How Short-Term Rental Is Impacting the Real Estate Market

How Short-Term Rental Is Impacting 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, especially when compared to traditional hotels. 

However, there are always two sides to every story, and 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 aren’t subjected to enough regulations and are able to 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 that are leased temporarily.

For these reasons, this article aims to look at 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, it’s important to understand what characteristics define a property that can be considered a short-term rental. That’s because short-term rentals can take various forms, and, in general, they are defined as residential properties that are leased temporarily and for a period of time that both the renter and the owner agree on. 

The duration of such stays can vary. For instance, some people look for such accommodations when they go somewhere for just 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 even 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. However, it comes as no surprise that some people in the hospitality industry may view short-term rentals in a less positive 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’re tourists traveling for a vacation or busy entrepreneurs doing business in different cities. Here’s a closer look at the key ways short-term rentals impact the real estate market and the communities where temporary rentals are the most popular.

Rising Prices 

The real estate market has been booming for a few years now, drawing more and more buyers every year and causing prices to increase. However, short-term rentals are affecting the traditional housing market, especially in popular areas and well-known vacation destinations. The most notable impact that they have is on inventory levels since short-term rentals don’t count as permanent residences, and therefore 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. This leads to a drop in actual inventory for traditional homes, making it harder for buyers to find affordable options. There are plenty of investors looking to buy multiple properties in popular vacation destinations with the goal of renting them out and making a profit. 

Locals Getting Displaced 

Since short-term rentals aren’t subjected to the same regulations and taxes that traditional hotels or long-term rentals need to abide by, they can often offer lower, attractive prices. In addition to this, the vast majority of property owners don’t live at the address where they rent their properties out, so they don’t interact with the guests and don’t keep a close eye on them and their shenanigans. It is not rare for such short-term rentals to need window replacements or garage door opener repair after a visit of particularly rowdy visitors.

As a result, the neighborhoods where these properties can be found tend to change quite significantly since they cease to be residential areas. This may cause locals to get displaced since they cannot afford the rising prices or are unable to continue living in the neighborhoods that have transformed 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 and neighborhoods 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 don’t 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 and other similar issues.

In Conclusion

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’s important to introduce some regulations. The introduction of new legislation regarding short-term rentals could potentially help curb the effects they have on local communities and help keep neighborhoods intact while still allowing homeowners to make some extra money off their properties located in desirable areas without having to commit to being long-term landlords. 


How Short-Term Rental Is Impacting the Real Estate Market