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Short-term rentals disrupt housing by reducing supply, raising prices, & impacting communities. Blog explores rise, effects, regulations, & solutions.
Over the past ten years, many sectors have changed in the sharing economy. In the residence industry, short-term rent (STR) has become the most important driver. Platforms such as Airbnb, Vrba, and Booking.com have changed the way to make visitors a short period of time for visitors to their homes, apartments, or spare rooms, usually for a few nights. This business plan gives travelers unique, cheap options in addition to hotels and gives the hosts extra money. But these permissions hide a major problem: STRs make it very difficult to work with the traditional housing market.
This disruption appears in many forms, such as low long-term living options, rental celestial values, and changes in how neighbors work. With the increase in the cost of housing in cities around the world, the rise of STR has made heavy arguments about the city’s policy, economic impacts, and neighboring well-being. The U.S. short-term rent market was $64 billion in 2023, up from $39 billion last year. This has been a major jump from the past year, which shows both changes in the backdrop of post-pandemic and how the properties are commonly used.
Why does this matter? Many cities already have a hard time finding homes because of population growth, people moving to cities, and not many new homes being built. When homes are turned into STRs, they are often taken off the market for long-term rentals or sales, which makes the lack worse. This makes rents and home prices go up, which makes it harder for people to find stable living. STR guests who come and go can also cause problems in neighborhoods by making noise, raising safety concerns, and giving people a sense that things are temporary.
This blog talks about the many ways that STRs affect the home market. We will look at their rise, how it affects the supply of housing and how much it costs, the impact on the community, how the government responds, and possible solutions. Our goal is to show through data, case studies, and expert opinions why STRs are more than just a trip trend—they’re also changing the housing market.
Short-term rentals aren’t a new idea—think of standard bed-and-breakfasts or vacation homes—but digital platforms have made them easier for more people than ever before. Since its start in 2008, Airbnb has had over 7.7 million active listings around the world by 2025 and you can also choose PixelShouters for editing your photo. Millions more were listed on other sites. This growth is made possible by technology that makes it easier to list homes, manage bookings, and connect with people all over the world. Micro-hospitality businesses can now be run from smartphones by hosts, and visitors can choose from a variety of options that are often cheaper than hotels.
The attraction is easy to see. STRs give hosts financial freedom, especially in places with high costs. If a homeowner rents out a spare room, they might make $200 a night, which is a lot more than what they would get from long-term rentals for the same area. STRs offer features that make guests feel like they are at home, fun things to do in the area, and reasonable prices. In the U.S. in 2022, the average nightly rate for an Airbnb was $153, while the average nightly rate for a hotel was $207, which makes STRs appealing to visitors on a budget.
The STR boom is caused by economic rewards. In places with lots of tourists, like Miami, New Orleans, or Barcelona, properties can make thousands of dollars every month, which is more than traditional leases. Investors have taken notice, and some have bought homes just for short-term rentals, which has sped up market growth even more. This trend was boosted by the huge increase in travel after the pandemic. Both domestic and foreign tourism sharply recovered.
But there is a bad side to this fast growth. There is stress on the housing market as more homes become STRs. The next parts look at how this change affects neighborhoods, supply, and affordability, showing the STR economy’s hidden costs.
One of the most direct ways that STRs change the housing market is by making it harder to find long-term housing. When people turn their homes or flats into STRs, those units are taken out of the pool of homes that people can rent or buy for stable, long-term periods of time. This loss is big in towns where housing is hard to find.
For example, a study done in 2019 in San Francisco found that Airbnb listings cut the city’s rental housing stock by about 20,000 units, which is about 5% of its total rental inventory. A report from 2018 said that STRs took between 7,000 and 13,500 long-term rental homes out of the New York City market. These numbers may not seem like much when compared to the total number of homes available, but in places where vacancy rates are already below 5%, even small losses make the problem worse.
The basics are easy to understand. Someone who owns an apartment that can rent for $2,000 a month could make $4,000 to $6,000 a month through STRs in an area that is in high demand. When the numbers are like this, a lot of people choose the second option, especially when rules aren’t strict. A lot of the homes in whole neighborhoods in places like Lisbon and Austin have been converted to STRs, giving locals fewer choices.
This decrease in supply is made worse by action from investors. Investors in real estate are buying more and more properties just for STRs because they see them as high-yield investments. In the U.S. in 2021, 24% of Airbnb hosts had more than one offering, which shows that the industry is becoming more professional. These investors often bid higher than first-time buyers, which makes the market even tighter for homes that people live in.
As a result? A loop in which fewer units are available, which increases demand for the ones that are still available, driving up prices and making housing less affordable for most people.
The change from long-term rentals to short-term rentals directly affects the rise in housing prices. Supply and demand say that when there are fewer units available, there is more competition, which drives up home and rent costs. A study from 2017 in the Journal of Urban Economics showed that when the number of Airbnb listings in a ZIP code went up by 10%, rental prices went up by 0.42% and home prices went up by 0.76%. Even though these percentages don’t seem like much, they add up over time, especially in places with a lot of demand.
STRs have been linked to rent increases of up to 7% in areas that get a lot of tourists in places like Barcelona, where tourism is a big part of the economy. Like in the U.S., median rents went up 20–30% in areas with a lot of short-term rentals (STRs) between 2015 and 2022 in towns like Nashville and Asheville. As investors fight for homes to turn into STRs, home prices rise, making them too expensive for first-time buyers.
People with low and middle incomes are being hit the hardest by the housing problem. For example, the usual rent in Miami went up by 40% from 2016 to 2023, while the number of STR listings went up by 60% during the same time period. Families, young professionals, and service workers have a hard time competing with the high rates caused by STR demand. In the worst situations, people are forced to live in places on the edges of cities with longer commutes and fewer services, which makes inequality worse.
STRs can also raise property taxes when home values go up, which can affect people who already own their houses. Higher taxes put more financial stress on owners in some markets, and those owners may turn to short-term rentals (STRs) to cover costs. This lowers the long-term housing pool even more.
STRs hurt more than just the economy; they also hurt the social structure of neighborhoods. Long-term residents build a sense of community through friendships, supporting local businesses, and getting involved in government. With their short-term guests, STRs can break down this unity. Neighbors say that short-term guests who don’t know the rules of the area cause problems like noise, trash, and safety worries. The constant flow of strangers can make people feel alone in historic areas or close-knit communities.
For instance, people who live in New Orleans’s French Quarter have said that rowdy STR guests ruin the area’s charm. A poll done in 2020 found that 60% of people who lived in high-STR areas felt like they had less of a sense of community. People in places like Venice who live there don’t like how tourists “overrun” their towns.
STRs also put a lot of stress on local facilities. More foot traffic, parking needs, and trash from regular turnovers put a strain on city services, and STR hosts often don’t pay their fair share of taxes. STRs have slowed down water and sewer systems in small places like Sedona, Arizona, making costs higher for everyone.
Another worry is that neighborhoods are being “hollowed out.” When homes are turned into STRs, local businesses that serve residents, like grocery shops and laundromats, may lose customers and be replaced by businesses that cater to tourists.
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