County report finds vacation rentals do not drive up housing costs

May 16—Anew report by Clatsop County staff found no correlation between the recent growth of the vacation rental industry and the rise in housing prices.

Prepared by the county manager's office, the Community Development Department, Assessment and Taxation, Geographic Information Systems and county counsel, the short-term rental data report will be presented to the county Board of Commissioners at a work session on Wednesday.

County commissioners are weighing where in the county's unincorporated areas to recognize short-term rentals as an allowable use. More than 170 rentals already operate on county land, most clustering near the oceanfront. Except for Arch Cape, where vacation rentals have been allowed since 2003, the development code does not mention them.

Clatsop County is not alone in confronting rentals of 30 or fewer days. Oregon's coastal communities have seen an explosion of vacation rentals that bring in tourist money yet can undermine quiet neighborhoods.

While North Coast property owners have long rented their homes to out-of-towners, the activity — eased by online platforms — has increased in popularity. The county began regulating vacation rentals for health and safety reasons in 2018.

In April, the board amended the operating standards to address occupancy and the behavior of vacationers — how they interact with neighborhoods and the natural environment.

Poised to vote on which zones should allow vacation rentals, some commissioners said they wanted more information on how rentals affect housing prices and availability in the region.

The board also extended a moratorium on new vacation rental permits until late August. The freeze was approved last summer and extended in December.

Residents hoping that the board will ban and phase out vacation rentals in residential zones have claimed the rentals contribute to housing price spikes. The county's report says that no relationship exists between the issuance of short-term rental permits and home values.

"The data illustrates that the increased housing prices have occurred and continue to occur for both short-term rental properties and non-short-term rental properties," the report said. "Communities such as Cannon Beach, which has severely curtailed short-term rentals, saw the largest real market value increase between 2018 and 2021 for properties holding an STR permit. This is likely due to the value placed on what is perceived as a limited and scarce ownership opportunity, thus commanding a higher price."

The rise in prices, the study says, is largely due to demand outstripping supply.

"This trend, which is occurring nationwide, has been fueled by a combination of factors including low interest rates and increased opportunities for remote work during the pandemic," the report said. "The data does not demonstrate that short-term rentals have driven up housing prices or that houses are being purchased to be converted to short-term rentals."

The report points out that short-term rental units in Clatsop's unincorporated areas compose 0.07% — 177 of 23,017 — of all housing units in both incorporated and unincorporated areas, according to the 2020 census.

The county has held more than two dozen meetings on the vacation rental issue since late 2019, when residents in South County's Cove Beach neighborhood began raising concerns about the industry's impact on their quality of life.

Next steps

In the coming months, the board will consider two recommendations.

County staff, based on board direction, recommends that vacation rentals become a recognized use in all residential and commercial zones — essentially maintaining the status quo but under the newly amended operating standards.

The Planning Commission's recommendation is more restrictive: that rentals be allowed only in commercial and multifamily residential zones, plus Arch Cape.

Planning commissioners who favored this option said that most residential zones were not meant to support the commercial ventures. The development code, they argue, should respect the character of the neighborhoods as zoned.

This recommendation would lead to the elimination of vacation rentals in other residential zones, including Cove Beach's Coastal Residential Zone, where rentals make up roughly a third of homes. It would also remove about $500,000 in annual lodging taxes from county coffers, according to Assessment and Taxation.