Municipal restrictions on short-term rentals have spread quickly. Reading the published code of 6,932 municipalities across 47 states, we find 1,512 that restrict short-term rentals outright, and 518 datable adoptions in the ten years from 2015 through 2024. These restrictions could be accompanied by the expectation that removing short-term rental income removes a category of buyer, and that local home values fall (or not grow as strongly) as a result.

To test this idea, we identified municipalities that have adopted a binding restriction, compare each to closely matched municipalities that have not, and track home values before and after adoption. Of those 518 adoptions, 304 sit in municipalities with a continuous price record and a close enough match to compare against. Across those and their 690 matched comparisons, we find no detectable effect on home values over the five years following adoption.

Identifying local restrictions

No national register of local short-term rental ordinances exists, so we first read the full published code of 6,932 municipalities across 47 states, located passages governing the rental of dwellings to short-term guests, and classified each by what it requires. Legistar, the agenda and records platform used by hundreds of US jurisdictions, supplemented our code research. It records the introduction, passage and enactment dates of every matter those councils consider, along with the outcome of the vote. Where a jurisdiction appears in both sources, the two dates agree exactly in five of nine cases and within one year in six.

The classification distinguishes administrative requirements from binding constraints on operation. A municipality counts as restricted here only where its code does one of four things (A registration or licensing requirement is not treated as a restriction):

• prohibits short-term rentals,
• caps how many may operate,
• requires the owner to occupy the dwelling, or
• limits the number of nights per year it may be rented.

1,512 municipalities carry a restriction of this kind. Adoption dates could be recovered for 715 of them from the amendment notes their codes carry, and 405 of those fall inside the period this analysis can observe on both sides of adoption.

Restricting municipalities are predominantly not resort communities. Places such as Bar Harbor, Maine and Nantucket, Massachusetts appear in the set, but the median restricting municipality holds only 1% of its housing stock as seasonal, recreational or occasional use, and only 51 of the adopting municipalities exceed 10%. Short-term rental regulation now operates largely as a general land use question rather than a feature of vacation markets.

Comparison municipalities

Municipalities could be assumed to restrict short-term rentals after prices have risen and residents have been priced out, so a decline following adoption may reflect the ordinance or may reflect a boom ending on its own schedule. Each adopting municipality is matched to up to three non-adopting municipalities in the same region, with a share of seasonal housing share within 3 points of its own, and similar in population, home values, household income and price growth over the preceding six years. The seasonal housing constraint is applied directly rather than traded off against the other characteristics, because it is the variable that determines whether two municipalities occupy the same market.

Results

The two groups follow the same path, both rising by roughly 58% over the decade shown. No separation appears at adoption or in any year afterward. Five years on, home values in restricting municipalities sit 0.7% above their matched comparisons, a difference indistinguishable from no finding. The estimate is precise enough to exclude a decline larger than about 0.3%. Applied to a municipality at the sample median, where the typical home is worth $455,000, the full range consistent with the data runs from about $1,500 below to $7,700 above.

Alternative specifications

We re-estimated the comparison under nine alternative definitions of the treated sample and the comparison group.

Restricting the sample to municipalities with substantial seasonal housing does not change the result, nor does limiting treatment to outright prohibitions and numeric caps, nor confining the sample to ordinances adopted before 2020, nor drawing comparisons from municipalities that would themselves adopt restrictions later.

Municipalities with prohibitions or caps record home values approximately 0.5% below municipalities that adopted only a registration requirement. This is the sign the price expectation predicts, and it is arguably the sharpest available test, since both groups faced comparable pressure and differed in the instrument they selected. The magnitude is small and the range consistent with the data includes zero, so it establishes a direction rather than an effect.

Interpretation

The evidence does not support the expectation that restricting short-term rentals lowers local home values, and it is precise enough to exclude declines beyond about 1% over five years. It equally does not support the converse expectation that restrictions raise values. The housing market outcome most often forecast in these debates does not appear to occur in either direction.

Limitations

Published codes do not include restrictions that were adopted and later repealed. We could only find adoption dates for 46% of the restrictions identified, and municipalities without a date are excluded. The price measure used, Zillow, is an index of estimated values for all homes, smoothed and seasonally adjusted, rather than a record of transaction prices.

Short-term rentals and the housing market: Quasi-experimental evidence from Airbnb in Los Angeles, Hans R.A. Koster, Jos van Ommeren and Nicolas Volkhausen, Journal of Urban Economics 124 (2021), studied 18 Los Angeles County cities that adopted Home Sharing Ordinances between 2014 and 2018. All 18 are included in our 304. Their study finds a 2% price decline because it compares properties on either side of a city line inside one metropolitan area, holding the local market constant whereas our national scan only measures averages across entire municipalities.