Homeowners Will Get Thousands From City for Not Renting Out on Airbnb

City officials in Sedona, Arizona, approved a program this week that will offer local property owners thousands of dollars to rent units to local residents instead of using them as short-term rentals through companies like Airbnb.

Under the program, if homeowners provide a lease of one year or longer to Sedona residents, they are eligible to receive between $3,000 and $10,000 per year, depending on the size of the rental property, according to Shannon Boone, the City of Sedona's housing manager, who spoke with Newsweek in an interview on Thursday.

To receive the funds, they must also agree to not use their unit as a short-term rental property for three years.

Boone's department originally proposed the incentive program, which was approved by Sedona's city council this week. The program is in a "pilot" phase, and will make $240,000 available in incentives to property owners. If popular, it could be expanded, Boone said.

Boone said city officials proposed the program because a substantial percentage of Sedona's housing stock has "basically become hotels."

"And that just adds to the tourism and takes away from the opportunities for local workers," Boone told Newsweek. Of the roughly 6,600 properties in the city, nearly 980 are being used as short-term rentals.

The number of short-term rentals in Sedona drives up rental costs, "because the supply is so limited and the demand is huge," Boone said.

"We know that we have workers who live in their cars; business owners are regularly having to decrease their hours because they can't find anyone to work for them because there's no place for anyone to live," Boone said.

The city is expected to start taking applications for the incentive program in the coming weeks.

Data released last month showed that owning a home in the U.S. is now more expensive than renting for the first time in 15 years. According to a report from Zillow, higher housing prices and rising interest rates have resulted in higher mortgage costs.

Real-estate brokerage company Redfin also found in June that median monthly rental prices had increased by more than 15 percent compared to last year, hitting $2,000 in May.

"While renting has become more expensive, it is now more attractive than buying for many Americans this year as mortgage payments have surpassed rents on many homes," Redfin's deputy chief economist Taylor Marr said in a statement at the time.

Cities that experienced the largest increases in rent prices this year include Austin, Texas; Jersey City, New Jersey; and Tempe, Arizona, according to data released by Real Estate Witch last month.