As Tahoe faces worker shortage, Placer County moves to cap vacation rentals

As the housing crisis in the Tahoe Basin continues, Placer County’s Board of Supervisors plans to vote Tuesday on an ordinance that would permanently limit the number of vacation rental properties.

The new rule would replace an urgency ordinance the board approved last year, which imposed a 45-day moratorium on new short-term rental permits, and stipulate no more than 4,300 permits can be active at any given time.

The cap on new permits would take effect March 22.

Homeowners who permanently reside in the community and want to rent out a room or second unit must still obtain a permit, but are not subject to the cap, the county said.

The county issued 2,350 permits in 2021, which is “approximately 400-500 additional properties” that have engaged in renting since 2020, according to meeting documents last year.

The decision to address short-term rental permits came on the heels of a historic 2021 summer season for Tahoe Basin residents, in which an unprecedented bleed of local workers forced many businesses to reduce hours significantly.

Dwindling housing stock and rising costs forced many long-term residents out of the area as cash-heavy buyers from the Bay Area and Sacramento swept into the real estate market, pricing out local buyers.

The region’s median income of $86,600 is not nearly enough to afford a home in the region, Board Chair Cindy Gustafson, who represents the Tahoe area, said last year.

The value of a typical home in South Lake Tahoe rose by about $181,000, or 41%, to $624,000 between June 2020 to June 2021, roughly double the pace of growth in the rest of the Sacramento metro area, according to Zillow.com.

Since January 2017, the city has only issued about 100 building permits for new housing units, according to the U.S. Census Bureau.

Home values have increased elsewhere around Lake Tahoe, though not as quickly. All California ZIP codes surrounding Lake Tahoe saw home values increase between 20% and 34%.

These factors contributed to a sharp drop in available housing for full-time residents, forcing some to leave the area permanently or endure long commutes.

“It’s a crisis at the affordable level, but it’s also at the middle-income level, and that’s part of the tragedy,” said Supervisor Gustafson of the issue last year. “You lose that segment of the community, and you become the haves and have-nots.”

If the new ordinance is adopted, current permit holders must file for renewal prior to the March 22 deadline.