By Herbert Molano
For those who lost their homes during the Subprime Mortgage Crises, the years 2008 and 2009 would scar their memories for the rest of their lives. Nine million people lost their jobs in 2008 and the nation’s homeowners suffered 3.1 million foreclosures. As the recession took hold and the economy imploded, three out-of-work designers at a conference thought up an idea to make some money to meet their own lodging expenses. In the process, they created a whole new international industry – home sharing and Short-Term vacation rentals using the Web.
The recession reduced home ownership throughout the United States by over 8 million households and those lucky enough not to have been ensnarled in toxic mortgages still felt the impact through the loss of jobs, company closures, and lost pensions. According to The Atlantic 401k and IRAs lost about 2.4 trillion dollars. The average loss to workers who had been on the job more than 20 years lost about 25% of their pensions.
After the recession, during the recovery, other schemes continued. Vulture capitalists bought swaths of neighborhood homes at depressed prices. The banks would not re-negotiate loans for the people holding the mortgages. Often, people who lost title to their homes were often offered to stay in their homes while renting it at ever increasing rents and eventually could not make those obligations either.
But for thousands of home-owners desperate to stay on their homes, there was an opportunity they would never have imagined. They could rent out a spare room or move temporarily out of their home and rent to vacationers from abroad. Some who would never have accepted the idea of sharing their home with total strangers found that it was not such a bad experience after all. Since many had lost their jobs, being home to host guests from across the country or from Europe took on the opportunity from Airbnb to meet the mortgage and eventually stay on their home during their retirement years. Short Term Rental was born out of necessity a decade ago, and may serve many home-owners as the next likely recession in 2020 if some economic forecasts are correct.
For homeowners without an adequate pension, Short Term Rental may be a solution when no other alternative may be available when chronic illnesses or an economic recession hit. Empty-nesters, people on disability, and retirees with limited income sources may just have a safety net and not know it.
The recent introduction by the Glendale City Council of an ordinance to ban Short-Term Rentals may remove the last remaining safety net to help homeowners stay in their homes. On December 10, the Glendale city council will be taking up the vote on this ordinance. Let’s hope that their memories are not so short-term as they ponder the unimaginable – a return to hard economic times for homeowners.