It’s summertime in Massachusetts, and on Cape Cod, that means bracing for beach-loving tourists, part-time residents, sharks, and the effects of a burgeoning housing crisis. While the state’s most well-known vacation destination has no trouble attracting the country’s rich and famous, it’s struggling to keep year-round residents and seasonal workers because housing costs have soared: The median home price in 2010, for example, was just under $380,000; by 2022, it was over $670,000 — a nearly 80 percent increase, easily outpacing inflation. That’s bad news for locals, business owners, and the entire regional economy.
Like the rest of the state, the dramatic surge in housing prices on the Cape has been the result of a variety of factors, including a lack of supply and a fierce resistance to development. But there’s one additional culprit on the Cape: the proliferation of short-term rentals and the rise of companies like Airbnb.
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One of the fears that housing advocates had in the early days of Airbnb was that its business model would give investors an incentive to snatch up available homes on the market, thus bidding up prices and reducing the already lackluster housing supply for long-term residents. And while evidence suggests that may indeed be happening, it remains unclear just how much of an impact it’s having on housing affordability in major cities. But in a vacation destination like Cape Cod — the kind of place where the population significantly swells in the summer — it’s almost impossible to ignore how many homes have become unavailable to year-round residents because they’ve been converted to short-term rentals. (In an extra kick in the teeth for residents, many of those homes, as Beth Teitell reported in the Globe this week, are often empty.)
This isn’t a new phenomenon for the Cape, which has long had its fair share of part-time residents who rent out their second homes while they’re gone. But companies like Airbnb and Vrbo have made investment in seasonal properties more appealing, all while housing development has slowed. In fact, the average annual number of building permits issued on the Cape is around 1,600 units, about 800 fewer than before the year 2000, according to a study commissioned by the Housing Assistance Corporation of Cape Cod.
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That’s why lawmakers, be they town meeting members in communities across the Cape or legislators on Beacon Hill, have to consider ways to better regulate short-term rentals so that they are less disruptive to the housing market. And they also need to encourage more development, especially of multifamily housing that serves the needs of local residents and lower-wage workers. The crisis isn’t abstract. According to that study, Cape Cod is projected to lose nearly 1,000 households that earn less than $100,000 each year between now and 2026, in no small part because housing has become so unaffordable.
The housing crisis is already being felt by businesses, not just because of a lack of customers but because of a shortage of workers, who can’t find affordable housing. “It’s just not a good business proposition to be building us out as a vacation destination and then not have housing for the workers,” Alisa Magnotta, the CEO of the Housing Assistance Corporation, told the editorial board.
With tourism being the driving force behind Cape Cod’s economy, lawmakers must find a delicate balance between ensuring there are indeed enough places for lodging while also limiting the growth of short-term rental units in order to prevent them from inflating housing costs. That’s why a good place to start would be targeting big management companies that buy a bunch of homes for short-term rentals — operating much like a hotel would while not being subject to the same regulations.
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The Legislature already took one positive step when it passed a law in 2018 that extended existing hotel taxes to short-term rentals and levied an additional excise tax on them. The revenue goes to a fund that would improve the Cape’s wastewater infrastructure — a problem that hinders housing development and endangers the coastal ecosystem. But that hasn’t necessarily hindered the expansion of seasonally occupied homes, which became even more popular after the COVID-19 crisis. “What the pandemic did is put [this problem] on steroids,” state Senator Julian Cyr, who spearheaded the 2018 law, told the editorial board. “We have effectively priced out most year-round working people from being able to afford housing in the region.”
That’s why lawmakers can go further and incrementally raise taxes for every additional property that an owner rents out on a short-term basis, specifically targeting big investors rather than owners looking to rent out their first or second home for an extra income to pay off their mortgage. Provincetown passed a version of that policy last year, when it added an extra 3 percent fee on short-term rentals that are considered “professionally managed.”
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Of course, limiting Airbnb’s footprint on Cape Cod will not on its own solve the housing crisis. The underlying problem is still a lack of housing supply. More than 80 percent of the Cape’s housing stock is made up of single-family homes. Still, nearly 40 percent of that stock is only seasonally occupied, and unless short-term rentals are curbed, the supply problem for year-round residents or seasonal workers looking for affordable rents will only get worse.
Editorials represent the views of the Boston Globe Editorial Board. Follow us on Twitter at @GlobeOpinion.
