🎯 STRisker: Bulletin - Arizona
Arizona Appeals Court Reinforces State Limits on Local STR Restrictions
Arizona Cities Hit a Legal Wall on Short-Term Rental Control
Arizona cities hoping to crack down on short-term rentals just received a firm reminder from the courts: local authority has limits and those limits are set by state law.
A unanimous Arizona Court of Appeals ruling this fall reinforced what many city leaders already suspected but didn’t want confirmed. Under a 2017 state statute, cities and towns are largely prohibited from banning or significantly restricting short-term rentals, including popular platforms like Airbnb and VRBO. Zoning limits, caps on the number of rentals, or outright prohibitions are mostly off the table, no matter how intense local housing pressures may be.
The ruling arrives at a tense moment. Arizona’s population has surged since the 2020 Census, growing by about 6% and ranking among the fastest-growing states in the country. That growth has intensified an already serious housing shortage, pushing home prices and rents higher across urban centers, suburban neighborhoods, and resort communities.
Local officials argue short-term rentals are part of that squeeze. While STRs bring tourism dollars, tax revenue, and economic activity, critics say they also remove homes from the long-term rental pool. In tight markets, even a small shift in housing supply can ripple through prices, and city leaders say their hands are tied when residents demand action.
The appeals court ruling makes clear that frustration alone won’t change the rules. The 2017 law was designed to protect property owners’ rights to operate short-term rentals and to create statewide consistency. At the time, Arizona’s housing market looked very different. Fast forward to today, and cities argue the law no longer reflects current realities.
However, it doesn’t mean STRs are entirely unregulated. Cities still retain limited authority around health and safety standards, noise, parking, and nuisance enforcement.
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The ruling also shifts the battleground. If local leaders want broader control over short-term rentals, the path forward runs through the state legislature, not city hall. Some lawmakers and municipal leaders are already signaling interest in revisiting the 2017 statute, especially as housing affordability becomes a defining political issue.
For now, Arizona’s short-term rental landscape remains largely protected at the state level. Hosts can continue operating under existing rules, while cities are left balancing resident concerns with limited regulatory tools.
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