The Impact of Short-Term Vacation Rentals on the Homebuying Market
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Airbnb (and other short-term rental apps like Vrbo) have become a popular option for travelers who prefer the comfort of a home over a hotel room. Approximately one-quarter of hosts on the Airbnb platform own nearly two-thirds of the listings, many of them in popular vacation spots. This has led to increased demand for properties in these destinations, driving up home prices in some markets.1
Recently there is a growing backlash as officials and community leaders say too many properties are being bought up by these investors, leaving affordable housing depleted and turning communities into transient neighborhoods. It also affects those who can only afford to rent (instead of owning a home) because many property owners are turning to short-term rentals instead of long-term tenants.
History of Airbnb
Air Bed and Breakfast was started in 2007 by two men in San Francisco as an online service that allowed property owners to rent out rooms or an entire home to short-term paying guests. The name was later shortened to Airbnb and then in 2011, expanded overseas, launching an office in Hamburg, Germany.
By the Numbers2
- There are 4 million hosts worldwide.
- 85% of hosts are located outside the United States.
- In 2022, the revenue worldwide in U.S. dollars was $8.4 billion.
- The average Airbnb rental in the U.S. is booked 21 nights per month.
- 45% of bookings on Airbnb are for at least one week.
A growing number of U.S. and Canadian cities, states and provinces are starting to implement mandates that limit the duration of an Airbnb stay.3 Although many of these mandates may be difficult to enforce, communities are hopeful it will help to rein in some of the more adverse effects of short-term rentals.
Some of these include:
- Hawaii — Stays under 90 days will not be permitted in most zones, except in select apartment and resort zones and where hosts have a valid Nonconforming Use Certificate.
- Memphis, Tenn. —A short-term rental property unit’s principal renter must be at least 18 years old. Entities may operate a short-term rental property, but only with a permit issued by the county clerk. During each short-term rental period, a responsible party must be available 24 hours a day to address any problems and complaints.
- Palm Springs, Calif. —The cityhas capped the number of days that a property can be rented out short-term at 26. It has also limited such rentals to 20 percent of homes in residential areas. Elsewhere in California, San Francisco has a 90-day rental limit.
- New York City — A law was implemented by the city in July that placed strict registration, zoning and maintenance rules. Hosts are also required to provide proof that they live in the properties with their guests during stays of less than 30 days and can only rent to a maximum of two guests per stay.
- Montreal — Some of the city’s boroughs have banned new short-term visits while the province of Quebec has capped stays at 31 consecutive days.
- Toronto — Airbnb hosts can only welcome guests for 180 days per year.
- Vancouver — Guests are limited to a 30-night cap for each stay. The property must be the owner’s primary residence.
While it appears that short-term rentals are here to stay, it remains to be seen whether municipalities and local governments can find a way that allows all — guests, investors and communities — to win.
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