AirBnb and VRBO or short-term vacation rentals (STVRs) have become increasingly popular in recent years, as they offer both travelers and property owners more options. However, the rise of STVRs has also raised concerns about their impact on the housing market and community, and this has become a hot-button issue here in Ventura.
Short-term rentals and home affordability
One of the main points of contention is that STVRs may cause home prices to increase. This is great for homeowners and sellers, but can be a detriment for renters looking to buy or for families considering relocating to Ventura.
STVRs can affect home prices by affecting supply. The idea is that homes that may otherwise be put up for sale are instead kept by the owners and used as STVRs. When home supply is scarcer, home prices rise.
STVRs can also reduce the availability of long-term rental units and cause rents to go up. Some landlords choose to convert properties they had previously rented on an annual basis into STVRs, because they can charge more money for short-term stays. This can make it more difficult for people to find affordable long-term housing. When there are fewer long-term rentals available, landlords can charge higher rents.
There is evidence to support these concerns. A study by the National Bureau of Economic Research (NBER) found that a 10% increase in the number of STVRs in a city is associated with a 0.7% increase in home prices. The study also found that STVRs can reduce the availability of long-term rental units by up to 10%.
Based on data from Ventura’s Transient Occupancy Tax program, there are currently 410 short-term vacation rental units here in town, out of about 296,000 total housing units. This would put our volume of STVRs at 0.1 percent of the market, which, when applied to the NBER data, could impact home prices by 7/10 of a percent. This means that our current median sale price of $812,000 would instead be $811,430 without STVRs in the mix.
STVRs and quality of life
In addition to the impact on home prices and long-term rental rates, I’ve spoken to residents who are also worried about how STVRs will affect our neighborhoods. Families and couples who are vacationing come and go frequently, and may have parties, stay up late, or clog a street with parked cars. This can be upsetting for residents who intentionally purchased a home in a relaxing neighborhood.
For all these reasons and more, higher end communities like Ventura are sometimes wary of STVRs. However, these are exactly the kinds of communities experiencing fewer issues from STVR tenants. Although complaints do occasionally arise, we don’t see a ton of disturbances coming from STVRs as compared to neighboring cities.
The city’s effort to reduce STVR disturbances
The city is invested in maintaining a high quality of life for residents. By enacting regulations, local officials hope to mitigate the negative impacts of STVRs while still enabling owners to benefit from the income that they generate.
These regulations include:
- Maximum occupancy: STVRs are limited to the number of occupants they may have. This naturally reduces the risk of noise, and discourages people from converting large family homes into STVRs.
- Noise restrictions: STVRs are subject to noise restrictions, which prohibit loud noise between 10 p.m. and 7 a.m.
- Nuisance Response Plan: Owners of STVRs must provide a written plan outlining how they will mitigate tenant disturbances and how they will document and resolve complaints.
“Summer Rule”
From the second Friday in June to the last Friday in August, STVRs must require a minimum stay of at least seven days. This is meant to reduce the impact of STVRs on the availability of affordable housing during the peak summer season.
This regulation has perhaps gotten a great deal of pushback from STVR owners. During the busiest rental season, the rule restricts their tenant pool and reduces their income potential (longer stays are cheaper per night than shorter ones). Some think it’s unfair to enact this rule during the summer months, when demand for short-term rentals is high. Others argue that the rule is necessary to protect the city's housing supply.
Efforts to mitigate STVR’s impact on housing
Because we’re still facing a housing shortage, the city of Ventura is concerned about anything that could further constrain inventory. To this end, the city has put multiple regulations in place. These include:
- Registration and permitting: All STVRs in Ventura must be registered with the city and obtain a permit. This enables Ventura to manage the volume and placement of STVRs.
- Licensing: STVR operators are required to obtain a business license from the city. The fee is $100 or $200 per year, depending on the property.
- Taxes: STVR operators are required to pay the Transient Occupancy Tax (TOT), which is 10% of rents received for <30 day stays.
What do you think?
Ultimately, the impact of STVRs on our community is a complex issue with no easy answers. I’d love to hear your thoughts. Is the city over regulating this industry? Should all STVRs be banned? Call me at (805) 707-4121 or shoot me an email at [email protected]
