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 bdurr@avlwatchdog.org.
I thought short term rentals were limited to homestays in Asheville city limits, where the owner had to be present. How are 88% of the rentals entire houses?
The author transposes “Asheville” and “Buncombe County” throughout the article. Look at the lede/summary. The hotel rooms are primarily in Asheville but STR’s in Buncombe are included in the sensationalized report.
That’s what I want to know? This makes no sense given the stories on people who have been fined for such. I remember an owner who had whole house/s STR’s near Greenwise on Merrimon being heavily fined???
It’s time to offer tax incentives to local landlords who offer their homes as long-term rentals (as I’ve done for 20 years). This would be far more effective than the continual giveaways to corporate entities to grace us with ‘affordable housing’ that wipes out forests and destroys neighborhoods and brings more and more traffic. Until given such an incentive, I maintain the right to yank my home off the long-term market profit from the vibrant tourism industry since the TDA continues to advertise for more and more guests. I also voted against the affordable housing bond since it will subsidize tourism and exacerbate the situation and keep folks leading treadmill existences forever…
We need to address the root cause of this mess and convince the TDA not to advertise so damn much. They should help our city and just sit on the room tax money till we get a 50/50 split or better.
There should be a tax on any dwelling that is not occupied with a local resident at least 9 out of 12 months of the year.
There are illegal whole house rentals all over our neighborhood. Why no enforcement after they’ve been reported multiple times? Asheville ignores and looks the other way.
This is never going to end. Even when people are committing benefits fraud to set up these records as we all know happened right here in our town. When is enough enough?
Costs of rent and property in our county are way too high. The graph says it all, twice as many new rentals being set up than the increase in demand. Hopefully all these people will lose enough money we can pick up a house at a reasonable price someday.
What this article (and so many others) say repeatedly is that tourism is the root cause of most of our problems. This is deeply concerning as tourism also brings in so much money that it could solve so many challenges if the TDA weren’t undermining those who live here. And why has there been no follow-up story about the tourists who OD’ed at the Grove Park Inn last February, putting an unnecessary drain on our infrastructure?
I took a hard look at this when I was on Council. The effect on affordable rents is vastly overstated. Many, maybe most, hosts who create “homestays” are using space they wouldn’t otherwise have rented. Not everyone with a few spare rooms wants a full time neighbor.
Oh, also, the data regarding “entire homes” is misleading. I remodeled an unused portion of my house to use for STR. It has a separate entrance and therefore is considered a a whole home when it is simply a downstairs homestay, but it is a whole apartment, not an “entire home.”