Phoenix Says, ‘Yes In My Backyard’

Phoenix, Arizona is having a YIMBY moment. 

The city council voted Tuesday on allowing accessory dwelling units (ADUs) in the backyards of family homes in Phoenix. The current Phoenix zoning ordinance prohibits the construction of livable structures in backyards. These ADUs, commonly known as casitas, guest houses, or in-law suites, are livable structures built in backyards.

Under these proposed changes, casitas would be permitted to have electricity and plumbing, provided they adhere to specific size and placement requirements and gain approval from the city. Homeowners would be allowed to rent out the structure, but they must reside in either the main home or the ADU.

While state law currently prevents cities from outright banning short-term rentals, city council members are also actively working to convince the Arizona Legislature to reconsider these restrictions. This effort has garnered bipartisan support.

Despite the requirement for the owner to live on the property, some argue that enforcement may be limited due to the city’s staffing constraints. Additionally, the City of Phoenix cannot prevent an investor from purchasing the property and renting both the main home and the ADU as a short-term rental, potentially reducing available housing supply.

This decision comes at a time when the growth rate for single-family home construction in large metro core counties experienced a significant decline, dropping by 24.8%. This negative trend was consistent across both large and small metropolitan areas, with all of them reporting double-digit declines. Notably, the share of single-family home construction in large metro areas, including core and suburban outlying regions, accounted for just 49.8% of all single-family buildings in the second quarter.

So how would this affect the short-term rental market in Phoenix? Demand has been strong this summer, with an annual increase of 34.6%. Interestingly, this surge occurred as Phoenix experienced its hottest month on record in July – the hottest month ever recorded in a U.S. city.

From Madrid to Mexico

Alterhome, a proptech management company based in Madrid, is set to invest €1.4 million ($1.5 million) in expanding its operations in Mexico. Alterhome has been active in the Spanish market for over a decade, focusing on refurbishing homes and apartments.

Since entering the Mexican market in 2020, it has been managing 14 hotels through various contracts, and now, the company plans to launch vacation rental franchises in five to seven cities by 2024. With this investment, Alterhome aims to reach a portfolio of 3,000 managed homes by 2025 as part of its growth strategy, as reported by ShortTermRentalz. 

Australia’s Tryst with Airbnb

The Australian Capital Territory has seen a significant surge in short-term rentals, including those on Airbnb, over the past year, according to the latest real estate trends report. Short-stay accommodations in the ACT area have increased by a substantial 66%, resulting in a total of 1,133 short-term rentals available in the capital.

While short-term rentals have been crucial for meeting the demand in domestic tourism accommodation, they have faced criticism for potentially impacting the availability of long-term rental housing and contributing to a rental crisis. 

Maria Edwards, the Chief Executive of the Real Estate Institute ACT, attributed the increase in short-term rentals to a combination of new building developments and long-term rentals transitioning to short-term options. She also suggested that the end of the pandemic may have motivated more people to convert their properties into short-stay rentals as travel restrictions eased, The Clayton County Register reported.

The report also pointed out that government legislation in the ACT region, which implemented rental caps to protect tenants from excessive price increases, might have contributed to the rise in short-term rentals — as landlords might view short-term rentals as a way to compensate for lost income due to interest rate increases and a stagnant sales market.

Louisville Regulates Short-Term Rentals

City leaders in Louisville, Kentucky are considering new regulations to control short-term rentals. These proposed changes, which have passed the city’s planning & zoning committee as of August 29, may be approved by the full council on September 14.

The motivation behind these changes is to address concerns from residents in neighborhoods like Irish Hill, Phoenix Hill, Butchertown, and the Highlands about investors buying homes and converting them into short-term rentals. On the other hand, some people are concerned that stricter regulations could deter tourists seeking budget-friendly options and an authentic experience in Louisville.