Last week Sedona real estate companies received a memo from Jim Windham, of the City's Department of Community Development, which appeared to presage a crack down on vacation rentals. It complained of violations of the City's prohibition of rentals for less than thirty consecutive days. Up to this point, enforcement of that ban seems to have been rather minimal and sporadic. If the City is suddenly about to begin spending considerable resources in active enforcement, it's time to raise the question of the value of the ordinance itself.

Clearly, such a ban is in the interests of the local hotel and time-share industries which would, presumably, prefer to limit the competition. But, is it good for homeowners and the City in general? We think not.

An increasingly large proportion of home sales go to people who want to have a second residence in Sedona to use until they are able to retire here. For many, the financial demands of carrying a mortgage for that home are heavy and they rely on the income from short-term rentals to ease the burden. Removing that income will clearly make home ownership unaffordable for a large number of current and prospective owners. We can expect to see such owners forced to sell as well as buyers being further priced out of the market. That can only exacerbate an already sluggish real estate market and hurt those attempting to sell their homes. That would be an immediate boon to our buyer-clients with plenty of money, but it's not good for the market in general.
  
Beyond homeowners, there is a positive ripple effect of vacation rentals on the local economy. Absentee owners who do short-term rentals need the services of managers (please note: our company does not manage rentals), cleaning crews, landscapers, and other maintenance people. All these people would certainly be affected by a reversal of the City's, up-to-now, laissez-faire policy.

Those behind the new get-tough approach, whoever they may be, can certainly point out that property owners who choose to violate the ordinance were not ignorant of it when they purchased their homes and were aware that the City could decide to begin enforcing it at any time. Be that as it may, it begs the question of the wisdom of the ordinance in the first place. The local lodging industry is healthy and enjoying strong occupancy rates and time-share sales continue to boom. They don't need a protectionist policy by the City to eliminate competition from homeowners.

Who else may object to vacation rentals? In some neighborhoods, Home Owners' Associations might, conceivably, view them as a nuisance, but they have the power to curtail them via their own CC&R's, if need be. That doesn't require City enforcement. And, I as a homeowner have considerably more influence on my HOA than I do at City Hall.

There is a simple solution to the question. Remove the ordinance from the books. Require home-owners who do vacation rentals to register and pay bed taxes on them, as do the hotels (but not, curiously, the time-shares - that's another issue). This would benefit the City's tax coffers and the economy generally. It would bring an underground economic activity above-board and make money for the City instead of having the considerable expense of attempting to police it. It's time for the City to recognize the needs of the broad public good rather than narrow special interests.

GREATER SEDONA MARKET UPDATE: Current Median prices:
Single Family Homes:
SOLD: 95 (since 1 Jan 2006); Median: $574,000; DOM: 85
ACTIVE: 293 (vs.175 in May 2005); Median List Price: $725,000; DOM: 74 Pending/Under Contract: 81; Median List Price: $600,000; DOM: 115

Condo/Townhomes:
SOLD: 20; Median: $392,500; DOM: 63.
ACTIVE: 44; Median List Price: $396,000; DOM: 53
Pending/Under Contract: 14; Median List Price: $365,000; DOM: 55

Vacant Residential Land:
SOLD: 30; Median: $500,000; DOM: 113.  
ACTIVE: 258 (vs.106 in May, 2005); Median List Price: $525,000; DOM: 75 Pending/Under Contract: 45: Median List Price: $575,000; DOM: 72

Roy E. Grimm, PhD, the broker/president of Buyer Brokers Realty of Sedona, is a Certified Luxury Homes Specialist and a member of Who´s Who in Luxury Real Estate. Natalie Kurz is the team statistician & Buyer Brokers´ Office Manager. Their office is in The Old Market Place (282-2757/800-282-2959).