Short-term rentals high and climbing on the Kenai Peninsula
Short-term rentals are on the rise in Alaska, a trend that may spell difficulty for long-term renters looking for housing.
Here on the Kenai Peninsula, short-term rentals like AirBNB and Vrbo take up the greatest proportion of total houses compared to the rest of the state — nearly 7%.
In September’s issue of Trends, the Alaska Department of Labor and Workforce Development’s monthly economic report, the Kenai Peninsula Borough far and away tops the list of Alaska areas with large proportions of short-term rentals— so much so that it surprised the researcher behind it.
“When I first collected the data, I looked at it and I made sure that I hadn’t made a mistake. Just because it seemed so much different than any other area,” Gunnar Shultz, an economist with the Alaska Department of Labor, said. He authored the report about short-term housing, part of a broader Trends article that explains why Alaska’s rental market is so tight right now.
Shultz compared the number of active short-term rentals in an area with the total housing for that same region. On the Kenai Peninsula, there are more than 2,000 active short-term rentals, and around 31,000 total housing units. For comparison, Anchorage also has just over 2,000 short-term rentals. But, Anchorage’s total housing stock is around 118,000.
After Kenai, the city with the second-largest proportion of its housing stock devoted to short-term rentals is Sitka. But there, it’s only about 3.5%, half as much as Kenai.
Shultz started looking into the matter because he noticed that rates of short-term rentals in Alaska had increased, and were eclipsing pre-pandemic levels. He knew it might help to explain present difficulties in the rental market.
“There is also evidence from empirical studies at the national level in other areas that when short-term rental listings increase, that is associated with declining long-term rentals,” he said.
Shultz said we don’t yet have the data to confirm that is happening here in Kenai, because while long-term rentals are tracked by the state, short-term rentals are not. For his research, he used data from AirDNA, a proprietary third-party research company that tracks active short-term rentals nationwide, specifically AirBNBs and Vrbos.
Shultz said that the specific impact of an increase in short-term rentals is really more of a policy question. But that question has played out in a number of peninsula communities over the last year.
There are 470 active rentals in Seward, according to AirDNA, a city which has notoriously struggled with affordable housing. In March, members of the city’s Port and Commerce Advisory Board discussed setting restrictions on AirBNB and Vrbo rentals after hearing testimony about the critical need for housing.
One person who testified at that meeting was Seward High School Principal Henry Burns, who dealt with homelessness and a two-and-a-half hour commute when he relocated to the city last year.
In Homer, a lack of housing caused a severe worker shortage that led to a unique solution — military barracks. In June, a government contracting company purchased surplus military barracks from Joint Base Elmendorf-Richardson in Anchorage and are in the process of transporting them to Homer to house workers for affordable rents, because so many were struggling to find spaces amid rising AirBNB rates.
But it’s not just Seward and Homer. In the combined areas of Kenai, Soldotna and Nikiski, there are 652 actively available short-term rentals.
Vacancy rates for long-term rentals are also at a record low on the Kenai Peninsula this year. According to Trends, decreasing vacancy rates are one of the primary reasons rent goes up. When renters compete for a smaller number of housing units, they give landlords more power to control prices. The peninsula, historically an area with a comparatively high vacancy rate, saw one of the largest drops of anywhere in the state this year, and currently has a vacancy rate of just under 4 percent.
The issue of short-term rentals is also being grappled with across Alaska. In Juneau, the city government hired a private firm to research the short-term rental market following concerns about the impact of AirBNBs on the city’s limited housing stock. The Juneau Assembly is also considering legislation to mandate that short-term rental owners register their properties. In Sitka, the city is considering action to crack down on short-term rentals during a severe housing crunch.
You can find the original story here.