Sedona’s housing crisis: Nearly 20% of homes are short-term rentals

Arizona Town Wants Locals Back

Sedona, Arizona, has a problem.

Roughly 16% to 18% of homes in this red-rock tourist town are now short-term vacation rentals — and the number has tripled since 2020.

That leaves teachers, firefighters, and restaurant workers with few places to live.

Many drive 30 to 45 minutes each way from Cottonwood, Camp Verde, or other nearby towns just to get to work.

So Sedona tried something new: paying homeowners cash to rent to locals instead of tourists.

The program is small, the money is modest, and conversions have been limited so far. While the city’s official page now states the program is under re-evaluation for “feasibility and continuation,” it’s still an interesting look at how places are trying to champion their locals against STRs.

Over 1,200 Vacation Rentals in a Town of Under 10,000

Sedona has fewer than 10,000 year-round residents and over 1,200 registered short-term rentals.

These aren’t second homes sitting empty most of the year. They’re active businesses, booked solid during peak season and generating high income for owners.

Every home converted to a vacation rental is one less option for someone who actually wants to live and work in Sedona.

Workers Commute From the Verde Valley

The people who make Sedona run often can’t afford to live there.

Hotel housekeepers, line cooks, retail workers, and even some teachers drive in from Cottonwood, Camp Verde, or Rimrock — typically 20 to 30 miles each way. Gas costs add up. Time with family shrinks. And when winter weather hits, the commute gets more difficult.

The workers serving tourists are being pushed further and further from the town they serve.

How the $10,000 Incentive Works

Sedona’s Rent Local Program offers homeowners up to $10,000 to convert their short-term rental into long-term housing.

To qualify, owners must sign a lease with a local tenant for at least 12 months. The rent has to be at or below the fair market rate. Owners must agree not to operate the property as a short-term rental for one year.

The city wants commitments, but the program does not impose permanent deed restrictions.

Arizona Law Ties Cities’ Hands

Here’s the catch.

Arizona passed Senate Bill 1350 in 2016, which prevents cities from banning short-term rentals outright.

Lawmakers said property owners should be free to rent however they want. That law has frustrated towns like Sedona, Scottsdale, and Flagstaff ever since. Cities can regulate noise, parking, and trash collection, but they can’t simply prohibit vacation rentals.

That’s why Sedona went with incentives instead of restrictions.

Median Home Price Tops $1 Million

Sedona’s housing market has gone through the roof.

The median home price now exceeds $1 million, pushed up by investors buying properties specifically for vacation rental income.

With typical listings earning around $70,000 annually, these homes become money machines.

Local wages can’t compete with that math. A teacher or paramedic has no chance of outbidding an investor with rental projections in hand.

Vacation Rentals Pay Significantly More

The numbers explain everything.

A long-term tenant in Sedona might pay $2,000 a month — about $24,000 a year. That same property on the short-term market can pull in $300 to $500 per night, with typical listings averaging around $70,000 annually.

That’s why a $10,000 one-time payment doesn’t move the needle for many landlords.

The income gap is just too wide.

Other Towns Are Fighting the Same Battle

Sedona isn’t alone.

Across the American West, tourist towns are trying to claw back housing.

South Lake Tahoe has been fighting over vacation rental limits for years — Measure T was struck down by a court in 2025, and new regulations took effect in July 2025.

Mammoth Lakes restricts short-term rentals to specific zones.

Bend, Oregon, requires 500 feet of separation between whole-house rentals.

Maui passed a law in December 2025 to phase out thousands of vacation rentals.

Each place is experimenting with different tactics because what works in one town might fail in another.

Longtime Residents Say Sedona Changed

People who’ve lived in Sedona for decades describe a town that feels different now.

Neighborhoods that once had block parties and familiar faces now have rotating strangers hauling luggage.

Houses sit dark between bookings. Some residents report that 40% of homes on certain streets are vacation rentals.

The sense of community has thinned out.

Some say Sedona has become a backdrop for tourists rather than a real place where people build lives.

Early Results Show Promise, But Scale Is Limited

The Rent Local Program launched in 2022 as a pilot and has since been modified.

City officials report ongoing inquiries from curious homeowners, but actual conversions remain limited.

Some owners are weighing the math. Others are waiting to see if the program expands.

The pilot is currently being re-evaluated for feasibility and continuation.

Critics Say the Money Falls Short

Not everyone thinks $10,000 is enough.

Critics point out that owners would lose tens of thousands of dollars per year by switching to long-term tenants. A one-time payment doesn’t cover that gap.

Some have suggested the city offer annual subsidies instead, or cover the difference between short-term and long-term income. Others say Arizona should change the 2016 law entirely.

For now, the city is working with the tools it has.

Visit Red Rock Country in Sedona

Sedona sits about 115-120 miles north of Phoenix in Arizona’s high desert, surrounded by the red sandstone formations that made it famous.

The town draws hikers, artists, and spiritual seekers year-round.

Cathedral Rock, Bell Rock, and Devil’s Bridge are among the most popular trails.

Downtown Sedona has galleries, restaurants, and shops along Highway 89A.

The Sedona Chamber of Commerce website lists trail maps, events, and visitor info.

If you’re planning a trip, booking early helps, especially in spring and fall when the weather is perfect and the crowds peak.

This article was created with AI assistance and human editing.

Read more from this brand:

• How the Winchester Rifle Won the American West
• 40 Million Americans May Run Out of Water and No One Has a Plan
• Nevada Families Lose as Corporate Housing Bill Dies by One Vote