See The Reports & GET THE FACTS

Introduction

Over the last several years, there has been increased discussion about the regulation of short-term vacation rentals nationwide. This is largely in response to the widespread housing shortage which has put additional pressure on how existing residences are used, particularly in communities where housing has multiple uses, such as for visitor accommodation alongside year-round resident usage. This conversation is evolving all over the country, in large cities and rural areas, but in Massachusetts the focus recently has been on the vacation hotspots of the state, especially the Cape and Islands. Nantucket has a long history as an attractive place for visitors. The short-term vacation rental market has helped facilitate Nantucket as a popular tourism destination and rented housing is a popular form of accommodation for visitors. At the same time there is a need for adequate year-round housing for people who want to live and work in the community.

Historically, local real estate brokers have connected visitors to vacation rentals, however since around 2010, digital, app-based platforms have also facilitated home and room rentals. Due to the online nature of platforms such as Airbnb and VRBO, it is relatively easy for data to be gathered on units listed on these platforms, either directly from the companies or through third-party services that scrape the listing websites. However, there is limited information on rentals through local real estate agencies despite these rentals existing on Nantucket for over 100 years, long before app-based rentals became a

reality. These rental units have supplemented the lodging market on the island, offset some of the losses of rooms at hotels and inns, and, overall, supply most of the lodging space for visitors on the island.

In an effort to close this data gap and add information about brokered leases to the discussions on the island, the Nantucket Association of Real Estate Brokers (NAREB) commissioned the UMass Donahue Institute to study the broker-based part of the short-term vacation rental market. The following is an analysis of lease data provided by NAREB member offices. This dataset covers over 16,000 rental leases across the period from 2019 and 2022, spread across over 2,000 unique addresses on the island. This dataset was assembled through the cooperation of numerous local real estate brokers who entrusted

UMDI with their data.

A few days before Special Town Meeting, ACK-Now  released a study they funded by FXM Associations which was a peer review of other studies combined with some non-STR statistics from US Census Data and private (non-transparent) data sources.

This study concluded that "...an estimated $11 million (1%) (of spend on Nantucket) is attributed to short-term renters." and that year round residents account for a far higher percentage (75%).   But where does the income for the islanders come from?  And if this was true, why wouldn't all the shops and restaurants stay open year round?   Even the Chamber of Commerce weighed in and asked their members to check the zip codes on the Point of Sale receipts to see what their on/off-island credit cared sales looked like.

A poll conducted by the Nantucket Current revealed that 2/3 of those who read the report, did not believe its conclusions.

The Town of Nantucket hired Process First to support the Short Term Rental Working Group (STRWG) with data analysis.

Process First is a consulting firm focused on system problems requiring expertise in operations, software development and data analytics. Over the past few years we have worked with many island organizations on other data and technology problems.

The analysis is designed to provide insight to the Short Term Rental (STR) market - generally seeking to understand the characteristics and quantities of listings and contracts.

The work used 6 main data sets with 3 major integrations to answer questions driven by the STRWG.

This work began with data collection on March 13, 2023.

Our remaining plan is to:

1. Continue to support the working group at meetings and with questions about the current analysis

2. Provide a simplified, accessible version of this report to be distributed as a "leave behind" at the public meeting.

3. Dive deep into a few key questions related that we have heard from the group.

To achieve this, we are requesting an extension of our work for #1 and #2, as well as a proposal for additional work to address

To achieve this, we are requesting an extension of our work for #1 and #2, as well as a proposal for additional work to address #3. With approval from the town, we would commit to supporting the STRWG in meetings and communications through

November.

Rent Responsibly is a national organization dedicated to supporting the short term rental community through education,  advocacy and is a recognized source of factual information.

EXECUTIVE SUMMARY

The first-of-its-kind research behind the 2022 State of the Short-Term Rental Community Report sought to ask novel  questions about short-term rentals (STRs) to two distinct but  interdependent audiences. 

The first was local government staff charged with managing the STR programs in their jurisdictions, interviewed to better understand their unique  needs and challenges through questions that had largely not been asked of this audience before. Qualitative interviews were conducted with  municipal staff members from local governments and destination marketing  organizations across South Carolina, Utah, and Colorado. While each  focal region represented one of the top tourist destinations in their  state, the issues faced in each region were markedly different. 

The second audience was STR owners and managers who are required to comply with municipal STR regulations. Nearly 4,600 respondents participated in the study via a detailed survey. 

With a better understanding of the challenges that both cities and operators face as identified through this research and the opportunities for collaboration between the two, communities can design and create informed solutions that improve the experiences of all stakeholders including city personnel, STR operators, and the broader community.

Commissioned by the Rent Responsibly - Conducted by the University of Charleston

Introduction

This study includes a composite of research to inform the potential ban and other

restrictions on short-term rentals (STRs). In summary, we find that the economic

losses would be substantial in the event of an STR ban. These losses would extend

beyond the rental market to the restaurant, recreation, entertainment, retail, and

transportation sectors. Further economic losses in the form of residential real estate

and business investment would be realized over time.

Importance of STRs and Potential Economic Losses

Short-term rentals (STRs) have substantially contributed to the economic gains in the

Coachella Valley. STR visitors accounted for 15% of all visitor spending in the region in

2021 and 25% of overnight visitor spending.

STR visitors to the Coachella Valley spent $829 million in 2021. This direct spending

generated $989 million in total business sales, including indirect and induced impacts.

This supported 4,649 jobs and generated $121 million in household income and $131

million in state & local taxes.

This has been the experience of La Quinta as well. STRs accounted for 25% of La

Quinta’s visitor economy in 2021. The proposed regulations on STRs would result in

massive economic losses. Within 10 years, La Quinta would experience a 122,000

drop in annual visitors (-55%), $102 million less in visitor spending (-62% versus the

baseline), 530 fewer jobs and $9.5 million less in local tax revenues.

Introduction and Key Findings

Literature Review

A review of literature on the impacts of STRs finds that concerns regarding their potential

downside effects is unfounded.

An examination across 15 major U.S. metropolitan areas from 2008 to 2019 found that a

1% increase in Airbnb listings led to a 0.769% increase in residential permit applications,

suggesting that Airbnb can play a major role in supporting local real estate markets and

thus boosting local tax bases.

In contrast, STR restrictions reduced property values by a total of $2.8 billion and tax

revenues by $40 million per year.

The analysis identified a clear downward trend in both listings and permits after a

regulation was enacted. Over the first 12 months, STR regulations reduce Airbnb listings

by 8.9% and residential permits by 10.8%. This produces negative impacts on housing

availability, business investment, and tax revenues over time.

Consistent with this finding, Oxford Economics concludes that STRs have not

substantially driven the U.S. house price and rent increases. For the period 2014–18, only

1% of the 14.9% increase in housing prices was attributable to STRs and even less in

seasonal markets like the Coachella Valley.

Case Studies of Economic Losses Due to STR Restrictions

Case studies of STR restrictions show consistent losses in economic activity. A review of

10 destinations where a range of restrictions were instituted indicates a combined loss of

$330 million over the first 24 months after these laws took effect. Most of these

restrictions were considerably less stringent than the proposed La Quinta legislation.

LOCAL TOWN FACTS AND FIGURES 

In its preparation for the 2022 Annual Town Meeting where vacation rental regulations were put forward for consideration, the town collected and analyzed data it did have.  

That included:

• Island location of STRs as registered on the MA STR registry, removing duplicates
• Analysis of noise complaints and their association with STRs
• Working Concepts for the general (Article 39) and zoning bylaw (Article 42) being developed

The information presented to the town boards illustrated the physical locations/zones and counts of short term rentals.  It also included their study of noise complaints found in Data from Nantucket Police Department: May 1, 2020 through October 1, 2020 that concluded the following:

• 2,241 registered short term rentals on Nantucket
• 557 calls related to noise complaints. 
• 66 addresses registered as short term rentals (11.8% of all complaints) 
• 10 addresses with more than 1 complaint (15% of short term rental address complaints) 
• 97.1% of short terms rentals were not the subject of a noise complaint

Although these facts do not indicate that STRs are a major nuisance as related to noise, the Article 39 bylaw which went into effect in 2023 has the regulations that ensure this will not be the case in the future as repeat violators will not be permitted to operate STRs.

Click below to view the presentation.

Background 

The Board of County Commissioners requested that Staff evaluate the socioeconomic impacts of potential downzoning on the current population of the San Juan Islands. Among the work conducted as part of this evaluation was an examination of the experience of other communities facing growth pressure, conducted by a consultant.

Report Summary The report reviewed the recent history of growth and change in Nantucket, Massachusetts and Aspen, Colorado. Some information was also obtained on Martha's Vineyard, Massachusetts, and Block Island, Rhode Island.

The report indicates that in each of these communities, wealthy purchasers of vacation homes have changed the character of the communities and placed substantial pressure on previous residents. The principal impact is to increase land values to the point that local residents depending on wage income no longer have substantial choices of residence. Increasing property taxes force fixed-income owners to sell unless some form of owner tax inflation relief is provided. A large percentage of rural and low-density lands turn over in the space of 20 to 40 years to wealthy individuals. The wealthy include a few local residents who became wealthy through sales of their property, and a much larger number of people who purchased second homes or vacation homes.

Government professional staff, business owners, and local interest groups contacted in each of the communities studied now considers affordable housing for residents and employees to be a substantial problem. Whether or not the new wealthy owners consider this to be a substantial problem cannot be determined from the data. Each of the communities is expending substantial sums of money to preserve some of the remaining open space at now greatly increased cost. Nantucket has long had a land trust funded by a 2% real estate transfer tax. Nantucket recently adopted a $27-million bond issue to

increase the available funding for its land trust. Pitkin County (surrounding Aspen) established a land bank in 1990 which has acquired7200 acres of open space land. Maps in the attached report illustrate the substantial areas of trust lands in these communities.

Each of these communities is also currently attempting by government intervention to override the housing market and provide affordable housing for local workers.

Conclusions 

Staff's expectation from this analysis was that the consultant might find some characteristic of the San Juan Islands that differentiated it from the situations in these  communities that have transitioned to a dual market in which long-term residents and local workers are squeezed into narrower choices and disrupted lives. The report does

not provide such hope for the San Juans. On the contrary, the similarities in size, scale, access, environment, and trends make us look very much like these communities as they were 20 to 30 years ago. The San Juans appear to be headed the direction of Aspen and Nantucket.

The lessons of those communities seem to be:

1. There is little that can be done to prevent the wealthy from taking over privately owned rural lands and converting farm and forest to estates and trophy homes. It is difficult to persuade current owners not to sell to the highest bidder.

2. The problems of finding housing for workers and the children of current residents who are not wealthy will become much worse. As the transition to ownership of a substantial portion of rural lands by the wealthy occurs, rural lands will no longer be available

for private ownership by local wage earners or small business operators.

3. While downzoning certainly has mixed effects, the transition to extremely high property values in rural lands would be expected to be accelerated by downzoning. This result would be expected because downzoning will reduce the potential number of rural parcels available for development, so the fewer available parcels will be bid up more rapidly by the potential purchasers. Downzoning may slow population growth somewhat by increasing the market entry cost for rural lands above that affordable to a larger portion of the population. However, the rate at which land is consumed for residential use would be expected to be just as high or higher.

4. In such a market environment, affordable housing for local wage earners and small business operators without substantial investment income can be provided in the private market only if sufficient land is available for development at urban densities with urban services. Apartments, condominiums and small homes would need to be delivered in the private market at urban densities at a cost of $80,000 to $150,000 per unit (Appendix A, Table 2 in the draft Housing Element) to be affordable to a range of households from low-income two-person households up to moderate-income four-person families. These are realistic expectations if sufficient land zoned for urban density is provided. If the County cannot, or does not desire to, make available a substantial amount of land for development at urban densities, then affordable housing for these groups can only be provided by artificial means such as public ownership or public subsidy.

5. It is possible to retain many of the aspects of rural character over time while providing for substantially more population and development, provided that this development is strictly limited to tightly-constrained growth areas developed at urban densities. The European model of development, in which densely developed villages are surrounded by rural farmland and forest, clearly illustrates this potential.

6. The ability of each person to build a fence around his or her own portion of the rural landscape at a reasonable price will soon disappear in the San Juan Islands as a consequence of basic economic forces and desirability of the island environment. To prevent this, the Islands would have to be made an undesirable place to live.

7. The rural landscape will only be available to those of modest means on public land or on land legally constrained to rural activities and patterns of development. Rural land and rural character will only be available if substantial amounts of rural land are retained in public ownership and management, or if government control manipulates the private market to preserve rural character by substantially restricting the options of private property owners.

8. Societal controls that may in the past have discouraged the conversion of rural lands to estates and trophy homes do not act to discourage these