TOURISM IMPACTS
When Boom Towns Become Ghost Towns in the New West
Short-term rentals and second homes are pricing locals out of the American West.
By Brendan O’Brien
I have spent the last year and a half researching the impact of short-term rentals (STRs) on housing in western U.S. mountain towns. This initially seemed to be a fairly narrow topic. I was wrong.
My study grew out of evidence that sites like Airbnb were increasingly offering entire homes for most of the year. Global cities like Barcelona and New York and Vienna had seen protests and lawsuits to regulate this market-driven turn toward housing tourists instead of residents.
I wondered how this trend played out in smaller cities. I chose three small cities in the US Intermountain West to study: Bozeman (Montana), St. George (Utah), and Flagstaff (Arizona).
These cities all have sizable residential populations and a large tourism population. Each is the largest city within a 100-mile radius and serves as a gateway for travelers to famous nearby national parks. Each also has a commercial airport and is located on a major interstate highway.
Very quickly, I realized that the same short-term rental pattern at work in larger cities was at work in these smaller communities.
Small City Impacts
One major difference between large and small cities was in the percentage of homes in the short-term rental market. In the larger cities, entire-homes STRs represented a negligible percentage of all housing units. In the three towns I studied, however, they were many times more prevalent.
Several of the people I interviewed in these towns spoke of STRs causing a loss of “community.” One person described their family’s desire to move away from the “nuisance property” next door.
A few mentioned that they had become STR “hosts” themselves to pay for the increasing housing costs in their city.
Altogether, I was left with the unsurprising conclusion that entire-home STRs have had a huge impact on housing prices and housing availability in Bozeman, St. George, and especially Flagstaff — which recently declared a “ housing emergency.”
Why Have STRs & Their Impacts Grown So Large?
One reason is state regulation.
In St. George, short-term rental restrictions are in place but are difficult to enforce due to a 2017 Utah state law. That law prevents cities from using an STR website listing (such as on Airbnb) as evidence that the property operates as an STR.
In Flagstaff, city officials have been frustrated by a 2017 Arizona state law that made local STR restriction illegal altogether.
However, it would be a mistake to focus too narrowly on STR listings as the entire problem. After all, entire-home STRs would not exist unless there were entire homes being left vacant in the community.
Boom & Bust
The story of the American West is often described as one of a boom-and-bust economy. That story typically goes like this:
(1) Gold, timber, oil, or any other extractive material is found.
(2) A “boom town” quickly springs up around that industry.
(3) The resource is mined until no longer plentiful or profitable.
(4) The town “busts” and leaves a “ghost town” alongside hills scarred by the rapacious industry.
In this context, vacant buildings are nothing new for the West. What is new is that vacant homes are now welcome mats rather than bad omens for opportunity seekers.
In recent decades, many former boom towns in the American West have transitioned to a “New West” economy. Nowadays, they are focused on protecting their natural surroundings to grow their tourism industry and attract new residents and businesses.
They have, in essence, become a leisure and recreation extension of the country’s larger metropolitan centers. And, as a result, their housing market is shaped by those larger metropolitan areas.
For example, one in every three households across the three towns I studied were identified as “housing cost-burdened,” consuming 30% or more of their income.
This occurred at the same time that the American Community Survey showed Bozeman, St. George, and Flagstaff to have vacant housing rates of 7.5%, 13.8%, and 14% respectively.
These patterns are seen in recreation-based communities across most of the Intermountain West.
Short-term rentals are erasing the distinction between “ghost towns” and “boom towns” in the West. Leisure and recreation have turned these towns into gateways for wealthy outsiders to temporarily live next door to long-term residents struggling to afford the rising cost of their homes.
Rather than gold or timber, the towns themselves have become the product that drives their economies. Between 2010 and 2019, Bozeman, St. George, and Flagstaff grew by 33.7%, 23.1%, and 13.7%, respectively.
The New West Economy
But the problems of the “New West” economy are the same problems of the “new economy” embraced by other cities across the US since the 1990s: cities do not always want all the new residents.
In the “new economy” paradigm, both large and small cities compete for higher-income, higher-spending tourists and residents.
For western towns, increasingly this has meant that residents have “either a second home or second job” — if they can afford to stay at all.
The US housing market is built upon an unrealistic image of an endless upward trajectory. It must go up in value and number. When there is no higher bidder in sight, the local housing market looks to become a global one.
We have seen this play out before. The housing market “recovery” formula following the Great Recession (2007–2009) hinged on private corporations, second homes, and short-term rentals.
Now we’re seeing a COVID-19-induced housing boom take the nation by storm, accurately summed up by a headline in The Economist stating simply, “House prices are going ballistic.”
This is particularly acute in small cities across the American West.
Between November 2019 and November 2020, the median sales price for a single-family home in Gallatin County, home to Bozeman, had risen from $420,000 to $615,000. A household would need to earn around $237,000 to comfortably afford those prices.
It is no mystery who is buying these homes.
Between January 2020 and January 2021, real estate data manager, Redfin, reported that national second-home demand had increased 84%, far outpacing sales of primary homes. It is not restaurant servers, retail employees, or auto mechanics who benefit.
For the many who serve as the backbone of the tourism industry, it doesn’t matter whether the “Zoom boom” is technically followed by a “Zoom bust”. If they are forced out of a community by inflated prices, the economy has busted for them.
The Future of Housing in the Intermountain West
Where could this go in the future?
- Can we expect large corporations to buy up vacation rental property, offering it as an incentive to employees able to work remotely?
- Can we expect housing to become the plaything for the speculation of hedge funds, utterly divorced from any social function at all?
The former UN Special Rapporteur on Housing, Leilani Farha, saw these trends happening after the last housing crash of 2007–2009, which sent shockwaves through the global economy. As she put it,
“Housing and urban real estate have become the commodity of choice for corporate finance, a ‘safety deposit box’ for the wealthy, a repository of capital and excess liquidity from emerging markets, and a convenient place for shell companies to stash their money with very little transparency.”
Whatever we should expect, it will not be good for those who desire to live in a “community”. Instead, these new boom towns are becoming “ghost towns” of buildings that accommodate transient populations lacking a permanent sense of place.
The “Old West” economy struggled with the proverbial “race to the bottom” — where its products were over-supplied and cheaply sold — leading to an economic bust.
Cities across the world today, operating in the mindset of the “New West” or “new economy”, would be wise to fear the reverse: a “race to the top”.
The housing market depends on endless growth. But, at some point, there will be no one left who is willing or able to buy. Past buyers will race their way to the top, step beyond the last stair — and crash. And, without rapid and far-reaching intervention, we will all crash with them.
This article is based on the M.S. Thesis: The frontier next door: How short-term rentals affect housing in western mountain towns
By Brendan O’Brien
Advisor: Dr. Brian Petersen
Department of Geography, Planning, and Recreation
College of Social and Behavioral Sciences
Northern Arizona University
April 2021
About the Author
Brendan O’Brien finished his Master’s from Northern Arizona University in April of 2021. His research focuses include affordable housing, public land access, and the role of race throughout U.S. history. You can download the full thesis on which this article is based here or reach Brendan through email at brendan.obrien@tutanota.com.
This article was originally published at https://medium.com on May 21, 2021. This new version was moved to the author’s Medium account on May 27, 2021.
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