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.

[John Underwood]

So in my neighborhood HOA I get it.

There are people with young kids that don't want the potential sex offender or serial killer or the late night Bachelorette parties making noise at 2AM. They deserve quite and peaceful enjoyment of their property. 

That is why I don't buy in an HOA neighborhood. I buy in tourist areas where vacation rentals are embraced.

It's easier to swim with the current.