According to 2024 data from AirDNA, a company which tracks short-term rental metrics nationwide, the industry in North Houston brings in an average of $1.27 million in total monthly revenue for owners. But it can also exert pressure on the housing market by reducing the number of homes available to sell, experts said.
“People are bidding up [home] prices in The Woodlands,” said Adam Perdue, a real estate economist with housing market research company Zonda.
Bram Gallagher, director of economics and forecasting at AirDNA, said the North Houston area has seen the steadiest growth in short-term rentals over the last five years compared to the rest of the Houston region.
The impact
The Woodlands Township’s short-term rental regulations are overseen by the Development Standards Committee and were established in late 2019. The cities of Oak Ridge North and Shenandoah did not have ordinances in place prior to 2024.
Township officials said the enabling legislation for The Woodlands does not allow for the passage of ordinances and fines, although the DSC can enact certain controls. However, both Shenandoah and Oak Ridge North have discussed measures to allow for fines ranging from $500 to $2,000 for violations of their short-term rental policies.
The city of Shenandoah had not yet approved an ordinance as of press time July 15.
Why now?
Perdue said the growth of short-term rentals has also started to affect the overall housing market by encouraging homeowners to put their properties for rent.
“It becomes worthwhile for people to build extra homes to rent them out instead of [putting] them up for sale,” Perdue said.
Short-term rentals in the region fell in 2021, but recovered quickly, according to AirDNA data.In their words
“I think it’s important that [rental owners] participate in paying the [hotel occupancy tax because] that’s what is required of them," said Shenandoah Council Member Ted Fletcher.
“[North Houston] maintained a pretty consistent occupancy, and that’s counter to the national trend,” said Bram Gallagher, director of economics and forecasting for AirDNA.
“I just don’t think a resident should have to deal with [short-term rental violations] period, and I don’t think the state of Texas should be allowed to determine what we think about it either, said Oak Ridge North Mayor Paul Bond.
Breaking down the revenue
AirDNA data shows the short-term rental market growing in profitability for homeowners over the past several years. In May, the number of bookings in short-term rentals generated $1.45 million in revenue for owners in The Woodlands, Oak Ridge North and Shenandoah. However, regulations can vary depending on whether cities choose to treat short-term rentals like hotels and require them to pay hotel occupancy taxes.
“The enforcement can always be difficult,” said Pam Knudsen, senior director of lodging tax compliance at Avalara, a company that provides tax compliance for short-term rental owners. “There is a revenue impact to the potential property owner who’s using that house as a short-term rental. But there’s also a revenue impact to the community if you regulate.”
Knudsen said regulations are common in cities, and they allow short-term rentals to be seen as another form of tourism.
“Most of the communities that we deal with have a type of short-term type of lodging tax that is applicable to the short-term rentals,” Knudsen said.Stay tuned
Oak Ridge North City Council approved an ordinance at its June 24 meeting. An ordinance discussed by Shenandoah City Council is still pending final approval, while the township has yet to revisit its short-term rental standards since 2019.
Gallagher said the biggest concern he has heard from short-term rental operators is making sure cities work with homeowners as opposed to overregulating.
“It’s more concentrated in, you know, local ownership and smaller operators, so a lot more of that money will go back into the community, compared to airfare that you might have paid you to get to Houston, or a hotel that you might have stayed in where you pay flat fees to Holiday Inn or something like that,” Gallagher said.
Editor's note: This story was updated to clarify that Shenandoah and Oak Ridge North did not previously have ordinances in place for short-term rentals. Other forms of regulation may be present in the cities.
