LAKE TAHOE, Calif./Nev. – Short-term rentals (STRs) have been hotly contested in recent discussions of Measure T in South Lake Tahoe, but their presence in the Tahoe Basin has existed long before online platforms like VRBO and AirBnB. Are STRs really harming housing in the greater Lake Tahoe area? The nuanced answers to that question are what we’re diving into for this housing series article.

A brief history of short-term rentals

Short-term rentals, also called vacation home rentals (VHRs), have been around since the 1950s, providing a homey and often cheaper alternative to staying in hotels and motels. Currently, STRs are defined in the basin as properties that are rented for 30 days or less. While people used to advertise their own homes in newspaper ads, the establishment of online platforms like VRBO (Vacation Rentals by Owner) in 1995 made listings even easier, boosting the popularity of STRs everywhere, but especially in vacation destinations like Tahoe.

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Many STRs and VHRs operated prior to the establishment of official ordinances that regulated them, many of which came about in the early 2000s for the Tahoe Basin, especially as residents began to complain about the impacts of visitors in their neighborhoods, like parking, trash, and noise complaints.

Throughout the region, the ordinances have been updated many times—every county in the basin has put out an update to their ordinance in the last five years, in part prompted by the major changes that COVID-19 left on the tourism industry. Most recently, South Lake Tahoe’s Measure T was struck down by courts, leaving the city council to decide on a new ordinance.

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Comparing ordinances

While each county in the region differs in its available housing stock, locations of STRs, and regulations for STRs, some commonalities arise. First, all counties require STR permits for those operating STRs, whether they’re part of a VHR company or simply renting out their own property. Next, almost all counties have set caps that represent roughly 10% or less of the available housing stock in each region, except for Placer County, which has a much higher cap, representing 32.5%.

However, not every ordinance is written the same. Placer County, which has both the highest and most variable rate of vacancy, has a much higher cap and more clustering than other areas. Washoe County is notable for having no cap on short-term rentals, and its ordinance has a higher focus on laying out rules for those with STRs rather than limitations on where STRs can be.

El Dorado County recently began trying to address clustering: groups of STRs concentrated together in residential neighborhoods. Douglas County only allows STRs to be owned by a person or persons, a trust, or a closely held LLC in the same household—corporations and other methods of ownership are not permitted by the code. In addition, Douglas County is the most restrictive on the locations of STRs and their density in neighborhoods compared to other counties around the basin.

For the most part, these ordinances are focused on reducing STR impacts in residential areas: specifying buffers and occupancy limits, codifying requirements for noise, trash and parking, and ensuring that there is compliance with what’s been set forth.

But few ordinances protect current renters and residents from their places being converted from long-term rentals to STRs. Fears that a resident could be kicked out in order to turn their long-term rental into a more lucrative business option have been expressed throughout public meetings.

While there’s little current evidence or studies done in the basin to indicate that this is occurring frequently, it’s one of the concerns that people have regarding STRs’ effects on housing.

Residents’ opinions on short-term rentals

The city of South Lake Tahoe commissioned a report in 2017 on Socioeconomic Impacts on Vacation Home Rentals in South Lake Tahoe, where surveyed residents indicated they believed that VHRs had a negative impact on residential neighborhoods—36% of respondents indicated that they believed VHRs depleted long-term housing.

The report predicted that the conversion rate from occupied to vacant units would outpace the development of new units, and nonresident homebuyers would put pressure on the available housing stock because of its relative affordability compared to other California markets. However, it also stated, “While the VHR market will likely continue to be a factor in the conversion of units… the impact may be reduced as the city continues to more fully implement existing regulations and ordinances.”

Other major complaints concerned the increased disturbances in their neighborhoods, commercial presences in residential areas, and perceived increase in larger homes built to become second or recreational homes, or to be used as VHRs. The report also included analysis regarding VHRs’ effects on property values, another topic of concern at the time.

Still, residents have mixed feelings on nuisance and illegal VHRs, which proliferate across the basin. They also worry about whether or not online platforms will help or hurt with the regulations, allowing people who are unaware of the rules to easily book an STR.

One of the reasons why the Placemate program started in Truckee was because of the friction of the availability of long-term housing as compared to vacation homes. Unlike VHRs, housing in the region is often quietly advertised among friends and family or online groups and isn’t always listed on commonly known websites like Apartments.com or Zillow. These practices make it more challenging to find housing for people moving to the Tahoe Basin without prior connections.

Another reason for Placemate’s Lease to Locals program is because of an adjacent issue to STRs: vacancy rates in the region, which span from 58% in Douglas County to 92% in Placer County, as reported by the Tahoe Prosperity Center in 2017. While second homeowners may choose to rent their homes either short-term or long-term, the reality is that many don’t rent them out at all. Placemate’s most effective community outreach includes sending postcards to these second homeowners who don’t rent their properties, but converting to a rental at all comes with its own stipulations.

Would short-term rentals convert to long-term rentals?

The short answer: it depends. Many STRs would likely not be well-suited for long-term living since they were built with the vacation home experience in mind—the properties can be too large for realistic maintenance without hired housekeeping, or located far away from workplaces and schools. Other STRs might be owned by a second homeowner who isn’t interested in the financial burden that changing over their property entails.

Brendan Ferry, chief deputy director of El Dorado County’s Tahoe Planning and Building Division, says that code enforcement officers who come across unpermitted VHRs will provide the option of long-term rental as a potential solution. Ferry said, “Preserving housing stock is absolutely a goal of ours and it’s always in the background of our conversations as a priority.”

But short-term rentals are often more appealing because they produce more income and tend to not degrade the quality of the property in the same way that long-term renters might. There are also less grounds for owners to evict long-term renters than short-term renters because of the strictness of STR ordinances, leading some to feel that there is less risk involved since they can also rely on code enforcement officers.

In fact, of the property owners who were surveyed for the 2017 South Lake Tahoe report, a majority said they “would never convert their VHR to long-term rentals”, instead preferring to leave it vacant, sell the unit, move back in, or consider other options.

However, Placemate has had a few STRs join their program: 22 in East Placer, 27 in Truckee, and 5 in South Lake Tahoe. Of those properties that have graduated from the program, 11 in East Placer, 16 in Truckee, and 4 in South Lake Tahoe have continued to rent long-term.

A 2019 study by Oxford Economics, commissioned by VRBO, says that the effects of STRs on rents in vacation destinations is “weaker in these highly seasonal areas… by their very definition, vacation-destination housing markets have higher vacancy rates that reflect more volatile seasonal housing demand.”

The study goes on to say that because homeowners have been renting out their properties since before the rise of internet platforms, the value from such rental revenue has “long been priced in the value of homes in these localities.” In conclusion, the study surmises that STRs were not a substantial driver of house price and rent increases in 2014-2018.

Because the houses in the area are still considered affordable compared to markets of bigger California cities like San Francisco or Los Angeles, there are still market forces driving people to buy second homes in the area. Some of these could become STRs, but given the long-standing nature of STRs in the Tahoe Basin, it’s unlikely that there will be another sudden boom of VHRs because the ordinances are already fairly strict compared to other ordinances in both California and Nevada.

Those interested in funding affordable housing have suggested that cities and counties could take a portion of the permit fees for VHRs and put it toward affordable housing, though currently, many fees go to balancing the costs of VHR enforcement.

STRs have become representative of housing market forces in the region and a potentially depleted affordable housing stock, but those issues are better attributed to vacancy as a whole in the region, not solely STRs, which have a low impetus to convert to long-term rentals. Those in support of STRs argue that the economic benefits they bring through tourism offset the negative effects that people have complaints about.

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Eli Ramos is a reporter for Tahoe Daily Tribune. They are part of the 2024–26 cohort of California Local News Fellows through UC Berkeley.