How Short-Term Rental Affects the Real Estate Market
In recent years, short-term rentals experienced a significant spike in popularity, following the success of well-liked platforms such as Airbnb. New options are popping up everywhere, with investors trying to make the most out of this concept and millions of travelers being drawn to the opportunity of finding accommodation that offers more amenities for less money and a greater deal of freedom.
However, there are always two sides to every story. While some people praise short-term rentals for all their benefits, others claim that they play a part in the process of tourists pushing the local population out, especially in popular vacation destinations and desirable areas.
Furthermore, short-term rentals are not subjected to enough regulations and can mitigate some taxes that other hospitality properties need to stick to. Then, there are also concerns about the future of their neighborhoods and the disruptions caused by properties leased temporarily.
This article examines the rise of short-term rentals and their impact on the current real estate market.
What Is Short-Term Rental?
Before diving right into the subject, one must understand what characteristics define a property that can be considered a short-term rental. That is because short-term rentals can take various forms.
Generally, short-term rentals are defined as residential properties leased temporarily and for a period that both the renter and the owner agree on. The duration of such stays can vary.
For instance, some people look for these accommodations when they go somewhere for a few days, but others may want to lease the place for a month or even longer. Short-term rentals typically come fully furnished, with all the necessities, such as kitchen essentials or basic bathroom amenities, provided.
Short-term rentals can be an excellent alternative for anyone who prefers staying in a property other than a licensed bed and breakfast or a hotel. Nevertheless, it comes as no surprise that some people in the hospitality industry may view short-term rentals in a less favorable light.
The Effects of Short-Term Rentals on the Real Estate Market
Short-term rentals are a go-to option for many people, whether they are tourists traveling for a vacation or busy entrepreneurs doing business in different cities. Here is a closer look at how short-term rentals impact the real estate market and the communities where temporary rentals are the most popular.
The real estate market has been booming for a few years now, drawing more and more buyers every year and causing prices to reach incredible heights. Yet, short-term rentals affect the traditional housing market, especially in popular areas and well-known vacation destinations.
The most notable impact they have is on inventory levels since short-term rentals do not count as permanent residences. Therefore, the prices of regular homes stay high.
Property owners tend to view short-term rentals as an opportunity to make some extra cash, with many deciding to lease their properties rather than sell them. It leads to a drop in inventory for traditional homes, making it harder for buyers to find affordable options.
As a result, plenty of investors are looking to buy multiple properties in popular vacation destinations to rent them out and make a profit.
Locals Getting Displaced
Since short-term rentals are not subjected to the same regulations and taxes that traditional hotels or long-term rentals must abide by, they can often offer lower, more attractive prices. Additionally, most property owners do not live at the address where they rent their properties out, so they do not interact with the guests and do not keep a close eye on them and their shenanigans.
Consequently, the neighborhoods where these properties can be found tend to change quite significantly since they cease to be residential areas. This situation may cause locals to get displaced since they cannot afford the rising prices or are unable to continue living in these neighborhoods.
In most extreme cases, neighborhoods may transform from peaceful and quiet areas to spots full of tourists and various renters who constantly come and go virtually all the time.
Disruptions Caused by Short-Term Rentals
Some hosts allow their properties to be rented out by multiple people every few days or weeks, meaning guests can come and go pretty much all the time. Not only does it make it impossible for neighbors to get some peace and quiet, but it also disrupts entire communities since guests who come for a vacation may want to party until late at night or simply have fun without considering people who live in the area permanently.
Many locals also tend to complain about trash being left behind, either because guests fail to pick it up after themselves or because property managers do not provide cleaning services until the rental is empty. Other issues like parking problems are also present. Many guests fail to follow parking rules, leading to traffic congestion.
The rise of short-term rentals has drawn both praise and criticism from various parties involved in this process. These include homeowners who want to profit off their properties, tourists looking for cheap accommodation options, and local communities suffering from disruptions or skyrocketing house prices caused by these properties.
This is why many people involved in the real estate market maintain that it is vital to introduce some regulations. Introducing new legislation regarding short-term rentals could potentially help curb the effects they have on local communities and help keep neighborhoods intact while allowing homeowners to make some extra money off their properties located in desirable areas without committing to being long-term landlords.