09/19/2019

Short Term Rentals: Are They Really Impacting Housing Supply and Neighborhood Safety?

Cities across the country have begun to prohibit short-term housing rentals. Bans have now been passed in Santa Monica, Anaheim, Manhattan Beach, Redondo Beach, Hermosa Beach, and New York City. A complete ban also goes into effect in the city of Santa Barbara on January 1, 2017.

But to date, little research has been conducted on the necessity of these new laws. Are they justified in view of the myriad of allegations levied at short-term rentals, despite the absence of bona fide evidence?

The Issue
A common belief is that the proliferation of short-term rentals (rentals of less than 30 days), has lead to higher rents and home prices in many communities. When properties are rented through sites like AirBnB or HomeAway.com, they are no longer available to local residents, which limits housing options within communities.

This indictment of short-term rentals is especially heated across coastal California, where available housing is especially limited and therefore especially expensive. But are these claims accurate? Are short-term rentals really raising home prices and rental rates?

The Effect on Housing Supply
We recently completed a study to determine the effect of short-term rentals on the housing supply of Santa Barbara City and County. We surveyed 1,660 local STR owners, with a response rate of 20 percent and a margin for statistical error of plus or minus 3.6 percentage points.

One claim of STR critics was true – a large portion (87 percent) of STR owners rented out their entire homes. It was much less common for people to rent out a spare bedroom or a couch.

However, we did not find that the supply of housing was significantly affected by the incidence of short-term rentals in the City or County of Santa Barbara. This is because (1) compared to the total size of the housing stock, there are very few STRs in Santa Barbara City and County, and (2) very few of these homes are used as STRs full-time.

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