The Answer is “Yes” but there is more: While the simple answer is ‘yes,’ Short Term Rentals [STRs] are adding to the affordability of housing in many cities, but it goes deeper than STRs. STRs can, and will, cause affordable housing in cities by challenging residents and affecting affordable housing availability. The more properties converted into short-term vacation rentals, the supply of long-term housing declines; I know of a stretch of beach along the California cost were 80% of the homes are STRs [owned by investors], and 45% of the homes just three blocks from the beach are STRs. This has affected the community, and it no longer has the “vibe” it once had. This drives up the cost of housing and reshapes neighborhoods in ways that are not positive. The people using STRs are not involved in the community nor are they invested in the community, they are, by definition, short term visitors [I will address the need for visitors to help the economy of the city, but this can be done without taking houses off the market.] Generally speaking, they do not care about issues facing the community; they have no investment in the community as a whole. As long as they have a beach to ‘catch the rays and get drunk’ for a week or two, they don’t have an investment in the erosion issues facing the beach. You see, they are ‘just visiting’ and have no responsibility for the issues facing the community. If you beach disappears, they will simply book an STR in another community to with a beach to ‘catch rays and get drunk.’ What started as renting out a room in your home to visitors, like a traditional bed and breakfast, has moved to a business model where investors buy homes in a city, with no intention of living there, as a ‘good investment income.’ Besides, it is hard to develop and maintain community when the people living next door change every week of two.
This trend is particularly evident in high-demand cities where homes have been taken off the rental and sales market and listed on short-term rental platforms instead. What are the results? An increased competition for residential properties, higher rental prices, and gentrification. This often hit the hardest on communities of color and lower-income communities. So, what can a city do to address the issues with STRs?
What can Cities do to Address this Issue? Many cities are taking hold of the STRs problem. Palm Spring and Santa Monica have taken the lead in addressing STRs and city ordinances to build more homes. Santa Monica has, and enforces, the strongest STR restrictions in the U.S. What did they do? They banned whole-unit rentals under 30 days and allowing only home-sharing where the host lives onsite, modeling, at some level, the traditional ‘bed and breakfast.’ Palm Springs capped STRs to 20% of homes in any given neighborhood. This created waiting lists in areas where STRs were STR are taking over neighborhoods and reducing investor opportunities. Other cities, like Washington City, a small community in Utah, have also taken action to reduce STRs because they were starting to see the cohesiveness of their community fall apart. But this is not only an U.S. issue, cities like Berlin, Málaga, Lisbon, Paris, and Florence have all taken steps to reduce STRs in their cities. Vienna capped many properties to 90 rental days per year unless owners obtain special exemptions; Amsterdam limits many properties to 30 rental nights per year and requires detailed registration.
Many city ordinances and policy add to the problem of STRs by not controlling their growth, holding fast to ordinances and policies design to limit affordable housing. Policies that affect economic growth, and housing prices.
Many cities have added to the housing issue because of zoning and land use regulations, both causing housing scarcity and making existing housing expensive. Cities need to review their zoning and building ordinances and balance them with controlling STRs. Zoning needs to encourage new smaller hotels and housing development. Reevaluating zoning regulations and ordinances could help unlock the potential for higher-density housing. This would make better use of available land, reduce sprawl, and encourage mixed-use developments, building vibrant communities.
Besides looking into reducing ordinances, and putting controls on STRs, cities need to develop meaningful affordable housing initiatives to actively invest in affordable housing projects and providing incentives to developers who commit to building affordable units. They need to honestly look at rent control and tenant protections by possibility implementing fair policies and providing meaningful tenant protections. Start looking into alternative housing models, such as co-housing, tiny homes, and community land trusts. All these options can offer more affordable and sustainable living options in your community.
Closing Thoughts: Many people, too many people, see problems and problems, and view many of them as unsurmountable; affordable housing being one. As for me, I tend to see problems as possibilities not yet realized. Problems are never impossible to solve if we focus on the possibilities, and yes – dream big. Because of that, I do not see the housing crisis as an unsolvable issue. I believe is we focus, see the possibilities, collaborate, stop with the defeatist mindset, and addressing the root causes, the housing affordability issue will start to unravel the ugly tangled web we wove. We need to develop a mindset where we focus on a future where everyone has access to safe, stable, and affordable housing.
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