May 23, 2024


It's the Technology

Airbnb Is Running Riot in Small-Town America

Airbnb Is Running Riot in Small-Town America

Kaitlin had been living in the Village of Oak Creek for over two years when she received the notice. It was June 2022 and her landlord had decided to raise the rent on her three-bedroom house by $800 to $3,000, an increase of 36 percent. For Kaitlin, who had been living alone since her sons moved out, the cost of staying was prohibitive. She had invested hard-earned money into improving the property, addressing persistent clay stains that the desert monsoons swept in from the surrounding red rocks of Sedona, Arizona. Kaitlin, who requested anonymity to protect her pending tenancy applications, was distraught to leave the property she had made her own. But she wasn’t alone. Across Sedona, rental prices were soaring—and a new kind of Airbnb gold rush was to blame.

For years, short-term rental companies like Airbnb have torn through cities. Some, like Mexico City, have embraced the rental platform to attract tourists and digital nomads. Others, like Amsterdam and London, have moved to limit or ban the platform, citing concerns of excess tourism; strains on housing supplies; or in the case of Toronto, the rise of Airbnb “ghost hotels.”

Three years into the pandemic, with flexible working the new normal for many and urban rental supplies taking longer to bounce back, short-term rental entrepreneurs have switched focus from big cities to tourist-friendly towns and resort destinations. And Sedona, a small city tucked between dramatic crimson rock formations in central Arizona, is amongst the worst hit. “Everyone wanted to go to those markets,” says Jamie Lane, vice president of research at AirDNA, a short-term rental analytics firm. And with the flood of outsiders coming in, local residents like Kaitlin are being forced out.

Sedona banned short-term rentals way back in 1995. But in 2017 an Arizona state law, SB1350, blocked such curbs. Legislators had pitched the law as an embrace of the new sharing economy and a boon for Arizonans looking to make some extra money by renting out their spare bedrooms. But when the law passed, investors flooded the market. More than 15 percent of available housing in Sedona is now listed on short-term rental sites like Airbnb or Vrbo, according to a 2021 study by local firm Elliott Packer & Co. As in many cities around the world, house prices in Sedona soared during the pandemic: The median price for a single-family home rose 64 percent over a two-year period from October 2020 to 2022. Stories of people living out of cars have become increasingly common, says Shannon Boone, housing manager for the City of Sedona. Camping on the city’s outskirts as a way to live—not for vacation—is damaging the pristine national forest that surrounds it.

Tourists flock to Sedona for its breathtaking vistas and walking trails, and the city has made a name for itself as a new age spiritual heartland of the American West. Along its main drag, healing centers and crystal shops are tucked between bars and restaurants. “Tourism is always going to be our economic engine, whether we like it or not,” says Sandy Moriarty, the former mayor of Sedona. But those tourists are increasingly strangling the life out of a city that depends on them for its survival. 

“Airbnb allowed the amount of tourism here to double, which means there’s more workforce needed, and at the same time decreased the housing available,” says Boone. It’s a brutal combination. More tourists equals more money and more job opportunities in Sedona’s hospitality and entertainment industries. But with housing in short supply, everyone ends up competing for the same tiny pool of rental properties. And in Sedona, more and more of these rentals are now Airbnbs.