The Sedona Verde Valley Association of Realtors is funding a new study to examine the economic role that the short-term rental industry plays in the Verde Valley and across Yavapai County as a whole.
SVVAR represents about 1,100 members, about 560 of whom are primary members who work mainly in Sedona and the Verde Valley.
“While many within our community demonize STRs for the various ‘problems’ they experience day to day, as Realtors, we empirically know the vital role they play in our vibrant community,” SVVAR president Wyndie Whitney said. “Unfortunately, our experiences and the experience of our neighbors differ, and thus we feel a research study is the best way to show everyone the economic impact STRs have and the challenges removing them would create for our communities.”
“It is the lack of development and an overwhelming opposition to development by NIMBYs within a given community that have created the housing challenges we’ve seen,” Whitney added.
The study is being conducted by RRC Associates of Boulder, Colo., which has already completed similar studies for Aspen, Colo., Breckenridge, Colo., and Jackson Hole, Wyo. Funding is being provided by SVVAR’s mobilization fund and the Arizona Association of Realtors.
“Why would we undertake such a study? I would say two things. Property rights and the economy,” local broker and former SVVAR government affairs chairman Ron Volkman said. “Realtors are famous for being defenders of property rights, and telling people what they can or can’t do with a home that they own is a big deal. So we get our dander up if it becomes what we call oppressive or over-regulatory … Second thing is, it’s the economy. It’s an enormous new but heavy impact factor of the economy in Sedona, but it also exists in the rest of Yavapai County.”
“There’s a lot of confusion and a lot of discussion and a lot of ‘facts’ thrown out that have no substantiation,” fellow SVVAR broker Phil Terbell said. “There’s a little bit of conversation that ‘well, if we didn’t have short-term rentals, we’d have workforce housing.’ We don’t know that to be the case, we don’t know that to be in error, but we believe it’s in error, and we’re hoping that this study can help us evaluate a bunch of facts or missed facts that are being thrown around out there.”
“There’s going to be surprises, we think, for everybody,” Volkman said. “All kinds of things are talked about in Sedona, being done to short-term rentals, and they already have been done in other places. We want to take an honest look at, well, what did that do, or what could that do, with the famous unintended consequences that nobody thought about or nobody thought would happen.”
The study will examine economic factors including rental rates and occupancy rates over the last five years; the actual number of STRs in Sedona and the Verde Valley and their locations; the proportion of STRs actually owned by large corporations; whether the number of STRs in the area has continued to increase following the boom caused by the COVID-19 pandemic response; the amount of taxes paid and economic activity generated by STRs; the number of people employed in the STR industry; and the number of tourism-related jobs enabled by the STR industry.
“Some of the other studies we’ve looked at said that the short-term rentals provide as much as 50% of the tourism-related jobs in those other markets,” Terbell said. “We’re kind of curious to see how much of that job market is short-term rentals providing in our market.”
“In those three communities, when they were confronted either with heavy-duty short-term rental regulations that could shut them down, what was their No. 1 choice of what to do with that property?” Volkman asked. “They left them vacant. People have property rights, and they don’t always fit with the dream or the assumption that government has of, ‘Oh, here’s of course what they’ll do with their home.’ Not so.”
“Most short-term owners — over 80% in most of the studies — were second homeowners that used their home on vacation, scheduled their own time in the house, and then they do the short-term rental when they’re not occupying it,” Terbell said. “It’s not something that they’ll just throw back into the resale market.”
“They are upscale homes in size and in quality, and their long-term rent is in no way affordable,” Volkman said of Sedona’s property market. “So those owners are not even going to try to go for long-term rental. They’ll just either use them as their own getaways, second homes, or it will be vacant the rest of the time.”
In other areas of the West, South Lake Tahoe, Calif., banned STRs in 2018; by the end of 2023, 44% of homes stood empty for more than half the year. Summit County, Colo., instituted a series of caps on STR use and other regulations in 2021 and 2022, and has since seen the proportion of unoccupied homes in some of its resort towns climb above 40%.
STR opponents in both areas have since proposed imposing vacancy taxes on those homes in a further attempt to force what they view as desirable behavior by homeowners.
Volkman added that in Palm Springs, Calif., “an outright ban dropped residential values a full 30% … people [were] sitting on homes for two years plus trying to sell them. It has consequences.”*
Volkman and Terbell also called attention to the role of overregulation in preventing the development of housing solutions throughout the valley.
“They’re not sincere and they’re not genuine even when it comes to trying to eliminate or limit development impact fees,” Volkman said of Sedona. “They just went with a big increase, through the roof — they’re talking out both sides of their mouth. It’s not genuine. It’s not real. I wish they would admit it.”
“We’ve got fire sprinklers, we’ve got graywater systems, we’ve got [dark] sky ordinances, we’ve got all of these ordinances that sound good and warm and fuzzy, but it just has driven the cost of housing through the ceiling,” Terbell said.
“It’s absolute overkill to basic safety features of a home,” Volkman agreed. “What can change in the county building regulations and codes that could make things more affordable?”
“How can we create some zoning districts that would encourage people to build maybe workforce housing?” Terbell asked. “Cottonwood’s already amended their planning and zoning code to allow for auxiliary dwelling units.”
“Maybe communes of some sort?” Volkman theorized. “What kind of housing complex could you put together that could get zoning allowance and approval to make everybody own a piece of it? I don’t know, but it needs to be thought out.”
A 2024 Harvard Business Review study similarly reported that “building restrictions that have severely limited the growth of housing supply have led to the widespread perception that short-term rentals must be swallowing housing units at the expense of local residents.”
Volkman was clear that home ownership, not home rental, is a “basic value” in the United States.
“If it slacks off the way it’s been slacking off, we’re going to be in a [expletive],” Volkman said.
“Well, folks, you got it — why aren’t you going to let somebody else have it?” Volkman said, addressing opponents to loosening regulations. “‘It’s bringing the wrong kind of people.’ Come on … even before Sedona was incorporated, it was always that couched kind of language … which just ain’t true.”
SVVAR expects to receive the results of the study by the end of the year and plans to host a town hall event early next year to present the results to the community.
“Hopefully there will be some people on city staff, in finance, who say, ‘this is true, this could sock us big-time,’” Volkman said. “It’ll be interesting to look people in the face with a black-and-white report, saying, ‘Here it is; now are you going to rethink the drumbeat against short-term rentals?’ Because that’s what it has been for the last five years at least. People run City Council campaigns based on it.”
“Instead of running on emotion, let’s run on some facts,” Terbell said.
*Editor’s note: Palm Springs did not ban STRs outright, but instead in 2023 capped the number of STRs in each neighborhood at 20% of the total number of residential dwelling units, resulting in the decline in property values.
