Sedona’s housing crisis worsens as short-term rentals multiply
Robin Kelley moved back to Sedona in 2018 and spent months on waiting lists before she found a home to rent.
The experience was a far cry from when she originally moved to Sedona a decade earlier, when it only took her two days to rent a furnished home.
Kelley and her dog eventually found an unfurnished home for $1,600 per month, which she says is $400 more than she would have paid for the same property three years ago.
Kelley’s story is increasingly common, which has city leaders concerned. Affordable housing has long been an issue in the city with million-dollar homes and few apartments. But city leaders say a 2-year-old state law is exacerbating the problem.
The law prohibits cities and towns from regulating short-term home rentals, allowing people to rent their homes to tourists and others via websites such as Airbnb or VRBO.
And there are plenty of visitors to the red-rock country.
Sedona attracts some 3 million visitors annually. In the high season, tourists can outnumber the city of 10,500 residents by a 3-to-1 ratio, according to City Manager Justin Clifton.
Sedona had an estimated 200 to 300 vacation rentals before the new law took effect. Today, vacation rentals have grown to more than 1,000 homes, or 20 percent of Sedona’s total housing inventory, Clifton said.
The result? In one of Arizona’s most beautiful places, many can’t find a place
to live.
The situation has Clifton concerned. “At what point are the community’s residents so outnumbered that there’s no real community left?” he wonders.
Sedona’s median home price is $555,000, among the highest in the state, according to Clifton, but only 4 percent of Sedona’s current housing is apartments, well below the national average of 20 percent.
The lack of affordable housing didn’t just happen because of the growth in vacation rentals. Sedona’s zoning made it difficult for apartments to be built in the city, until the rules were changed last year.
“The rules were still a product of the old priorities,” Clifton said, noting the area’s more rural way of life. “It’s only been just recently that we figured out that one of the ways to address the affordability issue is to allow for higher density.”
That’s what an Airbnb spokeswoman pointed out.
“Multiple factors are behind the city’s housing challenges, including a lack of development of affordablehousing units,” Airbnb spokeswoman Laura Rillos said.
She also said short-term rentals can help many families afford to stay in their Sedona homes.
Brenda Mendel is a Sedona resident who rents a room in her house on Airbnb. The extra income helps her pay the mortgage, she said.
“People expect and seem to demand cheap housing in the most beautiful place in America,” Mendel said. “These are people that have never gotten a mortgage and don’t realize the costs to pay taxes, insurance and mortgage every month.”
Investors have also gotten into the game though, swooping in to buy up four or five homes at a time, Sedona City Councilman Scott Jablow said.
Jablow said that some landlords have begun evicting long-term tenants because they can make more money on short-term vacation rentals.
The problem is where to look for a rental long term if you work in Sedona.
More than 40 percent of Sedona’s business workforce lives outside of the city. Clifton estimates it’s double that for city workers. Some suggest that’s because many of them have families or don’t want to have roommates, something that many renting in Sedona are forced to do.
The housing issue has made it hard to fill key city positions. Applicants for chief of police and assistant city attorney were unable to accept the jobs after they couldn’t find housing in the city, Clifton said.
“It’s very difficult to retain people,” he said. “If the city offered me a position at the same salary today, I don’t know that I could make it work.”
Sedona has a turnover rate of 20 percent among city employees, well above the average of 5 percent, Clifton said.
Other residents say that renters looking for affordable housing should look outside the city, to communities such as Cottonwood, Cornville or Jerome.
But Clifton said that as housing prices increase in Sedona, so do prices in neighboring communities.
The rise in short-term rentals has also created competition for boutique hotels and bed and breakfasts that have long been staples of the tourist town.
Steve Segner, owner of the boutique hotel El Portal in Sedona, said the increase in short-term rentals has increased traffic, noise and competition in the city.
“I’m inspected by the health and fire department, yet somebody can go right around the corner from my hotel, buy a five-bedroom house and be open tomorrow,” Segner said.
Segner said occupancy has been a little flat since the new law took effect, but he’s managed to combat the problem by increasing room rates.
However, he’s still concerned about housing for his employees, who have an increasingly difficult time finding housing in the city.
With few long-term rentals left in town, hotel owners are going into neighboring towns such as Cottonwood to rent apartments as corporate units so that they have a space for employees, Segner said.
Ann Perkins, a concierge at El Portal, rents three properties exclusively to Sedona employees because of the shortage.
“I get that a lot of people want to stay here but a lot of people also have to work here and take care of those visitors,” Perkins said. “I want to know who my neighbors are.”
Jablow, the councilman, is concerned there is little oversight of shortterm rental companies when tourists stay in homes and don’t know the surrounding area.
He mentioned a situation at a vacation rental on his own street where renters were smoking on the deck and caught the home on fire.
“You have people coming and going and they don’t know what they’re walking into,” Jablow said. “Is it safe?”
Airbnb says they partner with local government authorities and relief organizations to email hosts and guests about potential disasters, as well as providing a tool for neighbors to share concerns about listings in their communities.
“We want to do everything we can to help our community members be good neighbors in the places they too call home,” Rillos said.
One thing seems clear: Any fix will be up to the state.
Before the law was passed, Sedona prohibited all residential rentals of fewer than 30 days in the city. After the new state law was passed, the city amended its ordinance to require that all shortterm rentals pay $50 for a city business license. The Arizona Attorney General’s Office determined the move violated state law.
Republican state Rep. John Kavanagh, who represents Scottsdale and Fountain Hills, has drafted House Bill 2087 to address some of the issues created by the original short-term rental bill.
The bill proposes banning party and special-event rentals, where houses are rented out and occupied by 20-30 people at a time.
Kavanagh is also exploring how to ease concerns about investor-owned, short-term rentals.
Jablow said Sedona does not have the problem with party houses that Scottsdale and Paradise Valley are experiencing, but said that cities should have local control over rentals to decide what’s best for them.
“They seem to think they know what’s best for us,” Jablow said. “How could they possibly?”
Less than 2 percent of Sedona residents were born and raised in the city, according to Clifton.
The issue of housing has only compounded an existing problem of getting people to continue living in the tourist town.
Where residents used to pay $800 to $900 a month for rent in the city, they’re now paying $1,800 to $1,900 a month, according to Jablow.
“How are people supposed to afford that?” Jablow said. “They can’t, so they’re leaving the region.”
The city closed one of its two elementary schools last year after a slow decline in enrollment over the last decade, according to Jennifer Chilton, director of operational services for the SedonaOak Creek Unified School District.
Enrollment in the district dropped from 1,300 studentsin 2009 to 766 students today.
Clifton calls it a “downward spiral” of families fleeing for more affordable areas. “Point out to me a vibrant community that has no school.”
Still, the question of how to make Sedona sustainable beyond tourism has some officials worried.
“When you walk down the street and you’re not seeing neighbors who you can establish some kind of relationship and a sense of place, that’s a real threat,” Clifton said. “It comes across as kind of a fluffy idea, until you’re living it.”