SEDONA, AZ — Sedona has declared a housing shortage emergency and a resolution passed by the City Council says the problem is getting worse because of short-term rentals (STRs).
Sedona is one of several cities and towns where residents tell ABC15 they have concerns about these properties, after a 2016 state law prohibited local regulation, except in special circumstances, like safety or health code violations.
ABC15 is listening, and looking closer at the situation in Sedona, where city data shows just under 1 in 5 homes are used for short-term rentals. Some residents tell us that not only hurts their sense of community but is also pricing workers and families out.
“There's no neighbors, there's no activity. It's all just empty houses waiting for the next, you know, group of tourists to come in,” Ann Kelley, a Sedona homeowner, said while driving around one neighborhood speckled with short-term rental properties.
When Kelley bought her home, she says it was located in a residential zone that prohibited homeowners from renting out their property for fewer than 30 days.
“Now I live in a timeshare,” Kelley said.
The situation changed after 2016 when Arizona became one of a handful of states to pass a law that prohibits cities and towns from regulating STRs. Senate Bill 1350 made it illegal for Arizona towns, cities, or counties to prohibit property owners from using their residential properties as short-term rentals. It went into effect in 2017.
“Every house around us that's gone on the market has become a short-term rental,” Kelley said. “That home is a short-term rental. That home is a short-term rental.”
In 2024, 16% of Sedona’s entire housing stock was STRs. That jumped another 2% in one year, with vacation rentals now accounting for 18% of the housing stock.
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The city tracked that data through permits, which also shows that 66% of STR owners do not live in Sedona.
The rentals cater to some of Sedona’s three million tourists who visit the picturesque city of under 10,000 people each year.
Kelley says, through her efforts with the neighborhood group Sedona Residents Unite, she manually counted permits on popular streets; in some neighborhoods, the STR numbers even approach 40%.
“I believe in property rights. What about my property rights?” Kelley said. “You're worrying about the 20% and ignoring the 80%. I have the right to live in a neighborhood with friends and community, and you've taken that away.”
The uptick in STR permits prompted the City Council to pass a resolution last month declaring “a housing shortage emergency exacerbated by short-term rentals.”
“We're making it known to the state, our state representatives, that we have an issue,” Mayor Scott Jablow said.
Mayor Jablow points out the city already has 3,000 hotel rooms, with more hotels in development. He wants the 1,200 STRs on top of that to eventually go back into the housing stock.
“First of all, what we need is a cap. Personally, my own thought is a 5% cap,” Mayor Jablow said. “Give us the same tools that other states across the country have.”
The mayor says STR owners can rest assured they would not need to sell or alter their status, but he would hope to see those properties eventually sold to residents as long-term housing down the line.
The biggest problem, Mayor Jablow says, is that as out-of-state investors are flocking to the area, they drive up the cost of property, and families and workers cannot compete for housing.
“We don't have critical workers for our hospitals,” he said. “It's pricing everybody out.”
It's also pricing out students and teachers, according to leadership at Sedona’s schools.
“We had a staff member who was living out of her car for a while because she couldn't find housing,” Amy Fultz, Sedona Charter School Executive Director, said. “We have one staff member who has an RV, and they're living at an RV park.”
From charter to public schools, leaders say a lack of housing not only prevents them from recruiting and retaining teachers; but enrollment is also dropping.
“There was a time when the student count was probably about 20% higher than what it is right now,” Tom Swaninger, Sedona-Oak Creek Unified School District Superintendent said. “As families are moving out, that means less students in the school system, which means less funding for our school system as well.”
While the housing shortage emergency declaration passed unanimously in the City Council, not everyone agrees with it.
“This alarm that's being sounded, where we're seeing this huge increase, it's just not accurate,” Cameron Wylde, Wylde Vacation Rentals owner, said.
Through his property management company, Wylde runs 40 vacation rental properties around Sedona, all listed on Airbnb and Vrbo. He defended the industry before the City Council prior to the resolution vote.
“They are homes that are at or well above the median home price in Sedona, which is over a million dollars now. So I truly believe that the homes we are managing would never be workforce housing,” Wylde told ABC15.
He also points to the enormous economic impact of STRs in a city like Sedona that has historically based its economy on tourism.
“Not only are we bringing in tens of millions of dollars a year in bed tax, but we also are providing tens and tens of millions of dollars of jobs,” Wylde said. “Just one company managing 40 rentals. And we have about 1,200 rentals here in Sedona.”
Wylde sees the housing crisis as driven by the fact that Sedona has limited space to expand, being surrounded by a national forest.
He adds that many houses that have been sitting empty as second homes are coming onto the STR market. He says while they are upping the number of STR permits, they were never available to workers to begin with.
“We don't have workforce housing here, and that workforce housing should have built been built 20 or 30 years ago when construction costs were much more affordable,” Wylde said.
In upcoming years, up to 180 units will come online, after the city bought three plots of land specifically for affordable housing. A developer on one project will break ground this spring.
It’s one effort to draw back workers like Alex Redden.
“There's not a lot of room for people who work here to live here,” she said.
Even though she is a lifelong resident of the area, and works in the heart of Sedona, Redden chooses to commute 45 minutes from her apartment in Flagstaff.
“I'm willing to make those sacrifices for having that wiggle room and having that like space financially, and also just like not being so strapped for cash,” Redden said.
For now, the cost of living in her hometown is still out of reach.
State lawmakers are aware of the dialogue on STRs coming out of Sedona and other Arizona cities.
State Rep. Selina Bliss (R - District 1) has introduced two house bills that would give cities the power to cap STRs within their boundaries, or limit rentals based on the number of residentially zoned buildings.
“Arizona needs to provide for its residents the ability to have safe and secure communities that are affordable,” Rep. Bliss told ABC15. “My concern is at what point will leadership become concerned? Displaced housing stock is hitting 20% in some Arizona cities and towns. Will elected leaders become concerned when 30% or more of housing stock is gone? At what point is it too much?”
Efforts to limit STRs or return local control to municipalities have failed in the state legislature in the past.
Another state representative, House Majority Leader Michael Carone (R - District 25), feels caps on the rental properties could have unintended consequences.
“How do you differentiate from the small guy versus the corporate guy that's coming in from out of state? Right? These are the challenges that we're being faced with,” Carbone said. “I'm a supporter of local control… When it comes to this topic, it's very sensitive.”
Short-term rental companies are also responding to the concerns coming out of Arizona cities.
Expedia Group, the parent company of VRBO, told ABC15: “Expedia Group works with communities around the world to craft public policy that balances local needs, including a vibrant and diverse tourism economy. While we are proud of our continued work in Arizona to help strike this balance, we know that simply limiting or banning vacation rentals is not a standalone solution to a housing crisis, and encourage leaders facing these crises to consider and address their root causes.”
