Why are so many HOAs and local governments against STRs?

[Bryce G.]

The response I get most often when I ask this question is that it's disruptive to local lifestyles to have more frequently rotating tenants and as a result STRs can decrease property values.  The first one is qualitative, but the second question is quantitative and pretty straightforward. Unless long-term occupants are willing to spend more per month than short-term occupants, any given property will always be worth more as a short term rental.

To give a numerical example, according to CBRE, the average US cap rate from H2 2022 is 6.14%. Consider a given property that can rent for $4500/month or $450/night (not atypical numbers for a 4 bedroom home in many touristy areas). Ignoring operating expenses for the sake of simplicity, its value as a long-term rental is $4500 * 12 = $54,000 / 6.14% = $879,805. Its value as a short-term rental is $450 * 365 = $164,250 / 6.14% = $2,677,850. The valuations would be equal if long-term and short-term rental rates were equal, but short-term rental rates are higher most everywhere in the world. HOAs and local governments that disallow short-term rentals are asking all owners to shoulder a heavy financial burden (in this example a ~$2M investment loss) for the benefit of the neighbors who believe that short-term rental tenants are disruptive to their lifestyle.

I get the sense that many opponents of STRs don't fully understand or consider the financial implications that their position to disallow STRs has on owners in the community.