Short-term vacation rentals are on the rise in SLO County. How do they affect housing?

With two short-term rental properties located just blocks from downtown San Luis Obispo, Blake and Serena Andrews encounter plenty of people eager to vacation on the Central Coast.

“We live close to downtown, so a lot of people want to come here and walk to the restaurants and shop downtown,” said Serena Andrews, noting that one of their units “has thankfully been booked pretty regularly since we started it.”

The Andrews credit Airbnb with helping them afford to live in SLO. They host short-term vacationers at a converted garage on their property, while tenants can stay for a minimum of a month in the apartment building.

While many local homeowners rely on short-term vacation rental sites such as Airbnb and Vrbo as a source of extra income, local critics say they’re driving up the cost of housing in San Luis Obispo County.

According to San Luis Obispo County Supervisor Bruce Gibson, rents and home prices are both affected by high volumes of vacation rentals.

“It clearly drives housing prices up, and it drives long-term rents up,” Gibson said.

“It’s a supply and demand problem, right?” he continued. “If you take a house and you have a license to operate a vacation rental when that house sells, its selling price will be elevated by some amount due to the commercial potential of having a vacation rental, whether or not the new owner is going to use it as a vacation rental.”

Short-term rentals on the rise in SLO County

The market for short-term rentals has expand across SLO County, with no municipality posting negative growth in occupancy.

Summer has seen the short-term rental market heat up on the Central Coast, according to new data from AirDNA, a website that tracks Airbnb and Vrbo prices and listings.

In SLO County, the number of available units rose for short-term rentals listed on Airbnb and Vrbo between the first two financial quarters of 2022.

The vacation rental market in Avila Beach grew the most out of all SLO County communities between the first and second quarters of 2022, increasing from 156 active listings to 191, a 22% increase.

The city of San Luis Obispo was not far behind with a 20% increase, going from 361 to 432 short-term rentals, data show.

Paso Robles had easily the most short-term rental units of any SLO County community, AirDNA found, hitting an all-time high with 902 active units in the second quarter of 2022.

As of the second quarter of 2022, there were 3,516 dwellings in SLO County listed on Airbnb and Vrbo, according to AirDNA findings, which would account for about 2.8% of the county’s 124,470 housing units.

According to AirDNA, some housing units in SLO County were listed as being available full-time, meaning they were available more than 181 days in the past year.

Approximately 61% of the units in SLO County were listed as full-time rentals, according to aggregate data from the site.

Only Nipomo, San Simeon and Pismo Beach had full-time availability rates less than 50%, with Paso Robles and Oceano peaking at 66% and 67%, respectively.

How SLO County homeowners, rental company use Airbnb

The Andrews’ tenure as Airbnb hosts started in 2016, when they rented out their apartment in a “desperation move” to make enough money to pay rent on their apartment at the time.

They turned their refurbished garage into a short-term rental property in 2018. Blake Andrews works as a photographer, while his wife works as a mental help therapist.

“I tell people ‘Don’t do it,’ unless it’s something you’re really into,” Blake Andrews said. “Basically, you’re an innkeeper or hosting people, and it’s a lot of work.”

Some of those duties include keeping their dwellings clean and stocked with amenities, which Andrews said is difficult even with the help of hired cleaners.

Andrews said he and his wife were only able to afford their current home in San Luis Obispo thanks to the money they made listing their former apartment on Airbnb.

They credit the site’s reach with helping them connect with customers, whom they lease to independently for most longer-term stays.

Companies such as Retreat Vacation Rentals in Los Osos employ a different strategy. The company uses Airbnb and Vrbo to rent out 13 short-term rental properties located in Arroyo Grande, Los Osos, Morro Bay, Pismo Beach and San Luis Obispo.

Patrick Wilkinson, owner of Retreat Vacation Rentals, said he doesn’t think larger vacation rental companies or independent hosts are contributing to the lack of affordable housing in SLO.

“I think a lot of people think that it’s decimating the housing (market) — I don’t think that’s the issue,” Wilkinson said. “I think that there’s more people that want to live here than our houses (can support), and I think that the cities and counties aren’t allowing fast enough growth personally.”

He said the lack of available long-term rentals is more likely affected by the prevalence of out-of-town residents owning secondary homes in SLO County.

“I don’t think (short-term vacation rentals are) decimating the long-term rentals — I just don’t believe it,” Wilkinson said.

How do vacation rentals affect housing prices?

Limits on the number and density of short-term vacation rentals differ across SLO County.

Some property owners have evaded community regulations thanks to exceptions that grandfather in existing rentals, allowing some communities such as Cambria’s coastal community to stay heavily rented.

Gibson said findings from a UCLA Economics Department study, “The Sharing Economy and Housing Affordability,” do not support Wilkinson’s belief that the market is not impacted by increases in short-term rentals.

According to the study, “A 1% increase in Airbnb listings leads to a 0.018% increase in the rental rate and a 0.026% increase in house prices.”

A few years ago, Gibson said, 13% of SLO County’s housing stock was vacant, meaning those were second residences or short-term rentals with no permanent residents. The statewide average at the time was 8%.

That 5% difference between the state and county vacancy averages came out to about 4,500 unoccupied homes in the county, he said.

It’s not clear what those rates are now.

“We’re a lovely place to live, an attractive place to be, but if you think about trying to create 4,500 new housing units in our county, that’s a big deal,” Gibson said. “That’s several huge projects.”

Blake Andrews said the local government is to blame for the lack of housing, not Airbnb hosts.

“I think if there’s anybody to criticize about housing, it’s the city of San Luis Obispo and the lack of housing that’s available,” he said. “(Airbnb is) just a drop in the bucket of what is needed.”

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