As Colorado’s resort towns grapple with soaring housing prices and dwindling affordable options, recent data challenges a common culprit: short-term rentals.

Across the Western Slope, several residents and municipal leaders have blamed corporations and vacation rentals for pricing out the workforce. Renters and hourly workers in resort towns often resort to sharing crowded living spaces, settle for hours-long commutes from outside the county or even live in their cars as rent prices climb over 40-50% of the average household income and residents are pushed out by second-home owners. 

“There are a lot of anecdotes locally of folks that have said that they were forced out of their rental units when the owner of that unit decided to put it on the short-term rental market,” said Margaret Bowes, executive director of the Colorado Association of Ski Towns. “I can walk around my neighbourhood here in Summit County and see homes that used to be occupied by families or by a handful of resort workers, and now that home is in the short-term rental market.”

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Now, key findings from the Economic & Workforce Housing Impacts of Short-Term Rentals & Regulations study are challenging the impacts of short-term rentals to inculpate a deeper issue: underdevelopment and a wealth-driven reshaping of the housing market.

The study, commissioned by the Western Mountain Resort Alliance and conducted by RRC Associates and Inntopia, looked at Pitkin and Summit counties and Teton County in Wyoming as representative of the struggles of several Colorado resort mountain towns.

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The study’s focus on Summit and Pitkin counties doesn’t disqualify the rest of the Western Slope from these impacts, said Jack Greacen, founding partner for AEG Policy Advisors. Though the numbers may look slightly different, the pictures across Routt, Garfield, Grand, Eagle and other counties are almost identical.

“Your town is different, but it’s not,” he said. “At the end of the day, economics and math are still economics and math, and development should really be the priority of our conversation.”

Although the Western Mountain Resort Alliance does not directly profit from short-term rentals, the organization has lobbied against short-term rental regulations in the past out of concern that they could hinder a vital part of the local resort economy.

The study’s results supported the same conclusion across all three counties: Regulations on short-term rentals often do more economic harm than good. 

Economic impacts are only part of the picture, however.

Bowes said that though the information in the study is valuable to resort communities, it doesn’t provide a balanced picture of the housing challenges faced by both long-time residents and its workforce, such as quality of life, neighborhood character, workforce accessibility and the loss of affordable housing.

“We know that vacation rentals bring great economic benefits to communities. There’s no question about that,” she said. “But there are also impacts along with those economic benefits … like noise, trash, parking challenges, and then local enforcement needs to be tapped to deal with some of those issues.”

Nearly every resort town has its base area lodging, which is built specifically for vacation rentals. The issue for some residents and visitors began when rentals began creeping into what has traditionally been residential neighborhoods housing the local workforce, Bowes said.

“Colorado Association of Ski Towns recognizes that short-term rentals play a really important role in our resort communities,” she said. “They have visitors that support our tourism economy, but we also need to balance that with the preservation of our workforce housing.”

A changing housing market

During a Feb. 18 presentation on the study results, Greacen said the primary drivers of housing markets are the overall health of the economy measured by unemployment, interest rates and mean income.

The first two drivers have remained relatively consistent in recent years — the national unemployment rate has remained low following the COVID-19 pandemic, and interest rates are reaching normal levels after 15 years of lower rates.

Income, however, has undergone drastic changes — the country’s median income has almost quadrupled in the past 40 years, raising the number of millionaires from 600,000 in 1980 to over 25,000,000 in 2025.

“That is a big driver, in my opinion, of what we’re looking at in most destination marketplaces,” Greacen said. “You have a giant, larger pool of people who are able to come into these marketplaces and put cash down … the question (now) is, how has this growing pool of people who are able to come to your community and buy a home … changed your marketplace?”

A common sentiment in Colorado’s resort towns is that corporations are buying up affordable housing and turning them into short-term rentals, which then drives up housing prices. The data collected in the study, Greacen said, “disproves these theories right off the bat.”

How many short-term rentals are there?

In 2023, short-term rentals only made up 15% of total housing units in Pitkin County and 27% in Summit, which is 3% lower for Summit than it was in 2018. By contrast, vacation homes in these resort communities make up over half of Summit County’s housing and one-third of Pitkin County’s.

“(This is) the big misnomer that most people seem to forget,” Greacen said. “You can see there are thousands of homes within your respective communities that just sit banking throughout. These offer no additional benefit to the community besides the property taxes.”

Who owns short-term rentals?

Across the board, the data shows that short-term rentals aren’t being bought up by corporations — they’re more likely owned by someone else in the community or from Colorado’s Front Range.

Over 87% of short-term rental owners across both counties only own one unit. Of those who own short-term rentals in Pitkin County, 3% own more than six units. The number is slightly lower for Summit County, where only 1% of all short-term rental owners own more than five units.

The large majority of these short-term rentals also serve as vacation homes for the owners, with over 80% of owners using their units for personal trips of one to four weeks per year and then offsetting those costs through leveraging their property — in short, the majority of short-term rental owners are second-home owners.

“(Most) are single-unit owners, meaning it’s Jack who has come to your community, put down the deposit, bought the home,” Greacen said. “The percentages are significantly smaller than most residents and most elected leaders end up assuming.”

The question of where these owners come from is where Summit and Pitkin differ. Overall for Colorado, roughly 42% of short-term rental owners come from out of state, while 46% come from the Front Range, 10% come from Summit County, 1% come from other parts of Colorado and 1% are international. For Pitkin County, there’s a stronger shift toward out-of-state owners than compared with Summit County, since the latter is more accessible from the Front Range. 

“40% of people who own second homes currently within those marketplaces are people who are planning to come and become either full-time residents or retire to your community in the next five years,” he said.

Impacts on the local marketplace

Just from revenue alone, Summit County benefits from $1.7 billion in total economic activity from short-term rentals based on direct, indirect and induced costs. That translates to roughly 29% of the county’s gross domestic product. Pitkin County benefits from less than half of that — $553 million, or 11% of gross domestic product — partly because of its heightened restrictions on short-term rentals compared to Summit County.

Resort communities also rely heavily on hospitality services for job sourcing. Roughly 7,692 jobs are tied to short-term rentals in Summit County and 2,481 in Pitkin County.

“I’ll use the example of Sedona, where they’re trying to cap short-term rentals at 5% of total housing stock,” Greacen said. “You’re talking about reducing short-term rentals by roughly 72% within the community — that’s a 72% reduction in revenues. That’s a 72% reduction in jobs.”

When most tourism-based communities are also reliant on renters for tax revenue, he added, these municipalities don’t always have another industry that can offset that big of a revenue loss.

Impacts on housing prices

While short-term rentals have a substantial impact on the local economy, academic studies prove their impacts on housing prices veer in the opposite direction.

Studies referenced in the report show that short-term rental status accounts for roughly 1% of overall change in housing value.

The Harvard Business Review published that Airbnb’s year-over-year average growth equates to a roughly 1.14% increase in housing prices and a 0.8% increase in rental prices.

Greacen added that many of the homes that were turned into short-term rentals were never affordable to the local workforce to begin with. For Breckenridge residents spending 30% of their overall income on housing, only 12 units out of almost 10,000 that have been turned into short-term rentals would have been affordable to someone making the average household income of $77,600 in Summit County, he said.

Regulations on short term rentals: good or bad?

Short-term rental regulations, according to Greacen, don’t address the root cause of the problem: underdevelopment. Rather, the study suggests that caps and bans can artificially depress the market.

Mountain resort towns in Colorado have had historic underdevelopment since around 2008-2009. Although there has been a slight uptick in recent years, roughly 90% of construction spending has gone toward multi-family housing and improvements on existing properties.

Greacen explained that when regulations are placed on short-term rentals, the types of people who then end up buying those vacant homes are those who can put down all-cash offers with no down payment; and because they can afford to offset the cost without renting, it fills the community with vacant homes and less visitors feeding money into the local economy.

“During COVID, when you had this exodus from places like San Francisco, you had these individuals moving to these communities expecting to see a bustling rural community that they could invest in, and they don’t have that,” he said.

What’s more, retaliatory taxes have proven to be ineffective, Greacen said. Municipalities like South Lake Tahoe that have attempted to improve the problem with vacancy taxes are met with owners who see a $6,000 tax as a “rounding error in (their) investment portfolio,” he added.

“It’s when you get down to the caps and bans that suddenly (regulations) become negative,” Greacen said. “The data has already shown most short-term rentals are never going to wind up being affordable housing for the community. However, you can wind up hurting someone’s long-term net worth, their wealth, what they wind up passing on.”

For municipalities like Glenwood Springs and Vail that have limited developable land, solutions to expanding development and creating more affordable housing may only be attainable through zoning changes, which residents in Glenwood Springs have strongly opposed in recent years.

“To some degree, you’re going to have to ignore the cannon fodder that’s going to come from the local municipality over that issue,” he said.

When factoring in the challenges of broadband internet and the cost of transporting services, Greacen said the solution is “up, not out.” Even with zoning changes, keeping homes at an agreeable price threshold will likely also require deed restrictions, Greacen added.

While the Colorado Association of Ski Towns has been supportive of more density in development and deed restrictions to keep housing affordable, they disagree that the need is the same across every community.

“There is absolutely no one size fits all,” Bowes said. “Every resort community has a different relationship with vacation rentals.”

Because the town of Winter Park has fewer hotels than other resort communities in Colorado, it relies more on vacation rentals to support its tourism economy, for example. A city like Glenwood Springs, however, has a booming hotel scene and may be less open to more vacation rentals in order to support those lodging businesses.

Tools that have had positive community impacts in the past include short-term rental licensing fees, caps, zoning, and incentives to get homeowners to transition from short term rentals to long term rentals.

Just as important and more cost-effective than developing more housing, Bowes said, is the need to preserve local housing inventory that is affordable to locals.

“It’s all about balance. We don’t want to overregulate to the point where we are discouraging visitation, but we also want to ensure that our communities continue to be able to house their teachers, nurses, and police officers,” she said. “It doesn’t need to be all or nothing.”

Rather than considering regulations to help develop density housing within these resort communities, however, some municipal leaders have ignored the question entirely.

“That is a NIMBY-ism issue. Full stop. It doesn’t go any further than that,” Greacen said.

The Resort Alliance, along with Altitude Realtors, have worked with municipalities to discuss potential changes to zoning, short-term rental regulations and more — though a large portion of the influence will have to come from resort-town residents.

“What this ultimately shows for most elected leaders, and sometimes they ignore this, is that you don’t really have a housing problem — you have an affordable housing problem,” Greacen said. “Because, the vast majority of homes within your respective communities, particularly ski towns, were never built with the intent of being workforce housing … we don’t have giant subdivisions of homes that are meant for the local workforce.”

To read the full study, visit WMRA.online/news.