Short-Term Rentals (STRs)

What Are Short-Term Rentals?

A short-term rental (STR) is a home, apartment, or room rented to guests for a brief stay, often through an online platform such as Airbnb or Vrbo. Many local codes draw the line at 30 consecutive days. Shorter stays count as short-term or “transient” lodging, and longer ones as ordinary tenancies. The legal definition varies by place.

Policymakers often distinguish two broad kinds:

• Home-sharing. A resident rents out a spare room, or the whole home while away. The unit remains someone’s primary residence.
• Dedicated short-term rentals. A unit is rented to visitors full time, often by an owner who does not live there. This is the kind that takes a home out of the long-term housing supply.

How Short-Term Rental Regulation Works

Short-term rentals are regulated mainly by cities and counties, within whatever authority state law allows. Common tools include:

• Registration or licensing, so the local government knows which units are operating
• Primary-residence rules, which allow home-sharing but not dedicated investor units
• Caps on the number of permits or the number of nights a unit can be rented each year
• Zoning limits on which districts allow them
• Lodging taxes, the same or similar to those hotels collect
• Platform rules, which require booking sites to verify that a listing is registered

Example

New York City adopted Local Law 18, its Short-Term Rental Registration Law, on January 9, 2022. Hosts must register with the Mayor’s Office of Special Enforcement. Booking platforms may not process transactions for unregistered rentals. Enforcement began on September 5, 2023. Rentals of 30 consecutive days or more are exempt. The city also keeps a list of buildings where short-term rentals are prohibited.

Why It Matters for Workforce Housing

Each home converted to full-time visitor use is one fewer for residents. The effect is felt most where housing is scarce and tourism demand is strong. In resort, beach, and mountain communities, service workers often compete with visitors for the same small housing stock, and seasonal workforce housing is already hard to find.

How much this moves prices is debated, and researchers have reached different conclusions. One study, published in the Journal of Urban Economics in 2021, looked at the 18 of Los Angeles County’s 88 cities that had adopted home-sharing ordinances. It found that the ordinances cut listings by 50% and lowered both house prices and rents by about 2%. The authors estimated that Airbnb’s effect on prices was much larger in areas popular with tourists.

Hosts and platforms point out that rental income helps some owners afford their own homes. Supporters of limits argue that homes in tight markets should be available to people who live and work there. The Los Angeles findings suggest restrictions can ease prices somewhat, but an effect of that size would not by itself resolve a housing shortage.