Coastal Vacation Rental Permits and Trends

[AJ Wong]

As one of the few Oregon Coast Brokers working almost exclusively with investors seeking Vacation Rental Eligible homes I thought it would be helpful to provide some market insight into what's happening in regards to STR permissions and projections on the Oregon Coast.

A lot has changed since I initially moved, invested and sold my first BNB on the Oregon Coast. 

In late 2018 prices and market conditions were a bit different but notably the majority of current restrictions and regulations as it pertains to vacation rental permissions were essentially non existent. 

During the past 4-5 years many of the smaller Oregon Coastal towns, cities and counties have implemented either moratoriums (pauses) on new permit issuances or a cap on the number of vacation rentals permitted in a particular area. 

As the demand from investors has increased and the supply of vacation rental properties has multiplied, jurisdictions have increasingly restricted the issuance of short term permits. 

In many areas, even homes currently being utilized as short term rentals may not be eligible to transfer or apply for a new permit until the pauses or new rules are implemented.

Particularly in the North Coast in areas such as Lincoln City county, Cannon Beach, Nehalem, Waldport, Newport and Bandon these rules have been particularly restrictive and have had a cooling effect on the vacation rental sales market. 

For example there are several existing and profitable licensed rentals for sale in or around Lincoln City, which due to the county moratorium can not be immediately renewed. This has lead to the properties remaining on the market, likely until clarification is received or announced by the county in late February.m 2023.

Aside from permissions and permitting challenges, the increase in available short term rental listings for rent, combined with economic conditions led to a notable reduction in rental and vacation bookings and revenue during the end of 2022.

With Spring approaching and the economic environment stabilizing, our internal team at Vacasa and my personal clients have seen a considerable increase in booking and reservation activity over the past month, albeit not quite to pandemic levels. 

One area of growth on the coast that is being somewhat underutilized is the use of properties as furnished medium term rentals, or those generally over 28-30 days. 

The OR coast is somewhat unique in that there is seemingly a shortage of housing of all types and often vacationers, home buyers or property sellers seek space while they vacation or transition to a new home. 

Investors can list their property on the same digital rental platforms with minimum stays of 30-60-90-180 days and due to the reduced management input and costs can often net a similar return with less wear and tear on the property and more flexibility on personal usage. 

As a general investment parameter I’ve found it’s beneficial to not get overly attached to a particular strategy or result. The purpose of owning short term rentals in a vacation area is to often maximize revenue or cover carrying costs while the owners or families are not utilizing their second or vacation home. 

As it likely becomes more difficult to procure a licensed vacation rental home over the near to long term, savvy investors should consider their alternative paths to profitable property ownership as opposed to potentially abandoning, sidelining or discounting their investment strategy based on difficulty or limited availability. 

There are many attractive properties that would make excellent income producing and long term assets that might not be qualified for short term rental permits but could and should qualify as worthwhile investment properties or second homes. 

I’ve met several investors on BP recently that have shared their success with medium term rentals in the past year. They report strong demand and income as well as considerably less energetic input and maintenance. 

Additionally they report many satisfied tenants rebooking for the following season, as a symptom of considerably lower daily rates and generally higher value. 

What has your recent experience been with your short or medium terms rental on the OR Coast and beyond? 

Cheers.