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Deadwood Keeps Cap on Short-Term Rentals

Airbnb lists 76 locations in Deadwood. If the Deadwood City Council has its way, there won’t be any more, as Deadwood appears ready to continue a moratorium on short-term rentals while the city organizes a study on whether letting developers remove great gobs of living space from the already tight Northern Hills residential housing market and turn it into tourist lodging. The Deadwood City Council enacted a 180-day moratorium on short-term rentals last summer, then gave first reading to a 180-day extension at its December 20 meeting. The ordinance was slated for final approval at last Tuesday’s council meeting.

Deadwood’s Airbnb ban makes an exception for additional short-term rentals during the Sturgis Motorcycle Rally. Anyone wishing to start a bed and breakfast in an area zoned residential must apply for a conditional use permit. Landlords operating short-term rentals in non-residential areas must show the city that they are paying South Dakota State excise tax, get a lodging license from the South Dakota Department of Health. enroll in the city’s Business Improvement District Tax 1-6, get a city business license, and get commercial accounts for water, sewer and refuse.

Custer and Hill City have also banned the expansion of short-term rentals.

A 2021 Carnegie Mellon study found that short-term rentals reduce the availability of affordable long-term lodging but increase income opportunities for property owners. That income gain is concentrated: Inside Airbnb estimates that a quarter of short-term rental hosts own two thirds of the rentals.

AirDNA estimates that 62% of the listings you see on Airbnb have been added since 2020. Small-town and rural short-term rentals have doubled since 2019. But the rural rental market could be a pandemic bubble nearing a pop:

The number of short-term rental listings in small-town and rural areas nearly doubled between May 2019 and May 2022, according to a joint report by AirDNA and STR, another analytics firm. This follows a trend of U.S. travelers seeking fresh air and solitude during the pandemic, but could prove disastrous for Airbnb landlords in these areas if travel patterns return to normal.

“Rural areas are in danger,” says [Maryville University dean of accounting, economics, and finance Jaime] Peters. “The lack of alternative uses of grand rental mansions, with hot tubs, game rooms and sweeping vistas in rural areas make them particularly vulnerable. A small apartment in New York City can always be converted back into the (typically less profitable) long-term rental, but that is difficult with a seven-bedroom mansion in rural Georgia.”

[Tony J.] Robinson, who manages 30 properties across the country, shares similar concerns about a potential slowdown in demand for rural vacation rentals.

“If I try to convert my Tennessee properties into long-term rentals, I wouldn’t make money,” he says. “So I would be motivated to sell” [Sam Kemmis, “How the Airbnb ‘Gold Rush’ Could Impact the Homebuying Market,” Nerd Wallet, 2022.12.07].

I suspect Black Hills short-term rentals don’t face the same risk of losing customers post-pandemic, as the area was a popular tourist attraction before coronavirus pushed people to seek rural isolation. But that’s one effect Deadwood can watch for in its study of short-term rentals and consider in its discussion of a permanent policy on Airbnbs.


  1. larry kurtz 2023-01-06 06:58

    Airbnb gouges our guests far beyond what we charge so we are going to boost our liability insurance and rent month to month this year without listing our properties with that company.

  2. John 2023-01-06 07:48

    It’s not only the small towns going to war vs ABNB – “rural” HOAs are too. Once the short term rental cancer takes over a neighborhood there is no return to single family long term home ownership or residences.
    The short term rental market is nefarious – realtors don’t care or are willfully blind – selling properties covered by HOA convenents to out of state short term rental companies. In some cases the short term rental craze pits new, uninformed or willfully blind owners against the HOA board.

    Glance at Deadwood. The money-grubbing casino interests destroyed the neighborhoods – Deadwood has no grocery store, and now very few long term rentals or homes for the casino workforce.

  3. jerry 2023-01-06 08:33

    Affordable housing for the workers seems like a good idea. Grocery stores cannot compete when there is a Walmart just down the mountain. As long as gas stations handle milk, eggs and whatnot, that is not going to change no matter how many short term rentals are eliminated.

  4. Phil 2023-01-06 10:19

    I’m on the fence here. Having owned a Hill City cabin for close to two decades and having lived in it part time for the first few years of ownership, it has since been rented to a long time local at a (personally subsidized) below market rate. When I bought it, it was one of the few places in town with a short term rental permit, which I didn’t keep up. That changed in the last few years. There are now 6 str’s in the neighborhood, and most of the neighbors are vehemently opposed to any more, as is the town. I visit a couple times a year during the shoulder seasons, the only time I can stand the crowds, noise, and traffic. Seems like the str’s make for a quiet neighborhood those times of year, and the owners are making a killing compared to long term rentals. Even when occupied, including the property right next door, I don’t note any disruptive behavior. I am more concerned about the locals speeding like maniacs up and down the street on their quads and etc. Should have sold it last spring but didn’t want my friend and renter getting stuck in some Rapid City rathole. Now that I’m retired and not as able to support the cheap rent, I no longer have the South Dakota “Freedom” to choose how to manage my property and retirement income. Combined with the crappy weather and cesspool level politics, another nail in the South Dakota coffin, far as I’m concerned.

  5. Richard Schriever 2023-01-06 10:42

    Define “short-term”.
    As it is, I currently only occupy my own house about 5 months of the year, as I am a “road warrior” worker, living in hotels and STRs most of the year myself. On the other hand, the property next to mine has seen 4 different owner/occupiers in the 5 years since I bought my property.

    I am plotting on renting exclusively to traveling nurses. They typically stay 90 days or so. That’s about as long as I occupy the house myself at any one stretch (Fall or early Spring).

  6. larry kurtz 2023-01-06 10:54

    Travelers carry a scab stigma that grates with Our Lady of the Arroyo who is a retired registered nurse and former union member. We’re really remote and perfect for artists, writers and hermits who crave the privacy in a state where freedom is actually practiced.

  7. Mark Anderson 2023-01-06 13:27

    Gosh all those five month worker’s in Deadwood need to grift more money. Looks like all those five month workers in the hills agree. Those long 7 month vacations lead to no good.

  8. Tom Schmitz 2023-01-07 11:34

    I think it’s important to recognize that not all ST rentals are corporate operations. Nor are they all owners of second homes. Some people on fixed incomes rent their own homes where they live out to travelers because it helps them make ends meet. When it’s rented they stay with family or perhaps rent a room for themselves somewhere. These people have absolutely no impact on the housing market and should not be lumped in with those that do. I think second home owners also have very little impact.

    As for the impact of ST rentals on residential areas, whether they are governed by a HOA or not, this really boils down to behavior of the guests which can be anticipated by the owners screening of guests or failure to do so. After all,the behavior of owners themselves can just as easily disrupt a niehgborhood.

    It’s quite interesting that a place staking it’s future on ‘freedom’ is seeking to control what property owners can do with their homes, especially when what’s being done has no impact on their neighbors or community. I wonder how much of this action is being driven by the interests of hotel owners.

  9. jerry 2023-01-08 16:02

    I think you nailed it Mr. Schmitz. The hotel owners seem like an interested party for sure, and they have clout.

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