As short-term vacation rentals boom, Northwoods housing shortage becomes "more and more of a crisis"
The door of a sagging two-story home opens to an empty room covered in floral yellow wallpaper where a pair of builders strip away layer after layer of old flooring.
“This will be a door, wall here to create a laundry room or bathroom,” explains Rob Alexander, a real estate agent in Ironwood, Michigan. “This was a really dated home with old panel walls, but when it’s finished, it’s going to be a four bedroom, two bath house with an attached garage, so this one is worth fixing up.”
Alexander moved to the area a year and a half ago from California.
When the pandemic began, he and his now wife postponed their wedding, pulled out a map and moved to Michigan’s Upper Peninsula.
“Neither one of us had ever been here, no family, no friends. We didn’t know anyone,” he says. “But I didn’t want to be anywhere in the heat, so that cut half the country off. And then we didn’t want to be near any big cities because we feel like those are a little chaotic and not really what we’re looking for. So we started working our way over from Montana.”
Ironwood had just what they wanted — cool weather, fresh water and homes that were more affordable than some California apartments.
Ironwood, like other U.P. communities, was once a thriving mining town with thousands of residents and the infrastructure to sustain them.
But when the mining industry collapsed a hundred years ago, people left en masse.
The population plummeted. And houses stood empty.
Alexander and his wife bought two.
“When I see properties that are in disrepair, to me that’s exciting because I see opportunity to rescue them,” he says.
After fixing the properties up, Alexander made one his home and leased the other on Airbnb before eventually selling it.
He’s done that multiple times since.
And he’s not the only one with the idea.
Brad Barnett is the executive director of the visitor’s bureau in another U.P. tourist destination — the Keweenaw Peninsula.
Barnett says the bureau logged about 100 to 150 vacation rentals listed during peak tourist season in 2017.
Since then, that number has doubled, with up to 350 short-term vacation rentals available last summer.
“Our area has had an abundance of aging housing stock that was affordable for potential developers to be able to purchase a home for as little as $20,000 or $30,000, and then quickly remodel and use it for commercial vacation rentals,” says Barnett.
All of this development served the peninsula’s tourism industry, which exploded during the pandemic.
It also drove property values up.
“In our part of the country where you had individuals who have lived here and are looking forward to retirement, you’ll see people taking advantage of that,” Barnett says. “To be able to sell your home at a higher value, well that’s a great investment for a homeowner.”
Back in Ironwood, property values are up too, by 40 percent.
It’s enough to convince some landlords to sell, and when they do that, many take rental units off the market, forcing renters to find new homes.
But that’s not easy.
“People can’t find substitute housing,” says Kristin Slonski, the advocacy director of Wisconsin Judicare, a nonprofit law firm that provides legal assistance to people in northern Wisconsin who can’t afford it.
“We just have such a shortage of low-income housing all throughout the Northwoods that people are overstaying their tenancy because they have no choice. Because there’s nowhere else to go. There’s nothing to take the place of this unit that’s been terminated.”
When people don’t leave when they are supposed to, a landlord can file for eviction.
“What happens to those people then?” Slonski says. “You know, there’s still nowhere to go. There’s still no substitute housing that they can afford, and now they also have a judgement of eviction on their record. It’s becoming more and more of a crisis.”
It’s a crisis that Rob Alexander, the real estate agent in Ironwood, is familiar with.
The realtor he works for bought a decaying building that was supposed to be vacant.
But it wasn’t and the people who live upstairs won’t move out.
“What does it need? New roof. New electrical. New thermostat because there’s one thermostat heating all four units. It’s a mess, right?” Alexander says. “You’ve got to gut it out. You can’t keep people in there legally without utilities.”
When the realtor bought the property, her goal wasn’t to evict people from their homes.
“The goal with that purchase was to put a business in, a community center, do all these wonderful things,” Alexander says.
But the reality is people are still getting evicted.
And it highlights the dilemma of gentrification. How can areas like Ironwood attract outside investment and revitalize downtown streets while continuing to provide for low-income residents?