Vacation rentals — including apartments, condos, and entire houses rented by owners via Airbnb, VRBO and other listing services — now outnumber the number of hotel rooms available in Asheville and Buncombe County, the Buncombe County Tourism Development Authority reported Jan. 25.
The explosive growth in vacation rental rooms — calculated as room/nights available over a year — more than tripled the growth rate of new hotel rooms, and coincided with the Asheville City Council’s hotel moratorium from September 2019 through February 2021, the BCTDA reported. It also coincided with a shift in visitors’ travel behavior as a result of the COVID-19 pandemic, tourism officials said.
The topsy-turvy growth has prompted cities and towns to push for more regulation of short-term rentals, most of which are through the online platforms of Airbnb and Vacation Rental By Owner (VRBO).
“If the data from TDA are accurate, it reinforces the smart decision that the Woodfin Town Council took recently to limit the number of short-term rentals within our town limits,” said Jim McAllister, Woodfin’s vice mayor.
But Asheville city officials said they worry that the North Carolina General Assembly this year will resurrect previous legislative proposals to strip local governments of their ability to regulate these rentals. The issue pits the rights of property owners — those who own investment units and can earn income from the tourist boom — against the rights of other property owners, including neighbors who want peace and quiet, and fear changing the character of their neighborhoods.
Proponents of regulating short-term rentals argue that the growth of vacation rentals worsens the affordable housing shortage, and turns some areas into de facto hotel districts.
City Attorney Brad Branham said the City of Asheville’s top legislative priority for 2023 is opposition to any further state initiatives to curb the ability of the city to regulate the use of short-term vacation rentals.
The explosive growth of short-term rentals “absolutely highlights the dire need for maintaining a certain level of control for local government, especially in areas like ours with such a strong tourism related economy,” Branham said. “Absent such regulatory options, I would expect these numbers to continue increasing exponentially.”
In 2022, there were 3,668,237 vacation short-term rentals (one room available each night would count for 365), according to a BCTDA presentation to its board members on Jan. 25, compared to 2,626,820 room nights in 2019.
The BCTDA reported it collected $36.4 million in hospitality tax for its fiscal year ending June 30, 2022. This is from total lodging sales of $641.8 million, with hotels accounting for 62 percent of sales and short-term vacation rentals for 36 percent. But the sales trend is shifting in 2023 with hotels declining by 1.9 percent and short-term rentals rising by 3.5 percent.
Both Woodfin and Asheville officials said they recognize that there should be a balance on short-term vacation rentals regulation to allow residents to participate in the area’s vibrant tourism market, and that renting rooms represents an often critical income stream for many.
Yet, the availability of housing, most particularly affordable housing, and the character of the neighborhoods are concerns for both municipalities.
Woodfin’s McAllister told Asheville Watchdog in an email that “having ‘some’ short-term-rentals in Woodfin is fine, but to have more than 10 percent of all residences being weekend rentals for tourists is absurd for a small town populated by families and individuals who want a real community. The Council’s opinion was that we have enough places for tourists to stay and this data proves our point.”
The US Census put Woodfin’s total housing units at 3,689 in 2020, which, based on McAllister’s estimate of 10 percent, would mean that approximately 369 houses were dedicated short-term rentals.
Branham said in an email to Asheville Watchdog that reasonable regulation “equates to a balancing act between allowing locals to take part in the tourism economy while also maintaining sufficient housing stock and affordability levels as well as the character of our neighborhoods.”
“It continues to be the philosophy of the City of Asheville that local governments are best positioned to find and apply the proper regulatory balance to this complex and ever-changing marketplace,” Branham wrote.
The BCTDA referred Asheville Watchdog to AIRDNA data for locations of the rentals, which reported that Asheville has 2,688 active rentals, 88 percent of which are entire homes. The figures from AIRDNA do not break out Woodfin from Asheville.
“Short-term housing has its place in the overall housing continuum,” said Patrick Bowen of Bowen National Research, which has done multiple housing assessments in Western North Carolina, including one for the Dogwood Health Trust in 2021. “It’s just that in markets already suffering from limited housing availability, a large or rapidly expanding short-term housing market can be a significant challenge to the health of a local housing market.”
In that Dogwood Health Trust study, Buncombe County’s housing gap for long-term rentals was 7,699 units, while the gap for ownership was 2,048.
“In markets with limited available rentals and for-sale housing alternatives, the conversion of long-term housing into short-term rentals further reduces the inventory of housing available for more permanent residents, which only exacerbates housing availability and affordability problems,” Bowen told Asheville Watchdog in an email.
This lack of available housing often leads to more rapid increases in rents and home prices, putting such housing out of financial reach for many low- and moderate-income households, Bowen said.
For Asheville, this has contributed to some of the highest rents in the state and an average housing price of $427,000 in December 2022, according to the real estate brokerage Redfin.
[This article was modified after publication to correct BCTDA sales so far in the 2023 fiscal year, which ends June 30, 2023. Hotel sales are trending downward by 1.9 percent and short-term rentals are trending upward by 3.5 percent.]
Asheville Watchdog is a nonprofit news team producing stories that matter to Asheville and Buncombe County. Barbara Durr is a former correspondent for The Financial Times of London. Contact her at firstname.lastname@example.org.