Short Term Rentals - One Part of the Housing Conversation

Housing affordability in Taos County is shaped by a range of factors, from rising construction costs to limited housing supply and the growing gap between local incomes and home prices. Short-term rentals (STRs) are often part of that conversation, but they are only one piece of a much larger housing landscape.

To understand where STRs fit, it helps to start with the broader picture.

Data from a recent Taos County Housing Market and Needs Analysis shows a housing system under increasing strain. The median price of an existing home is approximately $424,500, while a typical local household can afford closer to $210,000. That leaves a gap of more than $200,000 between what homes cost and what local residents can realistically pay.

Rental housing reflects similar pressures. More than half of renter households, 57 percent, are cost-burdened, meaning they spend more than a third of their income on housing. At the same time, the number of available rental units is limited and often priced above what local households can afford.

Even the way we think about “available housing” can be misleading. On paper, about 34 percent of homes in Taos County are considered vacant. In reality, many of these are second homes, seasonal, or short-term rentals, but ultimately units not available to people living and working in the community year-round.

This is where STRs enter the picture.

They are part of how housing is being used, and in a place like Taos, where tourism is a significant part of the local economy, they are not inherently out of place. For some Taoseños, STRs provide income that helps offset the cost of owning a home or creates a pathway to homeownership that might not otherwise be possible.

At the same time, like second homes, STRs can reduce the availability of housing for long-term residents. The key question for communities is not whether STRs exist, but how they are managed within the broader housing system.

Taos County’s recently adopted Short-Term Rental Ordinance is an effort to answer that question in a more intentional way. The ordinance establishes a framework for how STRs operate, including permit requirements, operational standards, and a cap on the total number of STR permits allowed in the County. These tools are designed to create some structure around STR activity while balancing the needs of property owners, neighborhoods, and the broader community.

One of the more notable elements of the ordinance is the Short-Term Rental Cap Exemption tied to long-term affordable housing. Under this approach, a property owner can become eligible for an additional STR permit by providing a qualifying long-term affordable rental unit. In practical terms, it creates a direct connection between STR activity and long-term housing. For each affordable unit added to the long-term rental market, one additional STR permit may be granted.

For example, a property owner who is otherwise limited to one STR permit could provide a separate unit rented at an affordable rate to a local household and apply for an additional STR permit through this program. Even if the County has reached its overall STR cap, this pathway remains available as long as it results in the creation of an affordable rental unit.

Taos Housing Partnership has been working alongside Taos County to help implement this program, including supporting the application process and helping ensure that units and tenants meet affordability requirements. While still new, the Cap Exemption reflects a creative attempt to connect two parts of the housing conversation that are often discussed separately. It is also important to keep the scale of the challenge in mind. The affordability gap in Taos County is significant, and no single policy will resolve it. Addressing housing needs will require a range of approaches, including increasing housing supply, preserving existing homes, and supporting both renters and prospective homeowners.

This is consistent with findings from national housing research which has shown affordability challenges are best addressed through a combination of strategies, rather than focusing on any single factor in isolation. Regulating short-term rentals can be part of that approach, but it is most effective when paired with efforts that expand housing opportunities overall.

In Taos County, that broader perspective matters. Housing challenges are shaped by many forces, including high construction costs, limited development of entry level homes, demand for second-homes, and the growing gap between wages and housing prices. Short-term rentals are part of that system, but they do not define it.

The County’s STR ordinance, and particularly the Cap Exemption, represents one way of working within that complexity. It does not treat STRs as the sole cause of housing challenges, nor does it ignore their impact. Instead, it introduces a framework that connects short-term rentals to long-term housing outcomes in a way that reflects the realities of the local market.

As Taos continues to navigate housing affordability challenges, keeping that full picture in focus will be important. STRs may be one visible part of the conversation, but lasting solutions to address the housing shortage will come from addressing the broader system that shapes how housing is created, used, and sustained in the community.

Housing Matters Column, Published in the Taos News.
Taos Housing Partnership is working to create equitable housing opportunities for Taos County.