The State of the Short-Term Rental Industry Report Part II

The short-term rental (STR) industry has experienced significant changes and growth, especially in recent years. The 2024 State of the Short-Term Rental Industry Report by Rent Responsibly and the College of Charleston represents the largest and most comprehensive study ever conducted on this sector and the regulatory environment surrounding it across the United States. This report provides valuable insights for STR operators and local governments alike, offering data that can inform better community management and responsible operation of private accommodations.

Understanding the Study

In April 2024, researchers conducted a sweeping survey, collecting responses from more than 5,000 STR owners and property managers. They gathered information about various aspects of STR operations, including properties, technology, marketing, and regulations. Additionally, over 2,000 local government staff and elected officials provided insights into their communities, covering topics such as housing supply, tourism, STR ordinance provisions, and policy objectives. The outcome was substantial: a total of 4,004 responses from STR operators and 1,540 from government officials, resulting in more than 130,000 data points.

This is Part II of a two-part series. The first part appeared last Thursday. Today’s blog focuses on insights from government officials.

Navigating the Affordable Housing Crisis

The challenge of affordable housing is acute across many jurisdictions, with a staggering 83% of government officials acknowledging a significant shortage in their areas. This crisis is primarily driven by three major factors:

  1. High Costs of Construction: The expense involved in building new homes is a substantial barrier.
  2. Soaring Real Estate Values: Increasing property prices continue to limit affordability.
  3. Limited Available Space: The scarcity of land suitable for development exacerbates the housing shortage.

In response to these challenges, some jurisdictions have adopted innovative strategies to improve the housing landscape. According to government officials, the most effective measures include:

  • Expanding Development Areas: Over half (55.3%) of the respondents have opened new areas for housing development.
  • Financial Incentives for Construction: Nearly 51% have introduced subsidies or incentives to lower the cost of building new homes.
  • Reforming Zoning Policies: Around 46% have revised zoning laws to facilitate easier and more extensive housing construction.

The Mixed Bag of Short-Term Rental (STR) Regulations

Opinions on short-term rentals vary among government officials, with 48% viewing them favorably. This positivity generally decreases with age but is higher among those who have personally used STR services. Despite this, most jurisdictions report minimal complaints against STRs, with two-thirds receiving fewer than ten formal grievances in the past year.

Approximately half of the surveyed areas currently have an STR ordinance, with significant future modifications anticipated:

  • 22.4% of jurisdictions with existing STR ordinances plan to make changes within the next year.
  • Over half of those without an ordinance believe one is necessary, and about 25% anticipate enacting one soon.

Effective STR ordinance provisions highlighted by respondents include:

  1. Permit or License Requirements: Ensuring all operators are registered and compliant.
  2. Local Responsible Party Mandates: Having a local contact for STR properties.
  3. Parking Management: Addressing the potential increase in parking demand.

Conversely, less effective measures were identified as on-site host requirements and limits on the number of rentals.

Short-Term Rentals: A Policy Perspective

While STRs are deemed an important issue by over half of the elected officials surveyed, it remains secondary to other legislative priorities. A significant 82% of officials feel under-informed about STRs, which hampers effective policymaking.

In terms of community engagement, more than 55% of STR operators seek greater involvement in shaping local ordinances, and over 40% of all participants expressed intentions to engage more actively in advocacy efforts within the coming year.

This complex picture illustrates the balancing act between fostering economic opportunities through STRs and ensuring they integrate smoothly into community housing strategies. As jurisdictions navigate these waters, the involvement of multiple stakeholders will be crucial in shaping effective housing and rental policies moving forward.

Barb is the president of NASTRA and has spent her professional career in hospitality and real estate. After acquiring her first short-term rental in 2018, Barb moved her focus to legal advocacy after she sued the city of Nashville over a permit issue. Over the last three years, she has mentored more than 2,800 new STR hosts and is the Community Leader for Airbnb in Nashville, as well as an Airbnb “Ask a Superhost” Ambassador. Barb has appeared on numerous radio broadcasts, television shows, and podcasts to talk about her love of hosting. She also manages and co-hosts a number of short term rentals across Tennessee and Arkansas. Barb and her husband Pat own a hotel brokerage, development and consulting company. Look for her upcoming podcast series, “Women of Airbnb.”

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