There is an old saying the road to hell is paved with good intentions. In 2017 Governor Ducey signed into law a bill that prohibited local governments from regulating vacation and short-term rentals across the state. He thought he was allowing individual homeowners to make some extra cash on the side to improve their lives. Instead, it morphed into large investment groups pooling their cash, buying homes, and creating party houses catering to drunken golf outings and other wild and loud parties. He completely missed how it would impact the very fabric of neighborhoods.
Recently one of our favorite pubs in Sedona put up a sign saying they were closed on Tuesdays for the foreseeable future. The owner said it was because the employees could not afford to live in the area. After all, short term rentals had severely reduced the number of rentals available and it had driven up the rent for the few long-term rentals that were available. The workers simply cannot afford to work and live in Sedona.
As one of my Tempe neighbors so eloquently stated: “Three (16%) of the homes on my short street are now full-time AirBNB; Soon there will be one more. On another street right by me, 33% of the homes are now Airbnb. These are the majority of the recent home purchases on my street. All are Airbnbs.
Even if an Airbnb is not a problem home, these are hotels in your neighborhood. There is no way to prevent the majority of homes on your street from becoming Airbnbs. For example, potentially 90% of the homes on your street could be all Airbnb homes. So there is no community left in that scenario; just a big hotel row. The state legislature won’t allow cities any control to prevent this situation.
Buying in a neighborhood for commercial use puts a high demand on available single-family housing for both rent and ownership. These commercial buyers pay cash too which pushes the prices way up because these commercial buyers are looking at huge returns from short-term rentals. This demand artificially increases prices. The people winning those home purchase contracts are not buying these homes to live in.
A side impact of all these short-term rentals is that there are fewer workers in these areas because they can’t afford to live here. I fully believe that there should be something done to have done limit on the commercialization of neighborhoods and condos. What they have done is allowed areas dedicated to housing to be overrun with commercial interests … and rapidly that housing is going away. The short-term rental investors target the same housing as the lower to middle class. This housing was affordable but the commercial demand has now made it unaffordable even to the middle class. I mean, how many people can afford $3000 a month for rent or to own a home costing $500K? Even a nicely paid engineer couldn’t afford either of those. Commercial investors in neighborhoods have overcome the American Dream.”
Clearly, there needs to be a balance on the commercialization of our neighborhoods.