As lawmakers consider new short-term rental bills, new MSPC study warns bans won’t fix housing affordability
- MSPC Newsroom
- 5 days ago
- 2 min read
As state and local lawmakers across the country consider new legislation targeting short-term rentals, a new study from Mountain States Policy Center warns that restrictive policies are unlikely to improve housing affordability and may instead raise costs, reduce economic opportunity, and deliver windfall gains to the hotel industry.
Authored by Amber Gunn, Short-Term Rental Regulations: Principles, Pitfalls, and Practical Reforms is one of the most extensive reviews to date of short-term rental regulation, synthesizing academic research, economic data, and real-world case studies from major cities and resort communities. The study finds that short-term rentals account for only a small, localized share of housing market pressure, while restrictive zoning, permitting delays, and regulatory costs remain the dominant drivers of high housing prices.
"Lawmakers are actively debating short-term rental restrictions right now, often under the false assumption that these policies will improve housing affordability,” said Amber Gunn, author of the study.
“The data shows that broad bans and caps are a failed experiment. They target a tiny fraction of the market while cutting off a critical economic lifeline for middle-class families. This study offers a blueprint for legislators to move past speculative fears and protect the property rights and entrepreneurship that allow ordinary households to achieve true economic mobility."
The study documents recent regulatory crackdowns in cities such as New York, where the elimination of most legal short-term rentals coincided with continued rent increases and record-high hotel prices, but no measurable improvement in housing supply or vacancy rates. Similar outcomes are identified in resort communities, where housing shortages are driven primarily by second and seasonal homes rather than short-term rentals.
According to the analysis, short-term rentals frequently serve as a financial lifeline for middle-income households, helping homeowners cover rising living costs, avoid foreclosure, and remain in high-cost communities. Eliminating these income opportunities through blanket bans or permit caps disproportionately harms these households while doing little to address the structural causes of housing scarcity.
The report warns that many proposed STR restrictions function as de facto protectionism, reducing competition and benefiting incumbent hotel operators rather than renters or first-time homebuyers. In multiple jurisdictions, reduced STR supply has been followed by sharp increases in hotel prices and revenues, signaling regulatory capture rather than consumer protection.
Instead of sweeping prohibitions, the study urges lawmakers to adopt a narrow, evidence-based regulatory framework focused on property rights and targeted enforcement. Recommended reforms include prohibiting blanket bans and arbitrary permit caps, relying on neutral nuisance enforcement, streamlining registration systems, limiting fees to administrative costs, and requiring sunset clauses and performance reviews for any STR regulations.
“Housing affordability is a supply problem,” the study concludes. “With multiple STR bills under consideration, lawmakers should be careful not to pursue politically convenient policies that fail to address the real causes of high housing costs.”
The full study is available for download here:
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