Arizona’s 57,000 Short-Term Rentals Aren’t Actually Killing Housing Supply—but This Is

Short-term rentals have become an easy villain in Arizona’s housing crisis—accused of pulling scarce homes off the market, inflating prices, and turning once-quiet neighborhoods into revolving doors for tourists. But a new analysis suggests the state’s affordability problem runs much deeper than platforms like Airbnb.

The report from the Common Sense Institute, released last week, found that many of Arizona’s short-term rentals (STRs) may never have been part of the full-time housing market to begin with.

Since 2010, Arizona added about 57,000 STR listings while losing roughly 55,000 vacation homes—a near 1-for-1 shift that suggests many Airbnb-style properties were converted from homes that were already sitting empty for part of the year.

That doesn’t mean STRs are harmless or that the backlash against them is misplaced. But if Arizona is looking for the force that did the most lasting damage to affordability statewide, the report points somewhere else: the collapse in homebuilding after the Great Recession.

Long before the COVID-19 pandemic sent prices soaring, the state had already spent years digging itself into a supply hole it never fully climbed out of.

Arizona’s housing shortage runs deeper than Airbnb

To understand Arizona’s housing crunch, you have to go back to the wreckage of the Great Recession.

Few states were hit harder: Phoenix home values fell 56% on average, the third-steepest drop in the country, and more than 116,000 homes in the state went through foreclosure in 2008 alone. For perspective, there were 367,000 foreclosure filings nationwide in all of 2025.

That shock also broke the state’s new-construction pipeline.

In the five years before the crash (2003 to 2007), Arizona permitted and built roughly 400,000 housing units, CSI found. Over the next decade, that figure fell to about 211,000. Even today, the state earned a tepid C on the State-by-State Affordability Report Card from Realtor.com®, which looks at how well new construction is pacing with demand.

The problem is that the lag didn't immediately look like a crisis. In the 2010s, price growth was relatively modest throughout the state, as many households delayed moving out, moving up, or buying for the first time.

Underneath, though, the gap was widening. From 2000 to 2009, Arizona’s housing stock grew by nearly 33%—much faster than its 24% population growth. In the decade that followed, that relationship flipped: The population grew 13% while housing stock grew just under 11%, according to the report.

Then the pandemic hit and stripped away the illusion that the market was holding together.

Arizona once again became an epicenter of a nationwide trend, ranking seventh among the top states people moved to during the pandemic.

Armed now with low mortgage rates, remote work flexibility, and federal stimulus money, a flood of new buyers collided with a shortage of inventory—and from 2019 to 2022, Arizona home prices jumped more than 64%.

The state's STR boom took hold where housing was already costly

Interestingly, Airbnb arrived at almost the exact moment Arizona's housing market was coming apart.

The platform launched in 2008, as the crash was unfolding, and the state's short-term rental market grew far more quickly in the years that followed.

As those listings spread, so did the backlash. In some tourist destinations like Sedona, Scottsdale, and Pima County, STRs have become a flashpoint, as locals saw them as threats to housing supply and neighborhood character.

Some of these cities even went so far as proposing ordinances to rein in the growth of STRs, but to little avail thanks to SB 1350, a 2017 law that bars jurisdictions from banning or broadly limiting short-term rentals.

If that sounds absurd, it's because of how much times have changed.

“When this legislation was passed, it was billed as a way for homeowners to make extra income by renting out a room in their house or a ‘casita’ that they had on their property,” Debbie Lesko, former Arizona state senator, U.S. congresswoman, current Maricopa County supervisor, and original sponsor of the bill, told Realtor.com in December.

“On the one hand, short-term rentals have indeed given homeowners a way to make extra income on their private property and given travelers a nice alternative to staying in hotels or motels, but I am concerned that investors are turning homes into moneymakers and changing neighborhoods,” she added.

She speaks to exactly the kind of framing that has made STRs such an easy target in the state's affordability debate: The perception that they are cash cows for outsiders while also operating in a heavily protected environment.

Except that the CSI analysis complicates this framing. Between 2015 and 2019, home prices rose 42% statewide in Arizona. In the ZIP codes with the highest concentration of Airbnb listings, they rose 37%. 

Those areas were hardly bargains to begin with. By 2015, the ZIP codes that now rank in the top tier for Airbnb density already had average home prices 21% above the statewide average.

Tourism is also an essential part of the state's economy. In 2023 alone, nearly 46 million people visited Arizona, generating $4.2 billion in tax revenue across the state and supporting more than 187,000 jobs, according to the Arizona Office of Tourism.

That said, STR backlash isn't totally off-base. In many communities, the anger is about more than price—spilling over to noise complaints and public nuisances. But it does change the nature of the case against them.

If a large share of Arizona’s short-term rentals were once second homes or vacation properties, then cracking down on STRs may not return as much full-time housing to the market as frustrated buyers might hope.