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What is the impact from vacation rentals?


In April 2019 the Harvard Business Review published When Airbnb Listings in a City Increase, So Do Rent Prices. This new industry affects the housing market through the reallocation of housing stock. Absentee landlords are reducing the housing supply, which, in turn, increases the cost of living for local renters. Because the total supply of housing is fixed or inelastic in the short run, this drives up the rental rate in the long-term market. Last year, investors bought about one in five starter homes in the United States. In the most heated markets like California, investors bought close to half of the most affordable homes sold last year. Listings disappear in hours — often to reappear on the market later with a much higher price.

The Vacation Home Rental (VHR) issue is a part of the problem. As thousands of beds have suddenly been made available, without being subject to any kind of planning, zoning or – in some cases, being run illegally, and hosts can outcompete nearby hotels and hostels, the demand for these ‘residences’ means that home prices and rents are pushed up, and local people are pushed out. Thousands more people come to Tahoe beyond the artificial limiting threshold of Tourist Accommodation Units (TAUs). TAUs do not apply to the VHR industry, thereby allowing many more accommodations. The impacts are evident.

An example is South Lake Tahoe where 58% of the housing stock is owned by non-residents. The Tahoe Regional Planning Agency (TRPA) issues housing allocations to build in Tahoe, which are rare and highly valued. They are being snapped up by investors to build mega-homes with the intent on making it a vacation rental. While Realtors and business supporters claim these things are good for the local economy, it is devastating to local resident’s daily lives, their jobs, and the environment. More locals are being pushed out of the market and must commute further, thereby contributing to traffic and pollution - the very thing the TRPA is trying to prevent. Service worker wages at the bottom of the scale are eroded further by the commute distance.

The Tahoe basin faces a critical problem and has a serious shortage of affordable housing. Many residents in the basin are finding it difficult to afford to buy a home and many cannot find a place to rent. South Lake Tahoe has a population of just under 22,000 and has a little over 17,000 housing units. More than half of these units are second homes or seasonal rentals (VHR’s) according to the US Census Bureau. Only 18% of our local residents can afford to buy the median-priced home, and 75% spend more than 50% of their income on housing. Jim Hamilton, 2005 president of the California Association of Realtors, told a group, "Real estate was never intended to be an ATM machine. This country was not founded on owning a home and making millions of dollars. Real estate should be about home ownership."

One of the major issues and contributing factors complicating this issue is the local zoning laws are not being adhered to. Zoning, in its basic form, attempts to separate residential property use from commercial property use. We are experiencing incompatible uses. Houses are generally built for families and not typically built to be used as a business. Today, these are being advertised internationally by online services and our housing stock is being snapped up by outside investors solely for the purpose of making a profit. Vacation-home owners say they rely on the income. That makes them a commercial enterprise. We have to use our common sense.

These 'businesses' are operating between our laws and ordinances. For example, hotels must follow many rules and ordinances to operate. Bed and breakfast inns are considered an expanded home occupation and can only be authorized by approval of a special use permit. They must obtain a business license and operate under many rules and ordinances. Weddings, receptions, fund raisers or similar events attended by non-guests, are subject to conditions of approval in the special use permit. They must have an owner present to manage the property. Why then do VHRs get a pass on these rules and get to operate somewhere in between the hotel and B&B?
New construction proposed on a bed and breakfast, or exterior remodeling of the building to be used for the inn, is subject to architectural review by the approving authority as part of the special use permit process. This determination will be based on compatibility with neighborhood building style, building materials and any historic style indigenous to the area. None of this regulation is applied to VHRs. Mega-homes are being built in our neighborhoods specifically for the purpose of being a VHR.

How is it an investor can bid up a home with the intention of making it a business, yet use a standard market appraisal and obtain a regular mortgage? Any other business has to use proper methods such as an income-based appraisal and business financing. We have to question the logic of building mega-structure that do not fit the character of neighborhoods, and allowing businesses to operate in our residential neighborhoods.

In many markets, the median income cannot afford the median house due to the high demand. Nationwide, the median home value is equivalent to 3.61 times the median household income according to ATTOM Data Solutions. This demand is fueled by the anticipated returns of the many investor buyers. These factors greatly affect our productivity and economy and are ignored due to their perceived benefits.
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luckless pedestrian

Super Moderator
Staff member
I am currently working on an ordinance for the small city I work for (pop 30,000) - we don't have that many right now, so this is a good time to put in controls - our short term rentals are to attend waterfront concerts, some tourism, and, short term workers for our large regional hospital.

Things like effects on affordability have been raised, and loss of neighborhood worries have come up.

I likely will make them register but I am struggling with which zoning districts to allow or not allow them in...


Galactic Superstar
Check out these impacts, men may want to cover their eyes at 2:56 due to patriot hotdogging his Borat-style monokini:



Arizona just allows them so we don't get a choice. Then again, we're big enough and not a prime tourist destination that it has very little impact except to the neighbor next door.