Study: Flathead County Has Most Short-Term Rentals in Montana

University of Montana researchers concluded vacation homes have positive economic impacts for hosts, but city officials say they can contribute to long-term rental shortages and rising costs

By Maggie Dresser
According to AirBnB maps, Whitefish Lake, seen here on March 18, has numerous short-term rentals. Hunter D’Antuono | Flathead Beacon

As short-term rentals (STRs) through sites like AirBnB and VRBO continue to multiply in Montana, a recent study finds that Flathead County had 2,814 properties in 2020, the highest in the state, contributing to a positive financial impact for hosts while potentially limiting housing availability and spiking costs in some communities.

Researchers at the University of Montana Institute for Tourism and Recreation Research compiled data through AirDNA and conducted a series of interviews with city and county officials, as well as surveys with hosts and guests throughout the state, to assess the impacts in Montana.

Elena Bigart, a researcher for the study, says the surveys concluded that STRs give hosts an opportunity to earn money and pay off expenses while bringing visitors to communities, generating economic benefits. For travelers, they offer more accommodation choices and kitchen access.

According to the study, tourism communities like Flathead, Madison, Park and Gallatin counties had the most STRs. Gallatin County trailed behind Flathead with 2,524 and Missoula County with 1,201. Flathead County was the fifth highest per 100 households with 7.3, while Madison County had the highest with 24.2 per 100 households.

As of September 2020, AirDNA data showed that more than 12,000 STRs in Montana had been active in the last year. Available listing nights were 25 times higher in June 2020 than in June 2015.

However, Bigart says city and county officials mentioned concerns about vacation homes affecting long-term rentals.

“We haven’t found direct evidence, just concerns,” Bigart said. “Potentially, short-term rentals could limit the availability of long-term rentals, impacting affordable housing.”

Bigart said officials were also concerned about noisy neighborhoods, disruptions and a change in community feel and identity.

Bigart said a lack of regulations and confusion about rules has become one of the most significant challenges for local communities. With only one state law, which requires a public accommodation license for a bed tax collection, most STR regulations are left to local authorities.

“The types of regulations and approaches are different,” Bigart says. “Some places have no restrictions at all, and some officials said it wasn’t an issue.”

But in busier areas like Bozeman, Missoula and Whitefish, regulations like registration requirements, special-use permits, cap limits and zoning restrictions are set to control STR numbers.

In Whitefish, STRs must go through a business license and permit process and are only allowed within two zones in the city, which limits their areas of operation, Whitefish City Manager Dana Smith said.

“We had 160 permitted short-term rentals in 2020,” Smith said. “That’s up from the high of 2018, which was just over 100. We did see a significant increase in the past year.”

Aside from permitted STRs, Smith says there are also non-permitted vacation homes in Whitefish. But many are difficult to identify and enforce, other than through complaints. There are also rentals outside of city limits.

In Kalispell, Senior Planner PJ Sorensen says the city council passed an ordinance several years ago that caps STRs at 2% of units within the city. Kalispell currently sits at 62 units and is well under the limit, which Sorensen said would likely be around 250.

“With 60 spread through town, it’s a pretty minimal impact,” Sorensen said.

But when passing the ordinance, Kalispell officials voiced similar concerns as Smith. While vacation rentals are a convenient way to travel for consumers, they worry about the long-term affects.

“Short-term rentals are challenging,” Smith said. “They provide an individual income to pay their mortgage and have an investment property, but it raises the cost of housing and takes livable space out of the rental market.”

And while many officials raised these concerns, Bigart says there’s no data to back up these ideas. But the impacts on Montana seem to be trending similar to places with higher populations.

“We’re learning a lot,” Bigart said. “Places like New York and L.A. have more regulations and they started this process earlier … The negative impacts that we found and the potential negative impacts were very similar to what was reported in other places.”

Meanwhile, in the tourist community of Whitefish, Smith says the city is ramping up efforts to enforce illegal STRs while figuring out ways to convert them into long-term rentals as part of a Strategic Housing Plan.

“If we have homes that are becoming short-term rentals, we lose the potential for a community member to live here long-term and become a valuable part of Whitefish,” Smith said.

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