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Vacation rentals: Explosive growth brings jobs, money, but some say it contributes to housing shortage

Out-of-town vacationers in Asheville for a wedding said they were among 24 guests staying in two rental houses on Upstream Way. Out-of-town vacationers in Asheville for a wedding said they were among 24 guests staying in two rental houses on Upstream Way. Watchdog photo by Starr Sariego

In a neighborhood along Asheville’s French Broad River and abutting a residential street that includes young families, Upstream Way stands out. It’s not just because most of the homeowners live out of town but also because, neighbors say, it turns into a fraternity house-like party scene on some weekends.

At least half of the houses are vacation rentals, with four accommodating parties of “16+,” including a “Bachelorette Oasis” and a “Bachelor Sanctuary.”

The homes are part of a booming vacation rental industry in Buncombe County that has more than tripled in the past six years. At the same time, long-term rents in the county have soared 65%, and service workers are complaining they’re being priced out of the area.

Industry advocates say large party houses are not the norm, and vacation rentals have significantly supplemented incomes for property owners, supported tourism-related jobs and given visitors diverse options for places to stay.

But many observers believe vacation rentals, which now number more than 5,000 in Buncombe, are causing or at least contributing to the area’s housing shortage and affordability crisis.

Asheville Watchdog interviewed neighbors about the impact on their quality of life and academics and economists about what short-term rentals do to the housing market.

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The Buncombe County Tourism Development Authority and advocates of vacation rentals point to a 2021 study commissioned by the local realtors association that found “no correlation between the rise of STRs [short-term rentals] and local housing prices or housing availability in Buncombe County.” 

Ken Johnson, associate dean of graduate programs at Florida Atlantic University’s College of Business in Boca Raton, reviewed the study at The Watchdog’s request.

“You’ve had a really big run-up in both home prices and rents in the last two to three years,” he said. “And while short-term rentals are not the singular cause of this, they are definitely a contributing cause, in my opinion.”

Other experts said housing supply and particularly whether a community’s new construction has kept pace with population growth are more of a factor in housing costs and availability.

“Nationally at least, short-term housing rentals are not a leading driver of high housing costs or the undersupply of housing,” said Owen Minott, senior policy analyst at the Bipartisan Policy Center in Washington, D.C., a nonprofit that studies solutions to affordable housing shortages. “We can’t lose sight of the source of the problem, which is really that we are just simply not building enough homes and especially affordable homes.”

Vacation rentals ‘exploded’

Western North Carolinians have hosted tourists, including in their homes, since “the discovery of hot springs and the medicinal value of them in the 1800s,” said Steve Frellick, founder of Yonder Luxury Vacation Rentals in Asheville.

By the 1990s, vacation rentals had become a business, Frellick said. By 2014, Airbnb had begun listing properties for rent in Buncombe, and the industry soon took off.

In January 2017, vacation rentals in Buncombe numbered 1,555, according to AirDNA, a Denver-based company that provides data and analytics on short-term rentals. By May 2023, that number had burgeoned to 5,466.

(The Asheville Citizen Times incorrectly reported 10,187 vacation rentals in Buncombe in two recent stories. The newspaper changed the stories last week to reflect the correct number.)

Buncombe’s short-term rental industry, “for lack of a better way to put it, exploded,” Frellick said. “I’m not going to pretend that doesn’t raise concerns. It does.”

Complaints of day drinking, boisterous parties

Neighbors of Beaver Cabin, a vacation rental in Weaverville marketed as a private mountain getaway accommodating up to 16 people, say their “quiet rural community” has morphed into “a state of noise and disturbance.”

“The echoing sounds of parties, music, people and boisterous activities have disrupted the peace we once enjoyed,” said a statement texted to Asheville Watchdog that the sender said represented the views of six neighbors. The neighbors asked not to be identified out of concern for instigating confrontations with the property owners.

Arcadian Avenue, the company that owns the cabin and markets three other large vacation rentals in the Asheville area, is a “small group of individuals that have great respect for our neighborhood,” said Julia Sawyer, hospitality manager.

She said the company has not received any complaints directly, but a “disturbed neighbor has reported us to the county and to Airbnb — with both, we have confirmed we are following all of the guidelines.” The cabin attracts mostly families and is not a “party house,” and guests must sign an agreement that includes being respectful of neighbors, Sawyer said.

On Upstream Way, in East West Asheville near Carrier Park, cars with out-of-state license plates are a common sight in the driveways of tall, modern homes built in the last seven years by local developer Jay Fiano.

Eight of the 16 houses are listed on vacation rental websites, including four owned by Fiano’s company. His “Upstream Bachelorette Oasis” accommodates 24 guests, and the “Bachelor Sanctuary,” 21 people, and all four of Fiano’s rentals have hot tubs, according to Upstream Way Luxury Vacation Homes. Prices vary by date but ranged from $822 to $1,095 a night, according to a search for a weekend accommodation in August.

A 2022 review on the site, by a guest who said he was among “about 15 guys” attending a bachelor weekend, said, “The outdoor spaces were fun, and it is on a street with other similar homes hosting large parties so no one was bothered by any noises we may have created.”

But residents of Joyner Avenue, whose homes back up to the rentals, say they hear plenty. Three spoke to The Watchdog on condition their names not be used out of concern about relations with the property owners.

“What was a lovely, peaceful place, now there’s a hot tub in my backyard with revolving people like loud men with stinky cigars talking about women’s breasts,” said a neighbor whose house is behind three rentals owned by people living in Florida, Texas, and Georgia. “Projectile vomiting bachelorettes off the back porch, that was another night.”

A homeowner adjacent to Fiano’s rentals described “noisy day-drinking all day long” and a fraternity house atmosphere. “It’s not that I moved into the bar district; the bar district moved into my neighborhood,” the homeowner said.

The city has received five noise complaints about properties on Upstream, including three on Fiano’s properties, city officials said.

Fiano told the Watchdog via text, “All vacation rental owners need to have a close working relationship with the noise ordinance folks at the City. I try very hard.”

He said he’s filling a niche in Asheville’s tourism-driven economy.

“There are some groups, say 12, 14, 16 people are coming here for who knows, a wedding, or it’s a mountain biking club, or what have you,” Fiano said in an interview. “Those folks aren’t looking for eight hotel rooms on the same hallway side by side by side.

“There is a huge category of people that will just go to Nashville if they can’t find an Airbnb here, or they’ll go to Charleston… That hospitality side of our economy, it prospers from having a few houses available for those types of travelers. It would be like if we didn’t have any campgrounds. . . we’re not gonna get very many campers.”

Promoting benefits: ‘It’s been a huge blessing’

Frellick, whose company manages more than 200 vacation rentals and is an owner himself, said many vacation rental owners are local.

“We live here,” he said. “I don’t want to hurt Asheville or Western North Carolina. On the contrary, I want to cultivate the community that we have and be a positive member.”

Steve and Donna Frellick got into vacation rentals in 2008, and their company now manages more than 200 properties in Western North Carolina. // Credit: Yonder Luxury Vacation Rentals

Frellick acknowledged vacation rentals get a bad rap and said he regularly encounters complaints in meetings with residents and even elected officials: “ ‘Vacation rentals are just party homes, Airbnbs bring riffraff to your neighborhood. . .If you start allowing them all of a sudden, your town has no integrity and it’s just all these tourists running around.’ 

“None of that is real,” Frellick said.

Vacation rental property managers and the local realtors association last year formed an alliance, the STR Trust, to advocate for owners and project a more positive public image. The group produced videos featuring people who benefit from vacation rentals, including a woman who cleans houses, and property owners Jody Welker and Kevin Morgan.

Welker, a retired Presbyterian minister, told Asheville Watchdog that renting out his 2,400-square-foot home in Black Mountain for more than 20 years helped him and his wife retire and move into the home. The roughly $11,000 to $14,000 the couple netted each year helped pay their mortgage, he said.

“The short-term rental market is a boon to the economy, and I hope people realize that,” Welker said.

Morgan inherited his grandfather’s home just outside the Asheville city limits, renovated the property and began renting it short-term in 2019, two years before he got laid off from his job as a machine shop supervisor, he told Asheville Watchdog.

“The rental property was what I had to fall back on,” Morgan said. “It’s been a huge blessing for us.”

Rentals bring jobs, money for owners

Vacation rentals have become big business in Buncombe, surpassing hotels in growth since the pandemic, according to the TDA.

The 2021 economic study commissioned by the realtor’s association found that vacation rentals in Buncombe supported 7,500 permanent tourism-related jobs and accounted for 20% of the total impact of travel to the region.

The windfall to property owners, both local and out-of-state, is significant. Top earners of vacation rentals in the Asheville market over the past year took in $25,000 to over $112,000, depending on the size of the home, according to Evolve, a vacation rental marketing and property management company.

Rents soar. Are STRs to blame?

As vacation rentals have proliferated, Buncombe’s housing costs have increased dramatically. Whether those trends are connected is a hotly contested debate locally. The Watchdog posed the question to national experts.

Rents in Buncombe have increased 50% since January 2017, compared to 32% nationally, according to Apartment List. Factoring in all types of long-term rentals, including homes, condos, and apartments, Buncombe’s rent increase was even higher – 65%, according to the Zillow Observed Rent Index (ZORI).

Other places that also experienced population growth, such as Minneapolis, Portland, Oregon, and White Plains, N.Y., had little to no rent increases, said Alex Horowitz, project director of the Housing Policy Initiative at the Pew Charitable Trusts.

Those cities “made it easier to build housing, especially apartments in commercial areas, downtown areas, walkable areas, and the increase in housing production held down rent growth,” Horowitz said.

“Some places reduced parking requirements, and that made it easier to build apartments. Some places made it easier to build, like two, three and four homes on some lots instead of one,” he said. “All of them primarily added apartments during that time period.”

Research, Horowitz said, “just doesn’t suggest that short-term rentals are a major source of rent spikes. The housing shortage is the primary culprit.”

The impact of vacation rentals is “smaller than many people fear because the short-term rental market generally remains small relative to the rental market,” said Ingrid Gould Ellen, director of the Furman Center for Real Estate and Urban Policy at New York University’s Robert F. Wagner Graduate School of Public Service. “The more fundamental driver of affordability challenges is the shortfall in housing supply.”

Minott of the Bipartisan Policy Center said a housing shortage “is especially a problem in many tourist destinations that haven’t built enough housing to sustain affordability for their workers.”

He said he could not say with certainty that vacation rentals were “not having any impact on housing affordability,” but added, “it’s not the source of the problem, which is the shortage of housing in general, especially long-term.”

Johnson of Florida Atlantic University said vacation rentals can reduce the availability of long-term rentals.  

“They subtract away from the number of units that people could live in,” he said. “You can’t be taking units out and going, ‘Oh, it really doesn’t matter.’ It does matter. . . It’s taking out supply so it’s helping to push up the price of housing.”

The population of Buncombe County grew by 15% since 2010, an increase of about 35,000 people, while the number of new housing units increased by a little more than 21,000, according to U.S. Census Bureau data.

Residential building permits in the county decreased by 25% compared to the previous decade, despite similar growth, according to the study commissioned by the realtors. “This underbuilding of housing has contributed to significant property and rent appreciation over the past 10 years,” the study said.

Buncombe is projected to grow even faster in the coming decades, adding 54,961 to 83,435 residents by 2045, estimates show.

“Like so many metros in the Sunbelt states where people are moving in rapid numbers, they can’t build fast enough,” Johnson said. “You’re going to have a period of pretty significant unaffordable housing, and it’s not going to go away overnight.”

Eventually, Johnson said, prices will level off if new construction catches up with the demand. Or, he said, if an economic downturn decreases travel, more vacation homes will be converted to rentals or sold.

“I still believe we’re going to go into a pretty significant recession,” Johnson said. “When the economy hits the slide, you’re going to get just a shock of supply rather quickly and that will help either flatten or even maybe bring prices down a little bit.”

‘Soft’ market could be turning point

Indications are Buncombe’s supply of vacation rentals may already be at saturation point.

Revenue from vacation rentals was down 13% in April over the same month last year, and down 11% in March, according to the TDA.

“I have heard from multiple [vacation rental owners] that ‘I’m not getting as many stays or having to reduce what I charge,’” said Matt Allen, director of professional development and government affairs at Land of the Sky Association of Realtors.

Chip Craig, owner of GreyBeard Realty based in Black Mountain, said the short-term rental market is “really soft just because of the increase of supply.

“We’re seeing people getting out of short-term rentals and moving into long terms just because the occupancy has been so low.” 

Buncombe’s era of explosive growth in vacation rentals may be coming to an end.

(AVL Watchdog is a nonprofit news team producing stories that matter to Asheville and Buncombe County. Sally Kestin is a Pulitzer Prize-winning investigative reporter. Contact her at This email address is being protected from spambots. You need JavaScript enabled to view it..) 

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