Chiwawa River Pines - Effects of Rental Ban?

The Chiwawa River Pines neighborhood in Plain had a lengthy debate in 2008 about permitting vacation rentals in their neighborhood.

At the time, I took the position that I thought that enforcing the existing (but unenforced) prohibition on short term (nightly / weekly) rentals would be bad for home values.  My experience tells me that vacation home buyers (who drive the Leavenworth and Lake Wenatchee real estate market) prefer to have the option to rent their home when they aren't using it. Not every vacation home owner does rent their cabin, but most prefer to have that as an option.

A few owners in Chiwawa River Pines wrote in..

"Many of us that did not purchase a home 5 or more years ago are paying a pretty penny to find a vacation home in Leavenworth. While we would all likely to be indepently weatlhy, many of us look to suppliment the cost of a mortgage with nightly rental proceeds.

I also believe that the values will decline since you are removing a subset of the buyers from this community."

Al Lorenz, an owner in Chiwawa River Pines, a real estate agent in Chelan, and the author of the NCW Real Estate Blog, took an opposing view.

"It has really only been in the last few years that there has been this noticeable rental activity. Certainly 4 years ago I never noticed it. Now, in certain parts of the development it is a problem. I’ll use my speeding analogy again, just because I didn’t get caught last week doesn’t mean I won’t get caught tomorrow.

That’s also why I don’t think the values will be negatively impacted. The folks that bought in Chiwawa River Pines have always known rentals weren’t allowed."

In September of 2008 the members of the Chiwawa Communities Association voted to amend their covenants to prohibit any rentals for periods less than 6 months.

What has happened since then?

Of the 53 homes that have sold in Leavenworth and Lake Wenatchee, only 3 were in Chiwawa River Pines. One of these homes was a bank owned property that had been foreclosed upon.

Currently there are 184 homes for sale in Leavenworth and Lake Wenatchee. 20 of these homes are in Chiwawa River Pines (and one of these was recently foreclosed upon and is now bank owned.)

What do these numbers tell me?

A home in Chiwawa River Pines is less likely to sell than a home in another neighborhood. 6% of the sales occurred here, but they have 11% of the homes currently  for sale.

At the current rate of sales, there is a 5 1/2 YEAR supply of homes on the market in the neighborhood.

I think any Leavenworth or Lake Wenatchee neighborhood that is considering banning vacation rentals should consider its effect on home values and what is happening in Chiwawa River Pines.

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Required Disclaimer

NOTE: This representation is based in whole or in part on data supplied by the North Central Washington Association of Realtors or its Multiple Listing Service. Neither the Association nor its MLS guarantees or are in any way responsible for its accuracy. Data maintained by the Association or its MLS may not reflect all real estate activity in the Market.

Comments

We have been looking for a vacation home in the Leavenworth area for the last 8 months. There have been some interesting listings in the Chiwawa River Pines neighborhood but we haven't even looked at them because we want the option of renting the home out if we so choose. At a time when there are so many homes on the market, I can't help but assume that the nightly rental ban automatically excludes a significant portion of buyers and consequently affects the amount of time a home is on the market and the price it eventually sells for. Just seems like common sense.

My husband and I bought our get away in 1986. We understood that there was and still is a clause in the agreement of ownership that it is not a rental community. We have really enjoyed our time there as well as our children and grandkids. We do not feel we should have to support those indivuals that expect us to support their financial goals. There are plenty of other areas that do not have this stipulation in ownership. I also feel the current market is not the responsibility of some to crutch others when they knew the rules-believe it or not you are not special. We are all responsible for our own financial losses,or gains.

Christine, Kristen and Sissy- Thanks so much for joining the conversation. Do vacation rentals belong in Chiwawa River Pines? Honestly, I don't really have an opinion. If the homeowners don't want them, then that's the way it should be. My point is that the market, the majority of home buyers who vote with their purchasing dollars, prefers neighborhoods that allow rentals. As long as owners in Chiwawa River Pines understand the tradeoff, then any decision is ok with me. It's my opinion that the current market (the past 5 years) penalizes those areas around Leavenworth and Lake Wenatchee that don't allow vacation rentals. This penalty results in fewer homes selling and for lower prices. I have seen this within the city limits of Leavenworth and I believe we are starting to see it in Chiwawa River Pines. Does anyone have a local example of someplace that doesn't have vacation rentals and prices have been higher than average?

I read with interest the discussion about the ban on nightly rentals. My neighborhood (also in the Plain area) is considering a similar ban. The truth is that nightly rentals are a nightmare for nearby residents. They are essentially unlicensed, unregulated motels that are often filled with noisy, obnoxious renters who have no ties to the community and who could care less about their impact on neighbors. Nightly rentals have a substantial negative effect on the safety, quality of life and property values of any neighborhood where they are allowed. If those who oppose such a ban were to experience the disruption, noise, trash, and trespassing that accompany nightly rentals, I believe your views would change.

We have considered looking in this area for a property, but we want to have the option of renting if we choose to do so to supplement the cost of owning a vacation cabin. I can understand the frustration that many of the owners are facing with having disruptive renters. and I would agree that they do need to have some way of controlling this aspect. Looking at the number of homes for sale in this area it is pretty evident that they are having trouble selling these homes. I'm sure that the current market is a factor, but if other buyers are like our family, we are looking elsewhere for our vacation home.

Speaking as one of the new Chiwawa Pines homeowners, we bought there in part because we do not want to live next to overnight renters. That said, we were bothered this weekend by one of our neighbors who continues to flaunt the covenants and rents out every weekend. The group who stayed there this weekend were noisy and woke us up. Another neighbor reported seeing marks on her property where some of these renters dragged firewood from her place to the rental. At least one of the homes currently for sale here has been abandoned and is in very bad shape. Another has serious architectural problems. We looked at it, but the contractor we used said it would take 100k to get it fixed. So, there are stories behind at least some of these lagging sales. But, if you are looking for a peaceful weekend hideaway, DO NOT buy a place next to folks who rent. Some renters are very respectful, but all it takes is one loud party to wreck your weekend.

Pam- Thanks for your comments. I think we all agree that some renters can be disrespectful and that even in neighborhoods that do allow vacation rentals, some restrictions are needed to prevent renters from disturbing the peace and quiet of the neighborhood. I have some ideas about ways to regulate vacation rentals that I'll try to tackle in a future article. What do other readers think? Are you planning on buying a home in Chiwawa River Pines because of the lack of rentals? Are you avoiding a purchase because you would prefer to have an option to rent?

Al- I certainly didn't mean for this post to be funny. I think it is sad. From October 2008 to August 2009, the sold homes were in the following price ranges. Under $300,000 15 homes sold $300-400,000 12 homes sold $400-500,000 10 homes sold $500-600,000 6 homes sold $600-1,300,000 10 homes sold The average sales price was $441,000 with a median of $395,000. (This is very very different from the Wenatchee market where the Pacific Appraisal numbers come from.) Are the high prices in Chiwawa River Pines slowing sales? The average price of a home for sale in CRP is $416,000 which is LESS than the average in the Leavenworth area during this time period. 5 homes are for sale for less than $300,000. The median list price is $399,000 which is nearly identical to the median sales price in Leavenworth. The highest price home is $650,000 which may be above the average, but isn't astronomical in Leavenworth. I am happy to look at these numbers again in a year or three - maybe this is "temporary disruption in the market." What I do believe strongly is that this disruption is UNIQUE to Chiwawa River Pines and is the result of the choice to enforce a prohibition on vacation rentals.

That's pretty funny Geordie! I don't see an analysis that means any such thing. In the Leavenworth, and the Wenatchee market, there is an abundance of higher priced homes. Homes over $300k are simply selling in low numbers. In fact, higher price ranges have lots of inventory in many neighborhood for a variety of reasons. The entire Leavenworth market has 24.5 months of inventory according to your numbers above, with an average of 7.5 homes selling per month. In the higher price categories, aren't the months of supply much higher? According to the Wenatchee area Snapshot report from Pacific Appraisals, which includes the whole Leavenworth area in its MLS, homes in the $551k to $600k range have 108 months of supply ALL OVER THE AREA! Various neighborhoods are all over the map on "months supply." Homes in the $651 to $700k range, since none have sold, have an infinite "months supply." I could imply that no homes in that price range will ever sell but that would be just as incorrect a conclusion as yours. Did you look at the price range of the homes for sale? Nice try at trying to stir up some controversy, but your analysis is opinion and completely inconclusive. Take the analysis a bit further and look at the pricing of the homes relative to the market. The thing that causes homes to linger on the market is if their sellers have unrealistic pricing expectations. That said, there are a number of former rentals on the market and some have sold. That is causing additional inventory in the short term. In some cases, a single owner owns several homes. If that owner is not a realistic seller, when the numbers are so small, the inventory statistics are easily skewed for reasons that have nothing to do with your conclusion. Long term, I think the neighborhood will be well ahead of the neighborhoods with obnoxious, unmanaged renters making just being in those neighborhoods less enjoyable and less safe than Chiwawa River Pines. It is no surprise that some folks who were commercially renting their properties, when confronted with the liklihood that they would not be able to continue that practice, are selling their properties. Since that policy was delayed until July and higher prices homes aren't selling quickly anywhere in the area, I'm sure you can't make any conclusions about its impacts when the dust settles. Also, remember Geordie, rentals were NEVER allowed in Chiwawa River Pines. They weren't BANNED. What happened is some folks ignored the covenants, bought properties and started renting them in a commercial fashion without local management. That created issues and complaints that the community is solving and may create a TEMPORARY disruption in the market. I never claimed that such a thing would not occur. I know, based on the votes, you'll find most owners in Chiwawa River Pines appreciate the outcome and value their properties even more. Geordie, do the math when the dust has settled but most importantly, do the math when there is statistically significant information. Let's have this conversation again in a year or three.

Gordie, I am curious if there are other communities in the Leavenworth/Lake Wenatchee areas that do not allow nightly rentals. If there are, it would be interesting to see what market trends they have.

Jim- Thanks for the question. Ponderosa Estates is currently discussing the question and will have a meeting on October 10,2009. More info can be found in the current issue of the Needler http://www.ponderosacommunityclub.org/needler/Needler2009/pcc_0909_asize.pdf I don't know of other neighborhoods that don't allow nightly weekly except for those within the city limits of Leavenworth. Inside the city, rentals must be in commercially zoned areas.

It is true Chiwawa River Pines is classified as a recreational area; however, there are many permanent full-time presidents that live in the area as well as those part-timers, snowbirds and get-away weekenders. however, all of us will pay taxes on inflated values because of the nightly rentals. These businesses can pay more for a home that produces income than those who choose to live in their home. A home should always be looked at as an investment, but foremost as a comfortable and affordable place to live. Many of the houses that sold in the Community may not have sold for the asking price as quickly if they had not been purchased for commercial purposes. If we were in the business of (flipping) buying at a low price and then shortly thereafter selling at a higher price, the increased value is of utmost important; however, the quiet enjoyment of our property is the most important factor to us. We are sure there are others who have lived in the area for years and also plan on staying here for years to come unless we are taxed out of the ability to keep our property and homes due to the commercial use of homes in the Community. We have a need to protect the value of our homes, and use responsible thinking in managing our community”---….that is the bottom line. Will it come to the point that every property that is sold will be priced out of the market for many of those who wish to live in the community on a permanent basis? When your neighbor lists his home, can you depend on it be turned into a rental? Will Chiwawa Pines be a rental resort in a few years--where no one wants to live on a permanent basis? When the bottom line each month is equated with dollars, the whole community changes. Problems occur when those who take pride in their property are surrounded by those who only want to see positive cash at the bottom line. Many times the bottom line determines how votes are cast on capital improvements, how rules and regulations are established, and the general appeal or non-appeal of the neighborhood is reflected in the number of rentals in the community. It can happen in the best of communities. When the number of rental properties begin to level out or exceed the high demand, then competition between the rental properties owners will require an adjustment to maintain the bottom line. The adjustment many times will require less expense, less maintenance, etc., and we know what happens next. A community will always see some less than desirable properties by some full or part-time residents; however, due to pride of ownership those property owners still have a reason to support the community and other high standards set by the community. Many non-owners only come to the Community to use it and/or abuse it. Those are our thoughts on the current subject.

Joyce- Thanks for the thoughtful reply. I hope to have a new article up soon about the appellate court's decision which has brought this issue back into the news.

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Allyson and Geordie Romer

Leavenworth real estate agents - Allyson and Geordie Romer

For over a decade, Allyson and Geordie have been serving clients in the Leavenworth-area real estate market. Together, they work tirelessly to stay on top of the regional market and present the most relevant opportunities to their clientele.

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