there is truly a benefit.
I don't live in a college town, so that "conversion" practice is something I have never seen. I can imagine how I would feel if that happened all around me.
My community doesn't have a college but we do seem to have some of the same issues with high-occupancy rental homes. Our average home is probably near 3000 square feet with 4 bedrooms (and some as high as almost 5000 square feet and 10 bedrooms) and it can be a bit much on a cul-de-sac with limited parking. I'm not sure that an occupancy limit ordinance would be effective but I do like the idea of a limitation on parking which would go a long way to clearing up some of our streets. We already have a very expensive noise ordinance which has pretty much shut-down all the routine 'party houses'.
I guess what I struggle with on an occupancy limit is 'how' is the ordinance enforced? I can't imagine the nightmare it would be to try to figure out exactly who is living in a house, how they are related, and then issuing a fine. My community is a complete melting pot with all kinds of families (including extended families and blended families) and I suspect that it is more likely these extended families that are the cause more of the parking and party problems in my city. The 4000 square foot home with six bedrooms and a four-car garage across the street from me is a great example. I'm sure that everyone in that home would claim that they are related (and they probably are!) but I just wish that they'd park at least one of their 5 cars on the driveway or in the garage rather than on the street....
Dick what a great topic, and both sides have legitimate concerns & points. It is not a clear cut right or wrong. We unfortunately as a society are very short sighted and we do not look to the future and we have paid the price for it often in the political as well as the economic arena. There are other nations around the globe who have the opposite mentality....looking for the long term. This post has inspired me to write about this subject in a couple of posts rather than hijack your post.
Do you really mean the real estate community or your local politcal action board/state point of view? There are a few issues here in my state that I also don't agree with that I believe are not in the consumers best interest. They got it wrong but what if it didn't work out that way? Think of what the neighborhood would have been like. Just remember they don't sell there nor do they live there.
It's also the factor that makes a condominium community worth buying into. I use to be a community association manager and it was a chore getting people (especially renters) to realize that in a community with garages, the garages are to store cars and not to be the alternative to a storage unit.
Dick, What a great blog topic!! Around University of Central FL, there's no ordinance and neighborhods show it. Also, there are communities that are zoned for "Short Term Rentals" with 4-5 bedrooms rented out by the week, crime rate is high, values have goned down so seeing what it does to communities, I agree with the ordinance if I put myself in place of one of those residents living in such communities. However, the other side of the token, how about those families who have 8-9 kids through blended families and those who can't afford seperate housing so they pile up multiple families into that "1400sq ft" home. As far as college students, I'm glad in your area University responded well by offering housing projects, not all might do so.
For me, it's a toss up!! I wouldn' want them in my neighborhood because of all the cars, noise level and heavy traffic.
What a wonderful topic! I have often wondered how college town areas came to become one house after another filled with college kids, without a ton of rules. It does hurt the value of the neighborhood, I am sure....
Hi, Dick: A great topic- and one I'm planning on expanding a little bit to account for some other factors. Keep an eye out for my post on these codes.
Aside from that, though, I must respectfully correct fellow Central Floridian Beth Atalay #44 on a few points:
- There are indeed rules and/or codes in the areas surrounding the University of Central Florida (UCF). Orange County has an ordinance prohibiting more than 4 unrelated individuals. This is a good thing- though it conflicts with the City of Orlando's rule that would allow for 5. Orlando falling within the county means the bigger guy's rules are the effective ones, of course. Beth may be referring to portions of the Oviedo and surrounding areas that lie within Seminole County- in which case she's correct in that no ordinances exist.
- Must also clarify that any short-term rentals are not in Orlando- as only Osceola, Polk and Lake counties permit short-term rentals.
- With regard to room rentals, the City of Orlando's code also states that rooms within single-family dwellings can only be rented out "by the room" if the property is owner-occupied.
Commentary regarding the 8-9 kids through blended families are a bit confusing as well. Widely-used HUD standards of "2 per room" (or the "2 per room plus one for the common area" rule many use) would all but eliminate 8or 9 kids in a 1,400 s/f home. Assuming 1 parent and the lowest of 8 kids, 9 folks in such a small place would be tough- the 9 kids and 2-4 parents would be all but an impossibility.
I would like to respectfully disagree with the benefits of this type of government interference.
In our city, an ordinance was passed 20 years ago to drive out student housing, in a town that is primarily just a university and not much else. The homes that were student housing at the time were granted a license, and everybody else was restricted to no more than 2 unrelated in a home. Among these licensed homes there is a program in effect to yank these licenses whenever improvements are made requiring a building permit, or when partying occurs.
The effect of this is that the price of housing for both students and others has doubled, we have have 2 students living in 4+ bedroom homes, costing $400 per person instead of the $200 that it would have taken before to maintain the expenses of the home. Many at the univ and city do not understand simple economics, if you require a group of four to rent 2 houses instead of 1 home then not only will the cost go up but the demand will also go up in relation to supply and thus higher rents.
The university tried to circumvent this economic reality by creating more housing, of course the government in its infinite wisdom cannot do anything less expensively than the private sector, this ended up costing the students an average of 600/month plus a subsidy from the state for nearly that amount.
In the end we still have students who need to live somewhere, they just get to pay more, and now that taxpayers get to pay a big chunk of this bill too.
As far at the parking, parties, and other problems associated with students in that residential street, these things are already illegal and controlled with fines which are paid by students and landlords who are foolish enough to allow that type of behavior.
Like all property rights issues, this is a tough call. Of course everyone wants their rights protected and so then you get into which rights prevail. I tend to think that the existing residents should . If you have made this your home and things have been one way for a very long time, it does not seem fair for those that are causing big (and possibly negative) changes to have their rights superseed the rights of the existing residents. If acceptable to everyone arrangements cannot be made, then existing home owners should trump.
Leslie, Thats a very good way of looking at it, however I would still like to let free enterprise determine what the highest and best use of the property should be, if these nbrhoods are more profitable as student housing then the prices will go up and the existing residents will also reap the rewards when they choose to sell at a profit.
I can see both sides. However, houses were allowed to be built based on a certain design and intended uses. City services (parking, roads, and such) where made available based on that projected design. Unless the investor buyer can also make some accomodation for the parking and demand on city services that is the way it goes. Also a neighborhood is zoned for particular uses and buyers into the neighborhood should expect it to maintain that character. I am a big conservative, but I also believe local government has authority in these areas. It is abused sometimes, but this is not abuse.
It never ceases to amaze as to the lengths some investors will go to make a buck. They don't have to live there, so why should they care if they completely screw up a nice neighborhood. Then, the hand-wringing starts when the local government intervenes and passes ordinances specifically designed to prevent it from happening. And then the local board of realtors sticks it's nose in and the shirk-fest begins.
Sounds like this one had a happy ending, and I'm glad to hear it!
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Imagine that you're a bit older than you are right now. You have some lovely grandchildren who come over and visit you several times a week. They look forward to coming to Grandma's House, the same house you've been living in for the last 40 years, the place where your kids grew up, rich with memories and still an emotional center for your family.
As you may imagine, this was a very controversial bit of law-making, and pitted family neighborhood residents against the investor and real estate community. The local Board of Realtors came out against it, of course - a knee-jerk reaction to anything that might affect a potential sale. .
Posted by 
;)
;)
;)
53 Comments on Occupancy Limits - One Side of the Story
I can go along with occupancy limits within reason. There is a point where there are just too many people. The key is balancing property rights and property use.
We are facing the same thing here in Tucson. Over the last few years, we've seen 'mini dorms' popping up in the neighborhoods around the University of Arizona...in much older neighborhoods. Of course the neighbors are up in arms about it and (to make a long story short) our city council recently enacted this very ordinance. Instead of limiting the area to just around the university, they made it city wide. (I do believe, however, they are re-looking at it.)
All municipalities in my area have occupancy restrictions. Many adopted them along with minimal housing standards as a way to keep property values up and make homes "safer" for residents. Of course there are the notorious communities that go overboard but for the most part this standard has helped keep some fringe neighborhoods desirable to both owner and investor buyers. The initial reasoning for occupancy restrictions, families of 6 or more moving into 864 sq ft houses with 2 bedrooms and one tiny bath that used to be a closet built in the late 1800's, early 1900's. Initially I wasn't a fan of the programs and requirements but there is truly a benefit.
I don't live in a college town, so that "conversion" practice is something I have never seen. I can imagine how I would feel if that happened all around me.
Hi Dick, very interesting. We have not heard of an ordinance here but probably not a bad idea.
It is always a challenge to keep existing residents happy while making reasonable accomodations for alternate types.
This is what fair housing has always been about. The trick is decide who gets to have their rights protected, and who gets to make that decision.
My community doesn't have a college but we do seem to have some of the same issues with high-occupancy rental homes. Our average home is probably near 3000 square feet with 4 bedrooms (and some as high as almost 5000 square feet and 10 bedrooms) and it can be a bit much on a cul-de-sac with limited parking. I'm not sure that an occupancy limit ordinance would be effective but I do like the idea of a limitation on parking which would go a long way to clearing up some of our streets. We already have a very expensive noise ordinance which has pretty much shut-down all the routine 'party houses'.
I guess what I struggle with on an occupancy limit is 'how' is the ordinance enforced? I can't imagine the nightmare it would be to try to figure out exactly who is living in a house, how they are related, and then issuing a fine. My community is a complete melting pot with all kinds of families (including extended families and blended families) and I suspect that it is more likely these extended families that are the cause more of the parking and party problems in my city. The 4000 square foot home with six bedrooms and a four-car garage across the street from me is a great example. I'm sure that everyone in that home would claim that they are related (and they probably are!) but I just wish that they'd park at least one of their 5 cars on the driveway or in the garage rather than on the street....
Dick what a great topic, and both sides have legitimate concerns & points. It is not a clear cut right or wrong. We unfortunately as a society are very short sighted and we do not look to the future and we have paid the price for it often in the political as well as the economic arena. There are other nations around the globe who have the opposite mentality....looking for the long term. This post has inspired me to write about this subject in a couple of posts rather than hijack your post.
Do you really mean the real estate community or your local politcal action board/state point of view? There are a few issues here in my state that I also don't agree with that I believe are not in the consumers best interest. They got it wrong but what if it didn't work out that way? Think of what the neighborhood would have been like. Just remember they don't sell there nor do they live there.
It's also the factor that makes a condominium community worth buying into. I use to be a community association manager and it was a chore getting people (especially renters) to realize that in a community with garages, the garages are to store cars and not to be the alternative to a storage unit.
Dick, What a great blog topic!! Around University of Central FL, there's no ordinance and neighborhods show it. Also, there are communities that are zoned for "Short Term Rentals" with 4-5 bedrooms rented out by the week, crime rate is high, values have goned down so seeing what it does to communities, I agree with the ordinance if I put myself in place of one of those residents living in such communities. However, the other side of the token, how about those families who have 8-9 kids through blended families and those who can't afford seperate housing so they pile up multiple families into that "1400sq ft" home. As far as college students, I'm glad in your area University responded well by offering housing projects, not all might do so.
For me, it's a toss up!! I wouldn' want them in my neighborhood because of all the cars, noise level and heavy traffic.
What a wonderful topic! I have often wondered how college town areas came to become one house after another filled with college kids, without a ton of rules. It does hurt the value of the neighborhood, I am sure....
Hi, Dick: A great topic- and one I'm planning on expanding a little bit to account for some other factors. Keep an eye out for my post on these codes.
Aside from that, though, I must respectfully correct fellow Central Floridian Beth Atalay #44 on a few points:
- There are indeed rules and/or codes in the areas surrounding the University of Central Florida (UCF). Orange County has an ordinance prohibiting more than 4 unrelated individuals. This is a good thing- though it conflicts with the City of Orlando's rule that would allow for 5. Orlando falling within the county means the bigger guy's rules are the effective ones, of course. Beth may be referring to portions of the Oviedo and surrounding areas that lie within Seminole County- in which case she's correct in that no ordinances exist.
- Must also clarify that any short-term rentals are not in Orlando- as only Osceola, Polk and Lake counties permit short-term rentals.
- With regard to room rentals, the City of Orlando's code also states that rooms within single-family dwellings can only be rented out "by the room" if the property is owner-occupied.
Commentary regarding the 8-9 kids through blended families are a bit confusing as well. Widely-used HUD standards of "2 per room" (or the "2 per room plus one for the common area" rule many use) would all but eliminate 8or 9 kids in a 1,400 s/f home. Assuming 1 parent and the lowest of 8 kids, 9 folks in such a small place would be tough- the 9 kids and 2-4 parents would be all but an impossibility.
Hi Dick,
I would like to respectfully disagree with the benefits of this type of government interference.
In our city, an ordinance was passed 20 years ago to drive out student housing, in a town that is primarily just a university and not much else. The homes that were student housing at the time were granted a license, and everybody else was restricted to no more than 2 unrelated in a home. Among these licensed homes there is a program in effect to yank these licenses whenever improvements are made requiring a building permit, or when partying occurs.
The effect of this is that the price of housing for both students and others has doubled, we have have 2 students living in 4+ bedroom homes, costing $400 per person instead of the $200 that it would have taken before to maintain the expenses of the home. Many at the univ and city do not understand simple economics, if you require a group of four to rent 2 houses instead of 1 home then not only will the cost go up but the demand will also go up in relation to supply and thus higher rents.
The university tried to circumvent this economic reality by creating more housing, of course the government in its infinite wisdom cannot do anything less expensively than the private sector, this ended up costing the students an average of 600/month plus a subsidy from the state for nearly that amount.
In the end we still have students who need to live somewhere, they just get to pay more, and now that taxpayers get to pay a big chunk of this bill too.
As far at the parking, parties, and other problems associated with students in that residential street, these things are already illegal and controlled with fines which are paid by students and landlords who are foolish enough to allow that type of behavior.
Like all property rights issues, this is a tough call. Of course everyone wants their rights protected and so then you get into which rights prevail. I tend to think that the existing residents should . If you have made this your home and things have been one way for a very long time, it does not seem fair for those that are causing big (and possibly negative) changes to have their rights superseed the rights of the existing residents. If acceptable to everyone arrangements cannot be made, then existing home owners should trump.
Leslie, Thats a very good way of looking at it, however I would still like to let free enterprise determine what the highest and best use of the property should be, if these nbrhoods are more profitable as student housing then the prices will go up and the existing residents will also reap the rewards when they choose to sell at a profit.
I can see both sides. However, houses were allowed to be built based on a certain design and intended uses. City services (parking, roads, and such) where made available based on that projected design. Unless the investor buyer can also make some accomodation for the parking and demand on city services that is the way it goes. Also a neighborhood is zoned for particular uses and buyers into the neighborhood should expect it to maintain that character. I am a big conservative, but I also believe local government has authority in these areas. It is abused sometimes, but this is not abuse.
It never ceases to amaze as to the lengths some investors will go to make a buck. They don't have to live there, so why should they care if they completely screw up a nice neighborhood. Then, the hand-wringing starts when the local government intervenes and passes ordinances specifically designed to prevent it from happening. And then the local board of realtors sticks it's nose in and the shirk-fest begins.
Sounds like this one had a happy ending, and I'm glad to hear it!
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