In a recent opinion piece, Rob Woodul president of S.C. Realtors, tries to make the argument that Short-Term Rental restrictions are bad for South Carolina. A major issue is how real estate investors view our state. Cities and towns in South Carolina are not investment vehicles, they are living communities that need to be protected.
The rules and Short-term Rental limits defined by local governments are in place because the community’s involved wish to protect the balance of long term and short term residents. For the most part, communities like Folly Beach, acknowledge that Short-term Rentals are now a part of the housing situations and are not seeking to ban Short-term Rentals. Recently passed referendums like the one on Folly Beach pose no threat to eliminate Short-term Rentals, rather they simply insure that a viable long-term community continues to thrive by guaranteeing that balance.
In fact in paper published by the South Carolina Law Review, the authors argue that “regulatory action over Airbnb is warranted and, due to the unique character of properties in South Carolina, should occur at the municipal level…. with common-sense, transparent regulation that balances the benefits of the “sharing economy” with the need of South Carolina municipalities to preserve the unique character and integrity of the neighborhoods”.
It is important to look at the actual data behind the Short-term Rental impacts on our state as we debate bills like House Bill 3253. Several of Woodul’s statements need closer scrutiny as they ignore the actual data.
Expansion of Short-Term Rentals is Unnecessary
As stated above, most of the regulations now in place across South Carolina merely seek to limit the number of Short-term Rentals in a community. A look at occupancy rates shows that there is more than adequate supply of Short-term Rentals in the state. National trends for AirBnB also show signs of over-saturation. According to a 2023 outlook released by short-term rental analytics firm AirDNA, Short-term Rental supply is expected to grow faster than demand. The study indicates that coastal, mountain, and rural locations that saw the biggest spike in pandemic numbers are set up to see the biggest drop in revenue and occupancy, numbers that are very relevant to South Carolina.
Overall Economic Impacts of STR Are Negative
In his piece and in the press release announcing the bill, realtors cited the economic benefits of STR for the state of South Carolina. “The dollars that we’re talking about translate for real opportunity for real people to help build their communities and their lives,” South Carolina REALTORS President Rob Woodul said.
A closer look shows that the beneficial economic impacts of STR are inflated and that the overall economic impact of STR in the state are negative. One of the major findings from a report by Granicus, an industry leader in short- term rental compliance monitoring and enforcement solutions for local governments, is that STR limits and rules need to be in place to insure that traditional residential neighborhoods are not turned into tourist areas to the detriment of long-time residents. The study concludes that the costs to renters and local jurisdictions likely exceed the benefits to travelers and property owners.
Woodul also implies that Short-term Rentals facilitate tourism. Again the data indicates that this is not true. The potential benefit of increased tourism supporting city economies is much smaller than commonly advertised. There is little evidence that cities with an increasing supply of short-term Airbnb rental accommodations are seeing a large increase in travelers. Instead, accommodations supplied via Airbnb seem to be a nearly pure substitution for other forms of accommodation. Two surveys indicate that only 2 to 4 percent of those using Airbnb say that they would not have taken the trip were Airbnb rentals unavailable.
Full-Time Populations Impacted
According to a recent study, Investors bought 24 percent of all single-family houses sold nationwide last year. Removing Short-term Rental restrictions will only accelerate this trend.
As more properties are converted to STR’s, the supply of available housing open for long-term renters and homeowners shrinks. With housing in short supply, everyone ends up competing for the same tiny pool of rental properties and rents increase.
Researchers at Carnegie Mellon University found that Airbnb “mildly cannibalizes” the long-term rental supply. And in the cities they studied where Airbnb was popular, residents faced a more severe reduction in housing stock.
Woodul makes reference to a vocal minority calling for burdensome restrictions or even outright bans on short-term rentals by local governments. In the case of Folly Beach, the vote was passed by a majority of it’s residents.
Crime Rates Rise
There is a reason that over 20 cities across South Carolina are working to limit Short-term Rentals as increasing Short-term Rentals has been proven to degrade the livability of communities . In the case of Folly Beach, it’s full-time population is currently 21.4% smaller than it was in 2010 and 6.0% smaller since the year 2000. Studies show that this slow erosion of communities has major consequences.
A major finding in a report by Northeastern University was that certain violent crimes, including fights, robberies, and reports of someone wielding a knife, tended to increase in a neighborhood a year or more after the number of Airbnbs increased. “What seems to be the problem is that Airbnb is taking households off the social network of the neighborhood and eroding its natural capacity to manage crime,” says O’Brien, associate professor at Northeastern.
Woodul states that “entrepreneurs are seeking out more places to open up short-term rentals to visitors”. Will your neighborhood be next? We need to push back to protect what makes our communities across South Carolina so special. No city or town should be viewed only as an investment opportunity.