Homer’s annual flood of tourists may be eroding its long-term rental market

Homer Spit. (KBBI Database photo)

Homer has a housing problem. Like many rural Alaskan communities, finding a place to live can be a challenge. But the growing tourism industry may be making it more difficult for year-round residents to find long-term housing. With just a handful of hotels in town, visitors have been relying on Air B&Bs and other vacation rentals. That demand may mean fewer rental options for Homer residents to choose from.

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Anna Vanbuskirk is on the hunt for housing during the worst time of year to be looking for a rental in Homer, but after moving to town two years ago, she’s use to the scramble every spring.

“The first year I didn’t find anything really, and I ended up living in a 1978 tour bus on a gentlemen’s property because I couldn’t find housing with my dog and I,” Vanbuskirk said.

Vanbuskirk has moved four times since then, and she has just two weeks to find another place for the summer. Situations like hers seem to be more common. Daniel Yager with Homer Property Management said several people come in with the same story every spring.

“They showed up in the offseason, they found a nice vacation rental that was going for a decent market price. When they talk to the owner, they expressed great interest in long-term tenancy, and those owners told them whatever they needed to hear,” Yager explained. “At the end of the six-month term, the tenant basically just got the notice that the lease agreement isn’t extending and they must move out by this day at this time.”

Vanbuskirk said she moved into her house knowing it was just for the winter, but others are moving unexpectedly. Kelli Parker moved into her current house last fall with a six-month lease and the promise that she could sign on for a full year come the spring.

Parker signed a year-long lease at the beginning of April, but couple days later, she was told her landlord had not signed the lease because he plans to list the house on Air B&B.

“I signed the lease and handed it back to him, not thinking I needed to have him sign his part right then,” Parker recalled. “After so many confirmations over the winter by email and then a personal one-on-one confirmation, I just didn’t see it as that important. I just took him at his word.”

Gina Pelaia at Bay Reality said she’s been getting more calls every year from frantic renters like Parker.

“I know sometimes when I first answer the phone they say, ‘This isn’t a seasonal place, is it? We aren’t going to have to move out in May are we?’” Pelaia said.

Pelaia said more vacation rentals are making the long-term rental market incredibly competitive.

“This time of year, I’d say we’re closer to a 1 percent vacancy rate. More in the winter, we’re looking at probably less than a 5 percent vacancy rate,” Pelaia added. “I manage about 150 properties, and I think I have two available apartments right now.”

More property owners are capitalizing on the demand for vacation rentals in the summer. According to data Air B&B shared with KBBI, the number of listings in the Homer area have grown over 500 percent since 2014, with 160 hosts listing 250 properties. Almost all of those are either apartments or complete houses.

What seems to be driving the growth is profit.

“On a monthly rental, the three properties, you bring in around $30,000. On a vacation rental, you can bring in about $60,000,” Kit Barnett said.

“And it’s definitely worth the work,” Barnett’s wife Phyllis chimed in.

Both Barnetts are retired teachers and they say they need the supplemental income. They listed the upper and lower levels of their duplex on Air B&B and other sites four years ago after one of their long-term tenants moved out. After that filled up consistently, they converted their small house next door from a traditional rental to an Air B&B as well.

Phyllis Barnett said she knows plenty of people are jumping into the market, but doesn’t think it’s anywhere near being saturated.

“I haven’t heard anybody complaining about their bookings,” Phyllis said with a chuckle. “I don’t know everybody, but nobody I know is complaining about it.”

Phyllis Barnett does think vacation rentals will eventually become less profitable as competition grows, but she said if that happens, she’ll turn her properties back into long-term rentals, which would be welcome relief for renters on the housing hunt.