Home prices are rising. Since 2000, median home prices in the U.S. have increased by nearly 160 percent (U.S. Census Bureau). We simply haven’t constructed enough housing, and this has put a squeeze on the housing market.
Here in the eastern section of Santa Cruz County, we have additional affordable housing woes. People like to buy vacation homes where they recreate. After a gravel bike tour or birding weekend in our beautiful area, it is understandable that a visitor might decide to purchase a second home here, renting it on Airbnb or VRBO to cover mortgage costs. This type of investment housing raises the value of our residential real estate, pricing out local working families. The rise of remote work also contributes to the challenge of housing affordability.
Increasingly, people are choosing to work from a home in amenity-rich rural areas like ours. Their big-city salaries allow them to pay higher housing prices. And finally, we live in a popular retirement location. Retirees often sell a home they’ve spent decades building equity in and use the proceeds to invest in our region. Younger families don’t have access to the same equity, which puts them at a disadvantage as they compete in our tight housing market.
With mining activity creating hundreds of new jobs, our housing needs will only increase over the next decade, squeezing our market further. We need an affordable housing solution for Santa Cruz County. We need local housing (including rental units) available at a range of price points so that new folks can join our community, work in our community, and raise families in our community.
While no one has come up with the perfect affordable housing fix, there are communities (including small towns and rural areas) implementing solutions that might guide us.
REGIONAL HOUSING PARTNERSHIP
Affordable housing is best understood as a regional problem that requires a coordinated solution across many communities. Boulder County in Colorado has created a Regional Housing Partnership (RHP) that is tied to a goal: “securing 12% of [its] housing inventory as permanently affordable to low- and middle-income households by 2035.” By working collectively to meet this goal, no one area is overburdened with “solving” the affordability crisis. The RHP follows a county-wide affordable housing plan, with guidelines that each community adjusts as appropriate within a context of collaboration and partnership.
As property owners, we have a role to play also. If you are creating an estate plan that includes a house that you own, you could choose to put the property under a deed restriction that limits any subsequent sales of the home to income-eligible borrowers at an affordable price. The resale restrictions are attached to the property’s deed.
Deed restrictions work even better when done collectively. One small recreation community in Colorado created an initiative to encourage its residents (both new home buyers and existing owners) to deed restrict their properties for affordability. In 2021, Mountain Village, Colorado launched the Your Equity Support (YES) program, whereby homeowners receive financial incentives from the town in exchange for placing a deed restriction on their property. The incentive amount is based on a percentage of the appraised value of the property (typically 15-20 percent). By accepting this payment, homeowners commit to limiting any future sales to income-eligible borrowers at an affordable price. The Town reasoned that funding this incentive was much more cost-effective than building new affordable housing. Two-thirds of the full-time occupied housing units in Mountain Village are now deed-restricted.
LEASE TO LOCALS
If you are an Airbnb or VRBO operator, or someone who owns homes in multiple locations, you could consider renting your property out for longer-term leases instead of short-term stays, supporting seasonal and temporary workers in the local economy.
The Lake Tahoe area has formalized this approach in its Tahoe Home Connection Alternative Rental Program, informally called “Lease to Locals.” The program’s goal is to create new rental housing options for the local seasonal workforce. The program utilizes grant funding to incentivize homeowners to offer 5-10 month leases instead of renting their homes weekend by weekend. Typically shorter stays generate more rental income, which is why owners are reluctant to offer longer leases. This program solves the issue by paying the property owner the difference. This approach works especially well if the targeted properties are typically vacant for a significant portion of the year. By encouraging longer-term leases, the program helps to alleviate the housing challenges faced by local residents and contributes to the overall sustainability of the community.
ACCESSORY DWELLING UNITS
If your lot is large enough, you could build an Accessory Dwelling Unit (ADU) on your property for use as a rental. ADUs, also known as granny flats, in-law units, secondary units, or backyard cottages, are smaller, supplementary dwelling units located on the same property as a single-family home. ADUs are often constructed and managed by homeowners, making them an excellent solution for addressing the need for rental housing while supporting existing property owners.
Many cities have encouraged ADUs as an affordable housing solution, including Portland, San Diego and Tucson. They work well in smaller communities also, as they help maintain the small scale and informal character unique to places like Patagonia.
With the region on the cusp of strong growth, we have a narrowing opportunity to address this County-wide affordable housing challenge. Let’s use these solutions as inspiration, and perhaps also come up with some innovative solutions of our own.
Stephanie Smith is building a home in Wildlife Haven outside Patagonia. She recently completed an Urban Planning master’s degree at University of Arizona.