Short Term Rentals are Raising Rents and Hurting the Economy

There are a lot of great things about Short Term Rentals (STRs), like Airbnb and HomeAway. Most people love being able to rent a house while traveling. It is especially convenient for families or large groups who would like more space and privacy. While STRs are a beneficial resource for travelers, they are having a negative impact on real estate prices and the economy.

Laws regarding STRs vary between cities. In big California cities like San Diego, city council has been going back and forth proposing and repealing regulations that could have barred the short-term rental of second homes. Here’s what’s going on…

The debate has polarized the city between STR companies, owners, and local residents
The presence of STRs increases the cost of local housing
Cities with a large STR presence are seeing less-reliable lodging tax payments
Zoning violations interrupt residential neighborhoods with stress, noise, and even unfair costs

In fall 2018, San Diego Councilwoman, Barbara Bay commented:

“After a multi-year process and numerous compromises, the council passed a legally sound ordinance. It was not a de facto ban. I’m disappointed that a corporation valued at $31 billion descended on our city and used deceptive tactics to force us to where we are today. If this goes to the ballot, this large corporation would likely spend millions of dollars, and since the next regular election is not until 2020 our city would endure a two-year freeze on any progress on this issue.”

Studies show that the economic burden from home sharing companies outweighs the benefits. STRs are taking business and jobs away the hotel industry, keep long-term rentals off the market, and can lead to disruption and disregard for conduct and infrastructure in neighborhoods by temporary occupants.


“The fact that the cost of long-term housing has become a prime source of economic stress for typical Americans should be considered when weighing the costs and benefits of Airbnb’s introduction and expansion.”- epi.org

Additionally, California specifically has been in a rental shortage crisis over recent years, thus making STRs that much more of a concern. The state’s rental vacancy remains at a low of 4.4%, compared to a healthy standard of 5.5%.

Long-term renters face the endless rise of housing costs as more properties are being converted into STRs for Airbnb customers. This means there are fewer options for those looking to rent full-time and it is causing a big economic problem. Though there is high demand for more condominiums, and single-family housing options, construction is slow. There is an imbalance to the demand-and-supply, resulting in this rapid increase in rent pricing.

The debate prolongs, as San Diego and other California cities remain ‘in limbo’ surrounding STR law issues, but there is optimism a compromise will come soon. The biggest question is, how will cities regulate home sharing and what will the bigger corporations do to help?


This article is intended to be accurate, but the information is not guaranteed. Please reach out to us directly if you have any specific real estate questions or would like help from a local professional. Article by Sparkling Marketing, Inc.