How Short-Term Rentals Impact the Rental Market

Short-term rentals (STRs) have become commonplace in the vacation and rental market. For travelers, they’ve become a popular alternative to hotels, and many listings are located on hosting platforms such as Airbnb and Vrbo. Renters are using STRs to partake in “city swapping,” where they jump from city to city. While STRs may have been a boon for travelers and transient renters, locals living in the area long term are facing the effects and consequences of this boom.

Key Takeaways

• STR growth is accelerating rental competition. Short-term rental listings have surged over the past decade, with active listings reaching 1.73 million as of May 2026, up 57.3 percent from 2021.
• STRs raise long-term rents and shrink inventory in several ways. By converting long-term units into short-term listings, driving investor competition, and inflating property values, STRs contribute to higher rents and reduced availability, especially in high-demand neighborhoods near transit and downtown areas.
• Cities are responding with varied regulations. Several cities, like New York, Santa Monica, and Miami, have adopted registration laws, permit systems, and zoning restrictions to curb STR growth and protect long-term rental supply, though approaches differ significantly by location.

The Rise of Short-Term Rentals

A short-term rental’s exact definition is often defined by the city, but it generally means rentals of 30 days or less. STRs were once a more niche segment of the rental industry, but it exploded in the past ten years to join hotels as one of the main travel lodgings and as a flexible way for renters to explore the country.

In 2024, the National Apartment Association (NAA) reported that there were more than 2.4 million STRs and 785,000 hosts in the U.S. Grand View Research said that the short-term vacation rental market was valued at $43,857.5 million in 2025 and expected to grow to $100,107.8 million by 2033 with a compound annual growth rate of 11 percent. They also predict that the U.S. will be the top revenue earner for vacation STRs in 2033.

It’s not the same everywhere; why your city’s story might differ

Even though STRs have become one of the most popular places for vacationers and renter nomads to rest their heads, their numbers vary depending on the city. A research study that analyzed Airbnb listings in forty American cities found that STRs are more likely to be in cities with a high tourism rate.

Data from AirDNA supports this finding as most of the cities with the highest Airbnb occupancy rates (how much time the property is booked vs how much time it is vacant and available) were major tourist destinations. Oahu and Kauai took first and second place while three Florida cities (St. Petersburg, Sarasota, and Key West) made the list as well. A few of the other cities are tourist hotspots, but also draw people for other reasons, such as business and major events.

Another part of the picture is that major cities are seeing a decline as regulations continue to change the landscape and the demand from travelers has dropped, as reported by AirDNA in their May review. Mid-sized cities and small towns have become more popular destinations as travelers look for a different type of lifestyle and leisure. So, smaller cities may start seeing a bigger impact from STRs.

STRs also might have a smaller impact on the rental market than expected, as well. Michelle Rumore, Senior Director of Market Analytics in the Tampa Bay area for CoStar Group, said that it is harder to track the effect of STRs on the rental market, since most Airbnb rentals are single-family homes or owned condos, property types that typically fall outside multifamily rental data.

In fact, in markets like Tampa Bay and Sarasota, Rumore pointed to a different trend altogether: a wave of new multifamily construction over the past five years has pushed vacancy rates to near-record highs, and landlords have responded with lower rents and steep concessions to fill units. So, renters focused on apartment communities, rather than single-family homes or condos, may find more room to negotiate, even in cities with a heavy Airbnb presence.

How Short-Term Rentals Affect Long-Term Renters

When people think of the industries affected by STRs, the hotel industry might be the first thing that comes to mind. But STRs have had just as significant an impact on long-term rentals. That’s not to say all challenges in the rental market can be attributed to STRs. Inventory shortages, broader economic conditions, and other market forces may play a larger role; however, STRs still exacerbate the challenges renters are facing.

Grant Montgomery, the National Director of U.S. Multifamily Analytics for CoStar Group, expands on this, “In some markets, short-term rentals have removed units from the long-term housing stock and contributed to tighter conditions, particularly in high-tourism destinations. In many larger markets, however, the scale of the apartment inventory is such that short-term rentals are only one of many factors influencing rents and occupancy.”

Montgomery also agrees that broader drivers, like housing supply, job growth, household formation and migration patterns, are the main forces that shape rental market performance. As he puts it, “The impact of short-term rentals tends to be much more noticeable at the local level than in the aggregate national data.”

Higher housing costs and lower rental inventory

More rentals dedicated to short-term rentals means less long-term rental inventory, and renters feel that in both prices and availability. While supply and demand factors such as construction, zoning restrictions, and regulatory conditions may have a larger effect on the rental market, STRs still play a noticeable role.

The average rent in the U.S. has already increased 0.7 percent year-over-year, according to Apartments.com data, and many worry that short-term rentals have been a contributing factor. This plays out in a few obvious but clearly connected ways:

• Landlord conversion and investor competition: Landlords are converting long-term rentals into short-term ones as they can generate higher returns in a shorter period of time, even with the additional challenges of managing an STR. Investors are snapping up properties to list as STRs for the same reason, and both reasons contribute to lower inventory.
• Shrinking rental supply: Every rental that is listed as an STR is one removed from the long-term rental market. This means a much tighter inventory, and when supply drops while demand stays the same, prices shoot up. The rental market is typically sensitive to even the smallest of supply changes, leading to rising rents.
• Concentrated impact in high-demand areas: According to the same study from before, high-demand neighborhoods, like ones near good transit service, close to downtown, or in high-value areas, are where STRs are most likely to cluster. Rent prices in those neighborhoods see the steepest increases as demand and price are closely tied together.
• Rising property values and taxes: STRs can inflate home values and property assessments in the area. Landlords then might charge higher rents to deal with the increased costs or to justify the property’s new value.

Loss of neighborhood feel

Short-term rentals can also change the feel of the area: there are new people all the time, varying group sizes are coming and going, and increased noise and traffic can all lead to a loss of the community atmosphere in a neighborhood. This can end up causing stress and problems for long-term residents or even pushing them to leave the area entirely.

Since most property owners don’t live on-site, they often have little incentive to make sure guests are respectful of the neighborhood and follow local rules, unless it directly causes them trouble or they’re forced to intervene by external forces, like neighbors, local regulations, or the city government. In contrast, long-term renters tend to have more of a stake in maintaining the neighborhood since they’ll be living there every day for a while.

Displacement of residents

STRs can lead to higher prices, as explored above, but this effect goes beyond individual renters struggling with costs; it can displace entire communities. Renters are already making many sacrifices to afford housing, and with STRs raising prices even more, many are left with no choice but to move.

Cities Most Affected, and How They’re Responding

To try to mitigate these effects on renters and locals, as well as the impacts on other industries, many cities are starting to regulate short-term rentals. This includes limiting the number of people or rooms, capping the number of days, establishing licensing requirements, and other stricter regulations. Other methods of dealing with STRs include stricter taxation and zoning laws, while some cities outright ban STRs. Here are some examples of cities impacted by STRs and how they are dealing with short-term rentals.

The information below is for general informational purposes only. It does not provide a complete overview of short-term rental laws in each city and should not be construed as legal advice.

New York, NY

New York adopted Local Law 18, aka the Short-Term Rental Registration Law, on January 9, 2022. The law reshaped the city’s STR landscape as it requires all hosts to register with the Office of Special Enforcement (OSE) and bars platforms from processing transactions for unregistered STRs.

This adds on to the existing short-term rental regulations, which already prohibited hosts from renting out an entire apartment or home for less than 30 days, regardless of whether the host owns or lives in the building. So, hosts can only rent out a room while staying in  the same unit/apartment themselves, can host no more than two guests at a time, and must comply with all other applicable laws.

Santa Monica, CA

Short-term rentals and home-sharing are often used interchangeably, but not every city treats them the same way. Some cities, like Santa Monica, clearly label and differentiate between the two, while others don’t use the two terms as separate categories in the same way.

This distinction matters in Santa Monica as the city prohibits short-term rentals, but allows home-sharing under the Home Sharing Ordinance, adopted on May 12, 2015. Under this ordinance, residents can host guests in their primary residence as long as one permanent resident lives on-site during the stay. Hosts must also have a home-sharing permit and business license, as well as following other related laws.

Miami, FL

Many cities in Florida rely heavily on tourism, meaning that short-term rentals are essential to the local economy, and Miami is no exception. However, the city has found ways to circumvent the state statute banning cities from prohibiting or regulating the duration/frequency of STRs through zoning laws. That state statute has a grandfather clause that means it doesn’t apply to any local laws, ordinances, or regulations adopted on or before June 1, 2011.

Miami’s 2017 zoning changes made STRs illegal in certain areas. The ordinance was challenged and initially won an injunction blocking enforcement, but Miami appealed, and the Third District Court of Appeal reversed that decision. The court found the ordinance wasn't preempted by state law because, although it was formally passed in 2017, the main parts of the code dated back to a 2009 city ordinance, before the state's 2011 cutoff. As a result, Miami's ban on STRs in those residential zones still stands today.

How Renters Can Find an Apartment During the STR Boom

Though STRs have tightened the long-term rental market, driving up rents and shrinking inventory, cities are enacting registration laws, permitting requirements, and zoning restrictions. In the meantime, renters can still stand out in a competitive market by following these tips:

• Be seen: Don't skip the tour, even a self-guided one. Showing up on time, dressed to make a good impression, and ready to ask questions puts you ahead of other applicants.
• Be inquisitive: Ask about building age, parking, and how maintenance requests are handled. Thoughtful questions signal you're a serious, engaged applicant, and they can surface useful details, like the moving timeframe the landlord is looking for or if they are open to negotiating terms.
• Be prepared: Have your paystubs, bank statements, and references ready to go, and know where your credit stands before you apply. Responding quickly to a landlord's outreach can be the difference between landing the lease and losing it to a faster applicant.
• Be flexible: Widen your search radius, stay open to a range of lease lengths, and consider compromising on non-essential features. In a market reshaped by STRs, flexibility, especially around move-in date and location, can open up your options.

The most important part of navigating a competitive rental market is using a reliable tool that puts accurate, up-to-date listings in front of you fast, since high demand means the best units can disappear quickly. Apartments.com does exactly that: it lets you filter by lease length, amenities, rent price, and more, so you can instantly narrow your search to units that fit your needs. That kind of targeted search saves you from wasting time scrolling through listings that don't match your situation, giving you more time to focus on securing a place that actually works for you.