10 Towns Just Named Best for Short-Term Rental Investments - Is This a Good Thing?

INVESTING - INVESTING NEWS
A new report shows which cities are in for a major short-term rental boom this year — but it might not all be for the better.
Updated Feb. 7, 2024
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AirDNA's recently unveiled list of the top 10 cities to invest in short-term rentals this year has sparked both excitement and concern among residents. While making the list signifies economic potential, it also raises questions about the implications of increased short-term rental (STR) activity for local communities. Some may profit, but others are voicing concerns about the impact on their communities.

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The Airbnb impact

Daniel Krasoń/Adobe Airbnb application on Nokia smartphone

The influx of STR investors into a city can bring both benefits and drawbacks. On the positive side, it injects revenue into local economies, supports small businesses, and promotes tourism. However, the rapid expansion of Airbnb listings can exacerbate housing affordability issues, driving up rents and displacing long-term residents. 

Moreover, the transformation of residential neighborhoods into tourist hubs can disrupt community dynamics and strain local infrastructure. Recent examples from places like New York City highlight the tensions between the economic gains of short-term rentals and their social costs.

Some cities are pushing back

eccolo/Adobe rental agreement contract

The success of Airbnb in New York City drove out entire local communities and saw pockets of neighborhoods slowly become entirely engulfed by Airbnb rental homes. Even more concern has been placed on cities on this year’s list in rural areas. For example, Sneads Ferry, N.C. (fifth on the list) is a small port and beach town in the state poised for Airbnb success, but a rental boom could potentially threaten the way of life for local residents.

In response to the challenges posed by the proliferation of short-term rentals, several cities have taken regulatory measures to curb their impact. New York City's recent crackdown on Airbnb, characterized by stringent restrictions and enforcement, reflects a broader trend of municipal efforts to regulate the STR market. 

Other cities across Europe and the U.S. have implemented similar measures, ranging from licensing requirements to outright bans on certain types of short-term rentals. These initiatives aim to reclaim housing stock for long-term residents and mitigate the negative externalities associated with excessive tourist accommodation.

These cities need to brace for impact

alenthien/Adobe aerial shot of colorful houses in kota, malaysia

STR analytics provider AirDNA created a list of the top 10 places to invest in short-term rentals for 2024 including a diverse array of destinations, from Columbus, Ga. to Fairbanks, Alaska. While these cities offer promising investment opportunities, they must also confront the challenges posed by increased STR activity.

  • Columbus, Georgia
  • Ellsworth, Maine
  • Logan, Ohio
  • Spring Hill, Florida
  • Sneads Ferry, North Carolina
  • Winter Haven, Florida
  • Stanton, Kentucky
  • Port Angeles, Washington
  • Akron, Ohio
  • Fairbanks, Alaska

Bottom line

AlesiaKan/Adobe man holding sign reading airbnb

The rise of short-term rental investments presents a double-edged sword for communities. While it promises economic growth and the possibility of earning extra income, it also raises concerns about housing affordability and neighborhood integrity. As cities navigate this complex market, effective regulation and community engagement will be essential to harnessing the benefits of short-term rentals while mitigating their adverse effects.

By fostering a dialogue between residents, policymakers, and investors, cities can cultivate sustainable tourism models that benefit all stakeholders. Ultimately, the success of short-term rental investments hinges on their alignment with broader goals of inclusive growth and equitable development.

FinanceBuzz is not an investment advisor. This content is for informational purposes only, you should not construe any such information as legal, tax, investment, financial, or other advice.

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