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A battle is brewing in San Diego over a ballot proposal that would impose a $5,000-per-bedroom annual tax on short-term rentals and vacation homes, with opponents arguing the measure could put hosts out of business and cripple the city\u2019s tourism industry.\u00a0<\/p>\n
The proposed Vacation Home Operation Tax would apply to roughly 10,644 properties, half of which are used as full-time short-term rentals and the other half are unoccupied second homes.<\/p>\n
Supporters of the proposed tax argue that it could bring in as much as $135 million a year for the city, while freeing up San Diego\u2019s scarce housing supply for local residents to rent long-term or purchase. \u00a0<\/p>\n
Last week, San Diego City Council\u2019s Rules Committee voted 3-1 to advance the proposal, but it will not go before voters until next summer, pending approval from the full City Council in March 2026.<\/p>\n
The first vote followed a two-hour public debate, during which the backers and detractors of the tax had a chance to make their cases, according to inewsource.org.<\/p>\n
“We\u2019d like to stop investors, especially foreign and out-of-state investors, and short-term rentals from pushing working families out of their neighborhoods,” Councilmember Sean Elo-Rivera<\/strong>, who proposed the tax, said during the meeting. “Ninety-nine percent of San Diegans would not pay this tax.”<\/p>\n But Councilmember Raul Campillo<\/strong>, who cast the lone no vote, insists that it’s a misguided view. While the tax will be paid by 1% of San Diegans, its effects will be felt citywide, he explains.<\/p>\n “The tax impacts every other component of the economy, and that means 100% of us would be affected by it,” he tells Realtor.com\u00ae.<\/p>\n The short-term rental industry in San Diego supports about 18,000 jobs, he adds.<\/p>\n In an interview with the Times of San Diego, Elo-Rivera elaborated on his position, saying that the tax is designed to benefit local residents, “not just those who vacation here and profit from us. That starts with San Diegans being able to afford housing here.”<\/p>\n He contended that too many homes sit empty or function as vacation rentals, “while families struggle to find a place to live.”<\/p>\n Realtor.com reached out to Elo-Rivera for comment on his proposal, but he did not immediately respond.<\/p>\n Critics say that if it’s adopted, the measure could carry negative consequences that outweigh any potential gains.<\/p>\n “It’s going to make running affordable short-term rentals pretty much impossible,” Bram Gallagher<\/strong>, director of economics at AirDNA, a short-term rental data provider, tells Realtor.com.<\/p>\n Gallagher adds that, contrary to Elo-Rivera’s argument, short-term rental ownership in San Diego is mostly local, with only a third of the properties being professionally managed, which could potentially indicate investor involvement.<\/p>\n According to the latest available figures, San Diego has roughly 14,400 monthly short-term listings, less than half of which are available full time, or at least 180 nights out of the year.\u00a0<\/p>\n In 2024, the short-term occupancy rate in San Diego was about 65%, meaning that the typical host advertising their property on online platforms such as Airbnb or Vrbo rented out a room two-thirds of the time, or about 117 days out of the year.<\/p>\n According to Gallagher, in the best-case scenario, a short-term rental owner in San Diego who rented out a room for 117 days out of the year at an average daily rate of $210 would earn about $24,500 in revenue\u2014before accounting for mortgage payments,\u00a0utilities, home insurance, and cleaning fees. \u00a0<\/p>\n Gallagher argues that if the new $5,000 tax is added on top of those expenses, “you may take it from being a profitable enterprise to one that is losing money.”<\/p>\n The AirDNA economist forecasts that the tax is going to “eradicate” the lower-end, “mom and pop” short-term rentals while driving rates up on the remaining, higher-end properties to make it worthwhile for the hosts.<\/p>\n “You’re going to want to try to aim for the highest market segment you can, because you know that you’re already behind $5,000 per bedroom,” explains Gallagher. “So you got to make each one of those bedrooms as fancy and as luxurious, as expensive as possible.”<\/p>\n The economist also points out that not all short-term rentals are used for tourism: Some provide temporary housing for traveling nurses, construction and seasonal agricultural workers, as well as digital nomads.<\/p>\n Based on AirDNA’s data, nearly 40% of San Diego’s Airbnb-type rentals have a minimum stay of 28 nights, placing them in the medium-term market and generally outside the typical tourism segment.<\/p>\nUnintended consequences <\/h2>\n
San Diego host shares his fears<\/h2>\n