Michigan Realtors

Study: Short-term rentals drive more than $787 million in economic impact in four Michigan counties; impact on home prices was minimal

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A comprehensive study of four dynamic Michigan vacation markets shows that short-term rentals drive more than $787 million in economic impact while at the same time having a minimal effect on home prices, a study released by Michigan REALTORS® shows.

Michigan REALTORS®, which represents more than 35,000 real estate professionals, asked Anderson Economic Group (AEG), to conduct an independent study of the overall impact of short-term rentals in Allegan, Berrien, Grand Traverse, and Leelanau counties. The counties were selected because their economies are driven by tourism spending due to their proximity to abundant natural beauty.

AEG found that short-term rentals contribute to local economies by providing a range of lodging and housing types for visitors, as an alternative to traditional hotels. In the four counties studied, short-term rental visitor spending was more than $592 million. Many of the visitors who rent a vacation rental also shop for food, eat at restaurants and visit attractions in these counties, pushing the overall economic impact to $787 million in 2024.

The findings countered a common misconception that short-term rentals are a significant driver in rising housing costs in the four Michigan counties. Higher concentrations of short-term rentals led to higher sale prices in only one of the four counties, according to the analysis. Additionally, the study found that only a portion of housing units, used as short-term rentals, could be repurposed to fill long term housing needs.

Other key findings include:

• Seasonal homes represent 9% of the total housing units in Allegan and Grand Traverse counties, 11% in Berrien County, and 33% in Leelanau County. Short-term rentals represent about 3% of the total housing units in Allegan and Berrien counties, 6% in Grand Traverse, and 13% in Leelanau County. See Table 1 below.

Table 1. Seasonal Homes and Short-Term Rentals as a Share of Total Housing Units, 2023

• Short-term rentals brought about 1.2 million visitors who generated additional spending in these four counties in 2024.
• Spending by visitors in short-term rentals supported 4,600 jobs and over $185 million in earnings in the four counties in 2024.
• Less than 2.0% of the housing stock, used as short-term rentals, could be re-purposed to fill in the housing gap based on housing typology and availability.
• Short-term rentals did not contribute to higher home prices in three of the four counties. Only in Allegan County did short-term rentals contribute to slightly higher prices (2.7%), a small fraction of a home’s overall value.
• Local ordinances limiting short-term rentals are unlikely to noticeably depress or decelerate growth in home sale prices.

“This study is important because for the first time we can clearly see short-term rentals do not necessarily lead to greater price appreciation,” said Todd Waller, chair of the Michigan REALTORS® Public Policy Committee which looks at the intersection of government regulation and housing economics. “It is important to have fair and balanced short-term rental regulations that support a heathy housing market. Short-term rentals are an important part of the housing ecosystem for communities who rely on tourism.”

“In Allegan County, more than $178 million of overall economic impact driven by short- term rentals,” said Jon Broadbooks, CEO of the West Michigan Lakeshore Association of REALTORS®. “For policy makers, this is an astonishing number, particularly as much of the economic impact is concentrated in the warm-weather, high-tourism months. It shows that short-term rentals are a partner in steady economic progress in communities throughout Michigan.”

Luke Jeffries, CEO, Southwestern Michigan Association of Realtors® indicated that “housing demand is strong in many of these communities so more housing development of various types and price points are needed. Communities should consider modifying or expanding housing policies that encourage residential development.”

“The study helps answer some of the questions local communities have about short-term rentals impacts on the housing market,” said Alan Jeffries, CEO of the Aspire North Realtors®. “While Grand Traverse and Leelanau counties benefited from over 346 million economic impact driven by short-term rental visitors, short-term rentals did not contribute to higher home sale prices in these counties.”

“Vacation homes and short-term rentals are a driver for visitor-based economies in the four counties studied,” said Cristina Benton, director of market and industry analysis at AEG.

“Short-term rentals bring about 1.2 million visitors, who generate significant spending and economic impact in the four counties. Short-term rental bans or caps in a community would result in reduced visitor spending and the related economic activity from these visitors. As local ordinances limiting short-term rentals are unlikely to noticeably depress or decelerate growth in home sale prices, properly regulated short-term rentals can be a part of a healthy housing market. "

About Anderson Economic Group, LLC
Anderson Economic Group routinely produces meticulous studies that illuminate economic trends in Michigan and across the U.S. AEG’s practice areas include public policy and economic analysis, market and industry analysis, and strategy and business valuation. For more information about the East Lansing and Chicago-based company, now in its 27th year, see AndersonEconomicGroup.com.

Vacation Rentals are Being Threatened in Michigan

The ability to rent residential property is fundamental to ownership. Communities across the state have long recognized short-term rental as an important tradition that provides a tremendously positive impact upon the local economy. This tradition promotes Michigan as a great destination.

The practice of vacation rental, often for a week interval, allows for the use of a property owner’s fully furnished residence in a vacation area or near an event destination. Dating back generations, short-term rental is favorable among tourists throughout Michigan. The practice helps Michigan property owners with the payment of property taxes and aids the upkeep of their property.

There is a growing trend in local government to enact zoning bans that preemptively tell property owners they are unable to rent. The rental of residential property is important to Michigan second home markets and in urban areas around event destinations. Banning the right to rent harms property owners and local businesses in many communities all over Michigan.

Michigan Realtors® supports defining the right to rent property on a short-term basis. Realtors® oppose zoning bans that preemptively tell property owners they are unable to rent their property on a short-term basis. Local governments possess tools in their nuisance ordinances and housing codes to protect public safety and address any discourteous behavior – whether from full-time occupants or short-term rental activity. Reasonable regulation of rental activity, outside of zoning, supports local government control. Reasonable regulation of rental activity, outside of zoning, protects the rights of all property owners.

Now is the time for the Michigan Legislature to preserve private property rights. Michigan needs to protect an owner’s right to rent.

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Michigan Realtors®
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