Folly United contends that limiting Short Term Rentals (STR) would not have an effect on the availability of affordable housing on the island. Simple economic theory proves that this statement is untrue. 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.
Research at the University of Arizona and University of Denver found that Airbnb is indeed making the real estate market more expensive. By enriching its hosts while making housing less affordable for others, Airbnb and other home-sharing platforms may be compromising public affordability for private wealth, the research suggests. “It’s going to increase the gap between the rich and the poor,” Wei says. “It’s going to make inequality a little worse.”
The study concluded: “STR’s have become a major alternative for real estate investment and have had a significant impact on housing affordability.”
We can learn by looking at what has happened in other vacation destinations
In Colorado ski towns, the demand for short term rentals and the increase in supply of STR’s are growing at such a rate that it is displacing local residents of the towns they are supposed to serve.
Margaret Bowes, Colorado Association of Ski Towns executive director, says that the perfect solution to the crisis is still not within reach. “The trajectory of the number of properties becoming (short-term rentals) is not sustainable,” according to Bowes. She adds that at the current rate, no one working in the said communities will be able to live in them.
Living on Folly is not cheap but ignoring the impact of increased STR’s on the island will lead to more people being priced out of the local housing market.