BAM Key Details: 

  • An Insider article highlighted 25 cities in the U.S. and Canada that are cracking down on Airbnbs and other short-term rental properties. 
  • Issues such as the depletion of housing for local residents and noise disturbances have motivated local governments to take action and limit the growth and operation of short-term rentals in their neighborhoods. 

The COVID pandemic triggered an explosion in short-term rentals, with investors snapping up properties in popular destinations across the U.S. and Canada. Many of those are Airbnbs.

But now, 25 cities and towns have made it harder to own and/or manage short-term vacation rentals in 2023. Residents and officials in those locations say short-term rentals create issues for local residents—including a depletion in housing stock and frequent noise disturbances.

Insider recently published an article that dives into each location’s response to conflicts involving short-term rental properties. 

Here we present the list, along with a general overview of the issues behind the crackdowns. 

Too much of a good thing—or just too much?

The boom in short-term rentals motivated investors, homeowners, and even renters to take advantage of the increased interest in travel by advertising their properties (or, in some cases, even their own apartments) as Airbnbs.

For some, it was a way to take the sting out of rent or mortgage payments. If they had to crash at a friend’s place while they rented out their pad for a few (or several) nights a month, as long as both parties benefited from the arrangement, it worked out pretty nicely.

From there, it seemed natural to invest in a separate property to convert into a full-time short-term rental for Airbnb.

Property owners could take advantage of tourist appeal and design a memorable “experience” for their customers—something they would hopefully recommend to others. 

Turns out, that approach, when taken to the nth degree, created some issues for local residents: 

For one, the explosion of short-term rental properties took business away from local hotels, driving down prices and making it harder for them to stay in business, let alone compete with comparably priced Airbnbs. 

For another, local residents didn’t appreciate that the short-term renters were taking up housing that could have benefited people in their neighborhood.

And it didn’t help that some of these renters showed a complete disregard for their neighbors—or for the properties they rented.

So, apart from Airbnb hosts who’ve managed to convert their customers into hotel people for life, let’s look at some of the reasons residents and local governments have decided to rein in Airbnbs and other short-term rentals.

The rental housing boom

During the pandemic, real estate investors sought to capitalize on the need for affordable short-term lodging by snapping up properties and converting them into short-term rental homes for vacationers, traveling nurses, and remote workers.

Early last year, as rising mortgage rates and persistently high home prices made buying a home unaffordable for many, sidelined buyers were forced to continue renting, which drove up demand for rental properties–-including short-term options.

Also, for homeowners who wanted to move but who didn’t want to lose their 3% mortgage rate, renting out the space seemed an ideal way to cover the cost of holding onto one home after moving into another one.

Cut to the two main issues this created for local residents: 

  1. Depleted housing stock—with out-of-towners coming in and claiming or outbidding locals on rental properties
  2. Noise disturbances—caused by short-term renters who aren’t invested in the area or the property, and who show little (if any) regard for their neighbors

Meanwhile, according to Airbnb statistics, the average U.S. host’s rental income grew to over $13,800 in 2021—85% more than 2019. And by 2022, Airbnb had an industry-record 1.5 million rental listings available, according to AirDNA.

Fast forward to 2023, though, and short-term rental owners face more competition than ever, making it more difficult for investors who were hoping for a healthy ROI from their investments.

With more people tightening their belts, unnecessary travel is one of the first things to drop.

And now, with many local governments passing regulations to limit short-term rental activity—like banning rental stays under 90 days or proposing new taxes on short-term rental property owners—communities across the U.S. and Canada are grappling with what the future of short-term rentals, including Airbnbs, should look like.

Residents are filing more complaints, and cities and towns are caught between these concerns and the revenue that vacationers bring in, along with the rights of property owners.

Some have simply called a time-out on short-term rentals, pausing new applications for non-owner-occupied properties. Chattanooga, Tennessee, is one such community.

Recently, in an email statement, an Airbnb spokesperson defended the place of short-term rentals in the fabric of popular vacation (or migration) destinations for decades.

In spite of that, and possibly due to the growing pile of complaints—not only from local residents but also from defrauded (or disgruntled) property owners and renters using the app—25 locations in the U.S. and Canada have passed legislation limiting the growth and operation of Airbnbs and other short-term rentals.

And there’s a decent chance that number will grow. 

The 25 cities cracking down on Airbnbs

  1. Alamosa, Colorado
  2. Aspen, Colorado
  3. Atlanta, Georgia
  4. Burlington, Vermont
  5. Chattanooga, Tennessee
  6. Coeur d’Alene, Idaho
  7. Dallas, Texas
  8. Dauphin Island, Alabama
  9. Dillon, Colorado
  10. Frisco, Colorado
  11. Lexington, Kentucky
  12. Marco Island, Florida
  13. Montreal (Quebec)
  14. New York City, New York
  15. Oahu, Hawaii
  16. Palm Springs, California
  17. Palo Alto, California
  18. Park Township, Michigan
  19. Portland, Maine
  20. Red Hook, New York
  21. Santa Rosa, California
  22. Sarasota, Florida
  23. Steamboat Springs, Colorado
  24. Tybee Island, Georgia
  25. Weehawken, New Jersey

Check out the full Insider article for specific details about each city’s response to short-term rentals. 

Top takeaways for real estate agents

If any of your clients are thinking of renting out their homes rather than selling them, be prepared to share any information on short- and long-term rentals and the risks that go with each—as well as any local legislation that could impact their decision.

Whatever they decide, you want them to know what they’re getting into and to get the possible result. They’ll remember the agent who helped them avoid a nightmarish situation and steered them toward a better one.