Santa Cruz has 2% vacancy rate. This low vacancy drives prices up and rental quality down. Any vacancy rate below 2.5% is considered extreme and a city in crises. The rental prices in Santa Cruz are the result of extremely low availability. Short term rentals are created by changing the use of a rental that was historically rented to long term tenants. Short term rentals pit tourists who are willing to pay upwards of $150 per night against residents who typically pay $25-$40 per night.
In this contest tenant will always lose. Keeping tourists in local hotels ensures that the city gets a steady stream of visitors who do not compete with tenants for housing.
Santa Cruz is a great place to live. This is not an accident. The city has zoning districts that put hotels and businesses in commercial streets and reserves the neighborhoods for residents. This guarantees that if you buy or rent a house in a neighborhood that you won't suddenly get a hotel or business moving in next door. Airbnb hosts have shattered years of good city planning and have shoehorned illegal hotels into the neighborhoods with no city approval or regulation. Now a local may suddenly find themselves living next door to a revolving parade of tourists and random visitors. See the maps that show where the 572 defacto hotels are.
Home Buyers Lose.
Investors purchase income property based on the rents that can be generated by the property's highest and best use. Purchasing a property and converting it to a short term rental can double the rents. This higher income stream makes the property more valuable to an investor and causes properties in desirable neighborhoods to get bid up beyond the customary market price. This drives all real estate prices up, harming first time home buyers and working people trying to buy a home for their family.
Hotel Workers Lose.
Local hotels employ reservation clerks, maintenance workers, housekeeping staff, restaurant workers, and night clerks. These are predominantly middle and low income jobs. As short term rental divert guests from hotels worker hours and wages are suppressed. The revenue that would have gone to local hotels instead goes to property owners. This is a redistribution of wealth from low wage workers to the 1%.
Our City Loses.
Visitors staying in Airbnbs are not a previously undiscovered group of customers. Without Airbnb these visitors would be staying in our local hotels. The 2016 Morgan Stanley study shows that 98% of Airbnb users would stay in a hotel if Airbnb was not available. In 2016 the city received $3,900 per room in hotel tax from local hotels. In that same year the city received $1,700 per room from Airbnbs. If we continue to shift tourists from hotels to Airbnbs the city will lose revenue.
Our Schools Lose.
The Santa Cruz City School District receives revenue based on the number of enrolled students in its programs. As long term rentals are converted to Airbnbs families are displaced and in some cases leave the city. For every lost child our city schools lose thousands of dollars in revenue. With 572 short term rentals currently in operation it is not unreasonable to imagine that city schools have lost significant revenue.