A unanimous Arizona Court of Appeals ruling this fall sent a blunt message to city halls: When it comes to short-term rentals, local control has hard limits in this state.
The decision arrives as cities across Arizona, grappling with rising housing costs and shrinking inventory, have pushed to regulate where, when, and how many homes can be turned into Airbnbs, VRBOs, and the like. But a 2017 state law sharply limits their authority, barring cities from restricting or banning short-term rentals altogether.
That law, though, is a relic of a different era for the state. Since the 2020 Census, Arizona’s population has grown by 6%, ranking fifth in the nation for numeric growth, according to the Arizona Office of Economic Opportunity. And like many places that saw a pandemic-era influx of new residents, State 48 now faces a deepening housing crunch.
Critics and some city officials argue that short-term rentals may be compounding the problem. While they generate tourism dollars and tax revenue, they also pull homes off the long-term market, tightening supply at a time when demand is surging.
Now, as pressure mounts in fast-growing cities and resort towns alike, local leaders are calling for the power to rein in short-term rentals. But so far, they’re hitting the same legal wall.
The housing crunch
Arizona’s housing supply has lagged behind its population growth. The state earned a lackluster “C” in a recent nationwide report card on housing affordability, state Department of Housing estimates estimate the housing shortage at roughly 270,000 units.
That imbalance is most visible across Arizona’s most sought-after areas. Since 2019, the college and ski town of Flagstaff has seen median home prices jump nearly 62%, according to data from Realtor.com®. Sedona, a resort town and top tourism destination, has seen a 49.5% increase. The major metros of Tucson and Phoenix aren’t far behind, with gains of 45.3% and 42.2%, respectively.
That’s why, in November, the Pima County Board of Supervisors—which oversees the Tucson metro—formally requested the power to regulate short-term rentals within its jurisdiction.
Supervisor Jennifer Allen, who represents Tucson’s District 3, noted that the city has at least 6,000 short-term rentals, 90% of which are single-family homes.
Allen was not immediately available for comment, but she told KOLD in November, “That’s why the county and the local governments being able to take back some of the regulatory freedom to be able to determine where and when short-term rentals may or may not make sense is so incredibly important.”
Yet, just weeks later, the state Court of Appeals delivered their unanimous ruling rejecting Sedona’s attempt to prevent a mobile home park from converting some of its units into short-term rentals. The city had argued that local zoning rules should block such conversions. The court disagreed.
Their ruling reinforced the grip of SB 1350, the 2017 law that bars jurisdictions from banning or broadly limiting short-term rentals. And for residents of that Sedona mobile home park, it raised the specter of being displaced in favor of nightly guests.
“Nothing in the legislative history of SB 1350 indicated that the Legislature intended to allow the wholesale eviction of residents through conversion of mobile home parks into de facto hotels,” Lauren Brown, Sedona’s communications director, told The Arizona Daily Star. “Such conversions bypass local zoning processes and are disastrous for the availability of affordable long-term housing for Arizona’s most vulnerable residents.”
It’s not just a Sedona issue, either. Across the country, mobile home park residents face rising risks of eviction when parks are purchased by investors. In Florida, eviction filings jump by 40% in the months following a park sale, according to data from Princeton’s Eviction Lab.
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