There are many reasons why things like an STR cap will have no effect on long-term rental rates, but first and foremost rental rates are influenced by real estate costs which are also influenced by the cost to build.

Real estate rates are also influenced by demand, and clearly (a testament to our great little beach town) Rockaway Beach is a very desirable place for a second home. As a builder that’s working around town, I talk to people a couple times a week driving around looking for a second home. The cost to build has also increased substantially over the past 4 years, as well as the cost of land given the lack of buildable lots available in Rockaway.

The vast majority of people who rent their houses (whether an STR or a long term rental) need a reasonable return on their investment or their money would go somewhere else. Many home owners that rent their houses are using it as income (many as retirement income). If that money wasn’t invested in a house it would be in some other asset that has a return, so the return on rent (after the cost to maintain the house, taxes, any mortgage, etc.) needs to be at a certain level.

Making long term rentals even harder to be “affordable” are Oregon laws that give renters so many rights, that landlords consider renting long-term risky and their return needs to account for that risk. In fact investors feel the need to make enough that if they do want their house back, they can make the payment required by the State for renters to leave.

With all these factors playing into long-term rental rates, the idea that a cap on STRs is going to make rental rates go down is silly – it was a flat out lie written into the city ordinance.

The key to affordable housing is encouraging alternative types of housing that is cheaper to build and therefore can be rented for less and still make the same rate of return.