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

Why It Matters

The findings shift policy focus from penalizing STRs to addressing the deeper supply deficit caused by stalled homebuilding, a key lever for improving affordability in Arizona’s tight market.

Key Takeaways

• Arizona added 57,000 STRs while losing 55,000 vacation homes since 2010
• New construction fell from 400k units (2003‑07) to 211k (2010‑20)
• Homebuilding collapse, not STRs, drove Arizona’s long‑term affordability crisis
• Prices rose 64% (2019‑22) as inventory lagged behind population growth
• Tourism generated $4.2 B tax revenue and 187k jobs in 2023

Pulse Analysis

The roots of Arizona’s housing crunch trace back to the 2008 financial shock, which wiped out more than half of Phoenix’s home values and triggered over 116,000 foreclosures in a single year. The fallout crippled the state’s construction pipeline; permits and completions dropped dramatically, leaving a supply gap that widened as the population continued to grow. Over the decade following the recession, new‑home output fell by nearly half, eroding the buffer that could have absorbed future demand spikes.

When Airbnb entered the market in 2008, many of the listings that appeared were conversions of existing vacation properties that already sat idle for part of the year. The Common Sense Institute’s analysis shows a near‑one‑for‑one swap: 57,000 STRs added versus 55,000 vacation homes lost. Moreover, ZIP codes with the highest Airbnb density were already 21% above the state’s average home price in 2015, and price growth there lagged the statewide 42% rise. These data suggest that while STRs add noise to the affordability debate, they have not substantially drained the pool of primary residences.

Policy debates have focused on tightening STR regulations, yet state law SB 1350 limits local authority to ban or heavily restrict them. Rather than targeting STRs, officials should prioritize reviving the stalled construction sector—streamlining permitting, incentivizing affordable‑unit development, and leveraging the tourism boom, which generated $4.2 billion in tax revenue and supported 187,000 jobs in 2023. A balanced approach that restores supply while managing STR impacts offers the most realistic path to easing Arizona’s housing crisis.