GrowSmart Maine panel tackles pros and cons of short-term rentals
File photo / Airbnb
Maine is part of a national trend in short-term rental activity: The market is seeing the most growth in small cities and rural locations, while urban locations are seeing the slowest growth, according to a U.S. market review from AirDNA.
Short-term rentals might not be the bogeyman some see them as, but they do create challenges.
There has been a significant boom in demand for short-term rentals like Airbnb across Maine, and many communities are trying to strike a balance: For landlords, short-term rentals mean extra income, but others say they’re making it difficult for year-round residents and seasonal employees to find affordable housing.
“There are more short-term rentals than there are long-term. Probably 50-to-1, if I had to guess,” Michael Roy said of Greenville, where he’s town manager.
Roy was a panelist during a recent virtual forum called “Short-Term Rentals — Boon, Bane or Both?” and hosted by Augusta-based GrowSmart Maine.
The Piscataquis County town of Greenville — with a population 1,437 and location on the lower end of Moosehead Lake — is a gateway to the North Woods and a center for outdoor recreation in the area.
Roy said the proliferation of short-term rentals has cut into affordable housing stock. So some local employers are buying houses to provide housing for employees.
But there’s a flip side, he continued: As Greenville increasingly becomes a destination, short-term rentals fill the need for tourist lodging when local inns and hotels are full.
“For a person working in a restaurant or the local grocery store, the affordable housing is not there,” said Roy. “We need to find that balance of long-term housing and short-term housing again. It’s unfortunate. We want people to come here and raise their families. But the real estate has gone through the roof.”
Unorganized territories
Maine’s boom is part of a national trend in short-term rental activity: The market is seeing the most growth in small cities and rural locations, while urban locations are seeing the slowest growth, according to a U.S. market review from AirDNA.
Tim Carr, a senior planner with the Land Use Planning Commission, said that, in the past 15 to 25 years, camps and cabins in Maine’s unorganized territories have been winterized to allow for multi-season use as short-term rentals.
An unorganized territory is any territory that does not have a locally elected municipal government. The territories are primarily located in Maine’s heavily forested areas. The commission serves as the areas’ planning and zoning authority.
Last summer, the commission held four community meetings to gather information about short-term rentals in its service area, to understand benefits and challenges associated with the market. The meetings were in the Millinocket, Moosehead and Rangeley regions, plus a virtual meeting.
The meetings were prompted by an increase in short-term rental activity and related problems that included an increasing number of nuisance complaints, concerns about exceeding septic capacity and impacting water quality, and concerns about affordable housing.
In Q4 of 2021, the unorganized territories had 569 active short-term rental listings; 52% were in the Rangeley, Moosehead and Millinocket regions.
Short-term rentals have grown in popularity in the commission's service area, according to meeting materials.
But the extent of the increase is unclear, Carr said. Based on AirDNA analytics, a compilation of Airbnb and Vrbo data, there appears to be some heterogeneity across the market, with some increases in some areas and some of those increases being minimal, some listings remaining steady, and some decreases.
But there are a couple of trends, he said. Moosehead, Rangeley and Millinocket are seeing the most short-term rental activity in the territories. And the places the commission tends to receive most complaints from are more densely developed subdivisions in those particular areas.
Coastal towns
Noel Musson, who leads the Southwest Harbor planning consultancy the Musson Group, said his team is working with many coastal and tourism communities that, like Greenville, are trying to strike a balance between the historical use of short-term rentals, a gap the rentals fill in the lodging market, and their implications for year-round communities.
Added to that, said Musson, Mount Desert Island communities are looking at whether and how the market is contributing to a lack of year-round and seasonal employee housing, as homes are converted for short-term rentals.
“Those are things we’re starting to think about,” Musson said. “There’s some social divisiveness we have to think about as well — the for-and-against type of conversations.”
Southwest Harbor, with a population of less than 2,000 and a downtown of just a few blocks, was No. 10 among 265 “best” U.S. markets for short-term rental investment for 2021. Southwest Harbor had the highest occupancy rate of the top 25, at 76%; average annual revenue in the STR market was $73,000.
In 2023, an analysis of Bar Harbor’s housing found the town would need 616 new year-round dwelling units by 2033 in order to offset the effect of stock turned into short-term rental units. Over the years, the town registered 637 short-term rentals, which otherwise could have been used for year-round housing for area workers and students, the analysis found.
In recent years, the city of Portland, which had 700 short-term rentals as of 2022, capped the number of non-owner-occupied mainland units at 400. South Portland banned non-hosted short-term rentals in residential districts.
Pros, cons
Panelists agreed the short-term rental market has benefits. Roy said people who are introduced to his area as short-term renters sometimes stay and become part of the community, thus spurring economic vitality.
Comments gathered by the LUPC cited positive economic effects such as additional income for the owner, job creation, lodging taxes, increased business for local vendors and restaurants, addressing a shortage of beds available through more formal lodging facilities like hotels, and being more accommodating for families than hotels, motels and inns.
A 2019 survey found that 51% of Maine’s Airbnb hosts said the arrangement has helped them afford their homes, with hosts keeping 97% of what they charge.
Among the challenges, panelists and comments gathered by the LUPC said loss of community and neighborhood character, impact on the availability of long-term housing, fire safety, drinking water safety, and guest safety in general, impacts on roads and trails due to an increase in vehicular traffic, including ATVs and snowmobiles, and an increase in solid waste handling and disposal costs.
Regulation
The commission is studying potential regulatory options. That could include implementing minimal standards for short-term rentals, the use of notifications to communicate standards to property owners, and providing best practice information to landlords, renters and neighbors, in the form of guidance materials accompanying the notice form.
The commission is developing educational and guidance materials, with a web page, to consider at its February meeting.
“We decided to take a notification approach at this point rather than a permitting approach,” said Carr.
Musson said that, as communities think about managing the STR market, it’s important to recognize that the topic is emotional for people on all sides of the conversation.
“In some cases, you’re talking about people’s livelihoods,” Musson said. “In other cases, you’re talking about people who really want to be there.”
Musson cautioned that regulating the market in one community has the potential to push the challenges to other towns. A statewide approach to regulation would be useful, he said.
Roy said the town of Greenville is working with the Moosehead Lake Region Economic Development Corp., and has secured an infrastructure grant, to eventually develop housing units that would be a combination of rental and home ownership. A goal is to restrict those by deed so they cannot be short-term rentals, he said.
“This would be for attainable housing for workers in the Moosehead Lake region, not just Greenville,” Roy said. “It’s a step in the right direction, we think.”
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