SARATOGA — This small southern Wyoming community is the latest to struggle with the problems that short-term rentals like Airbnb and VRBO can bring to high-demand tourist areas. Technology now allows remote workers to live wherever they want, and that influx is driving up real estate prices dramatically in many tourist-spotted cities. Add in short-term rentals, which can push some homes off the real estate market, and the problem can become even more acute.
“It’s kind of a balancing act and we’re trying to figure out where exactly the right pivot is,” McCall Burau, a business owner and member of the Saratoga Planning Commission, told Cowboy State Daily. “There aren’t enough hotel rooms to support community center events and general summer tourism activities, so short-term rentals definitely play a major role in our economy.”
However, short-term rentals are also taking some of Saratoga’s already scarce housing supply off the market, which some say is exacerbating the city’s growing affordability crisis.
“If we want to be a city with a diverse population in terms of age and economic status, we need a more diverse housing stock,” Burau said. “And the argument is that any affordable housing will be snapped up in the short-term rental market.”
Where the tipping point might be for short-term rentals and their impact on the housing market in Saratoga, according to Burau, is too early to say.
“I’ve talked to some researchers who are studying this,” she said. “And they don’t really have any firm numbers.”
Heatwave on Saratoga housing market impacts labor pool
The median price for a single-family home in Saratoga was $350,000 in July 2024, up $25,000, or 7.7%, from the previous month. That puts the median price per square foot at about $210, according to a report by Rocket Homes.
This jump in prices occurred despite a 43% increase in inventory levels and a 16.5% reduction in average time to sell.
This pressure has been going on for quite some time now and has even affected the ability to hire new employees, Burau told the Cowboy State Daily.
“We own a restaurant, so we see the housing and labor issue from a personal perspective,” she said. “There aren’t many available service workers and I don’t know where they all went after COVID, but the industry has really taken a hit.”
Companies used to be able to hire seasonal workers from outside Saratoga for the summer, but rising housing costs caused a dramatic labor shortage because they had nowhere to house the workers they could afford.
“We’ve completely remodeled our restaurant,” Burau told Cowboy State Daily. “It used to be kind of an upscale restaurant with table service and a complex menu.”
It has been redesigned as a counter service style, where customers order their food and then wait for someone to bring it to them.
“The menu has been simplified so that it’s not as labor-intensive, you don’t have to make a lot of complicated sauces and cook a steak to the right temperature, and the wait staff is very attentive throughout multiple courses of the meal,” Burau said. “That just didn’t exist anymore.”
The restaurant is now only open five days a week instead of seven.
“If we had enough people, we would love to be open seven days a week. But we just don’t have that.”
Far-reaching problem
Saratoga’s short-term rental situation and the affordability crisis that comes with it is a microcosm of trends emerging across the state and the country, Bram Gallagher, director of economics and forecasting at AirDNA, told Cowboy State Daily. It also shows how difficult it can be to figure out what impact short-term rentals are actually having on the housing market.
AirDNA tracks vacation rental data nationwide, and Gallagher estimates his company covers 90 to 95 percent of the short-term rental market.
According to Gallagher’s data, there are about 60 short-term rentals in Saratoga, about half of which are available full-time. The other half are offered on a part-time basis, meaning someone lives in the home at least part of the time.
Short-term rentals in Saratoga cost an average of $200 a night, Gallagher says, suggesting that even if these homes were to come back on the market, they would not fall into the affordable housing category.
Also, most short-term rentals are owned by people who own four or fewer rental units, so it’s not a corporate-driven trend. There’s only one apartment that looks completely “corporate,” he said, and it only has six units.
About four units are enough for a single person to fund their retirement or replace a full-time job paying $40,000 a year, Gallagher said.
“So we consider four or five – anything under 21 – to be small business owners,” Gallagher said. “Once you’re 20, we think, OK, you’re definitely a professional business.”
So far, Gallagher said, studies have not shown any significant relief for housing markets that have banned short-term rentals.
“Harvard Business School is studying New York City, which is known for its very expensive real estate, and trying to figure out what the impact of the recently enacted ban on short-term rentals is,” he said. “We used to be one of the largest short-term rental markets in the world, and now it’s essentially banned.”
“And they still haven’t seen a really big impact on real estate prices, even though hotels are much more expensive now.”
Demand and supply
Normally, high prices can be countered by increasing supply, but so far few new homes have been built in Saratoga, says Burau.
“Interest rates have brought construction to a halt,” she said. “The number of building permits being obtained this year is lower than last year, and everything has just come to a halt.”
She also notes that developers would rather build a million-dollar home than an apartment complex.
“I think if a developer can build a million-dollar house or an apartment complex that provides affordable housing for nurses and teachers, it’s probably easier for them to build a million-dollar house,” she said. “There’s a demand for that here, too. As long as the demand for affordable housing doesn’t exceed the demand for million-dollar houses, they’re going to continue to choose the easier of the two.”
She said that, market forces aside, two 48-unit apartment complexes in Saratoga would be a game changer for housing workers in the tourism sector, which is ultimately the city’s economic engine.
And that dynamic is one of the reasons why many people are considering short-term rentals, says Burau. But she also sees the other side of the coin: short-term rentals are an important part of catering to the city’s tourists.
“It can serve the local economy,” she said. “It’s just that it becomes a kind of corporate machine that doesn’t benefit anyone locally in terms of income and changing the community.”
“You don’t know who your neighbors are because the houses are no longer occupied by someone who sits on the city council or possibly has children in school – but these things are difficult to measure.”
Problem or scapegoat?
While some in Saratoga are calling for a complete ban or restriction to certain zones to limit them, others told Cowboy State Daily that the housing situation is part of a much bigger picture that will not be touched by regulating Airbnbs.
They also point out that not all short-term rentals take housing off the market. In some cases, long-term residents who are simply living in their homes rent out a spare bedroom to make ends meet.
“Airbnb-style rentals have been around forever,” an Airbnb owner named Terri told Cowboy State Daily.
Before Airbnb and VRBO, the short-term rentals she manages were assigned without the help of an online site to ensure lodging taxes were properly collected. They were instead rentals by word of mouth.
In their view, Airbnbs are being unfairly used as scapegoats.
“The housing problem is much bigger than Airbnbs and VRBOs,” she said.
Joe Glode, a former member of the Saratoga City Council, shares this opinion.
The root cause, he said, is not short-term rentals at all. Rather, it is the result of cash in circulation looking for an investment opportunity on the open market. That cash is finding an opportunity in the economic disparity between real estate prices in Saratoga and other communities where real estate prices are much higher.
“The reason is that you’re introducing a different standard of living here,” he said. “You take a property that you would normally sell for $150,000 here and you get $300,000. Then you renovate it so you can live in it and it’s worth half a million.”
Now that so many people can work from home, it is a trend that is accelerating in many communities. People are looking for places they would like to play and are moving. Wyoming’s Teton County is is leading this trend in the country, but it is not the only community where this happens.
Bring tourism to new areas, stimulate new construction projects
Terri also wonders if people really think about the positive impact short-term rentals can have on communities by offering more flexibility in accommodating guests.
That’s a fair question, Gallagher told Cowboy State Daily. So far, the data he’s collected suggests that communities with short-term leases tend to build more new homes than communities without them.
“We also see that they can help expand tourism in areas where it didn’t exist before,” he said. “Like youth sports, for example. They can be where they couldn’t be before. They can host tournaments there because they can accommodate more people through short-term rentals.”
According to Gallagher, this trend is observed throughout Wyoming.
According to his data, Wyoming added about 500 new short-term rentals across the state compared to last year. And most of those were not in tourist hotspots like Jackson Hole, which have zoning regulations restricting short-term rentals from being located there.
“It’s really nice to see a broad base spreading across the state,” he said. “So if there are some areas where there are too many tourists, we can move them here to other places where they would be happy. That’s a really nice trend in Wyoming, and I hope it continues.”
Contact Renee Jean at [email protected]
Jean-Marie can be reached at [email protected].
