Who Should California Homes Be For? How Second Homes and Short-Term Rentals Are Changing Coastal Housing

A house in California can mean three completely different things depending on who is standing in front of it.

To a local family, it is a place to raise their kids.

To a second-home buyer, it might be weekends at the beach.

To an investor, it could be an income-producing property with hundreds of potential nightly rental opportunities each year.

All three buyers may want the exact same house.

And in California's coastal, mountain and vacation communities, that competition raises an increasingly important question:

Who should California's homes be for?

The answer is more complicated than simply blaming Airbnb or investors. California had a housing shortage long before short-term rentals became popular. But when housing is already scarce, converting homes to vacation rentals—or keeping them primarily as second homes—can add another layer of competition for limited inventory.

San Diego Has Nearly 19,000 Active Short-Term Rentals

Consider San Diego.

As of August 2026, AirDNA reported approximately 18,862 active short-term-rental listings in San Diego, with active supply up about 8.3% year over year.

Perhaps even more interesting: approximately 90% were entire-home listings, rather than simply someone renting a spare bedroom.

That number needs some context.

An "active listing" does not necessarily mean 18,862 homes have been permanently removed from San Diego's housing supply. AirDNA's active-listing methodology captures properties that were available or booked during the trailing period, and individual properties can have very different levels of availability and usage.

Still, the scale illustrates something important.

In desirable California markets, homes aren't exclusively competing for people who want somewhere to live.

They're competing for multiple uses of the same scarce real estate.

One House. Three Completely Different Buyers.

Imagine a two-bedroom bungalow a few blocks from the beach.

Buyer #1: The Local Family

They work nearby.

Their children attend local schools.

They shop at neighborhood businesses, know their neighbors and hope to remain there for years.

For them, the property isn't an investment strategy.

It's home.

Buyer #2: The Second-Home Owner

They may already own a primary residence somewhere else.

They love the community and want somewhere to spend weekends, summers or holidays.

When they aren't using the property, it may remain vacant—or perhaps occasionally be rented.

For them, the house represents lifestyle and recreation.

Buyer #3: The Investor

The investor looks at the same property differently.

What could it rent for?

What are occupancy rates?

What are comparable nightly rates?

What would operating expenses look like?

Could it perform better as a short-term rental than a traditional year-long lease?

For this buyer, the property is primarily an income-producing asset.

None of these motivations is inherently illegitimate.

But there's still only one house.

Did Airbnb Cause California's Housing Crisis?

No.

That's an important distinction.

California's housing affordability problems are much older and much larger than Airbnb.

For decades, California has struggled to build enough housing in many of the places people most want—and need—to live.

California's own housing planning acknowledges that vacation homes, second homes and short-term rentals can affect the number of units actually available for year-round occupancy.

Meanwhile, affordability remains extraordinarily difficult.

According to the California Association of REALTORS®, only 19% of California households could afford the state's median-priced existing single-family home in the second quarter of 2026.

The statewide median was approximately $916,750, requiring an estimated annual income of about $228,400 under C.A.R.'s assumptions.

So removing every Airbnb tomorrow wouldn't suddenly make California inexpensive.

The underlying problem remains:

California has too many people competing for too few homes in many of its most desirable communities.

But Short-Term Rentals Can Change the Math

This is where the debate becomes more nuanced.

Imagine a long-term rental that might generate $4,000 per month.

That's $48,000 in gross annual rent.

Now imagine the same property could command significantly more during peak vacation periods as a short-term rental.

Suddenly, a traditional homebuyer isn't necessarily competing only against another family.

They're potentially competing against someone evaluating the property as a business.

That can change what an investor is willing to pay.

It can also influence what existing homeowners decide to do with their properties.

And those effects can become especially noticeable in places with limited housing supply and strong tourist demand.

Think:

San Diego.

Newport Beach.

Laguna Beach.

Big Bear.

Lake Arrowhead.

Palm Springs.

Lake Tahoe.

Different markets. Different regulations. Different economics.

But the underlying tension can be similar.

What About Institutional Investors Like BlackRock?

This is another area where social media frequently gets the story wrong.

You've probably seen posts claiming:

"BlackRock is buying all the houses."

BlackRock itself states that it does not buy individual homes in the United States.

BlackRock is also frequently confused with Blackstone, a completely separate company, as well as large institutional single-family-rental operators.

Institutional ownership does exist, and its impact deserves serious discussion—particularly in markets where ownership is concentrated.

But nationally, institutions aren't buying every house.

A 2026 U.S. Government Accountability Office analysis found institutional investors owned approximately 1% to 3% of single-family homes across the six metropolitan areas it examined.

That doesn't mean investors have no effect.

It means we should debate the actual numbers, rather than the viral version of the story.

The Second-Home Question May Be Just as Interesting

Short-term rentals receive most of the attention because they're visible.

You see the lockbox.

You see guests arriving with suitcases.

You see the listing online.

Second homes can be much less visible.

Someone may purchase a California coastal property, use it several weeks or months each year, and leave it vacant the rest of the time.

Again, there's nothing inherently wrong with owning a second home.

But from a housing-supply perspective, that property exists physically while being unavailable to a year-round resident.

That distinction matters when communities are trying to understand how many homes they actually have available for the people who live and work there.

There Is Another Side to This Debate

Short-term rentals aren't purely a housing problem.

They're also part of California's enormous tourism economy.

Visitors spend money at restaurants, coffee shops, stores and local attractions.

Vacation rentals can accommodate larger families who might otherwise need multiple hotel rooms.

And for some homeowners, renting a property periodically can help offset the extraordinary cost of owning California real estate.

Property rights matter too.

If someone purchases a home legally and follows local ordinances, how much authority should government have over how that owner uses the property?

That's why blanket statements such as "ban Airbnb" miss the complexity of the issue.

There are legitimate competing interests.

Coastal Communities Have an Especially Difficult Balancing Act

Coastal cities face a challenge that inland communities may not experience at the same intensity.

They have limited land.

Enormous demand.

Expensive construction.

Environmental and geographic constraints.

Tourism economies.

And residents who still need somewhere to live.

A house near the ocean therefore has multiple competing identities.

It's shelter.

It's an investment.

It's a vacation destination.

It's a retirement plan.

It's a potential business.

And it's part of a neighborhood.

California has to figure out how those uses coexist.

The Bigger California Housing Question

I don't think the real question is:

"Are Airbnbs bad?"

And I don't think it's:

"Should investors be allowed to buy houses?"

The more interesting question is:

What happens when residents, investors, second-home owners and tourists increasingly compete to use the same limited housing supply?

Because that is ultimately what we're talking about.

California needs tourism.

California needs investment.

Property owners deserve reasonable rights.

But California also needs communities where teachers, nurses, firefighters, restaurant workers, young professionals and families can actually afford to live.

Those goals don't always line up neatly.

Which leaves us with a question California communities will probably be debating for years:

Who should California's homes be for?

People who live there?

People who vacation there?

People who invest there?

Or all three?

The difficult part isn't choosing one.

It's figuring out the balance.

Mortgage & Real Estate Perspective

If you're considering purchasing a California property as a primary residence, second home or investment property, the financing can be dramatically different depending on how you intend to use it.

Second-home financing, conventional investment financing, DSCR loans, short-term-rental income, LLC ownership and cash-out strategies all have different qualification and underwriting considerations.

The intended occupancy needs to be established correctly from the beginning.

At the Belfor Team at American Pacific Mortgage, we work with buyers and real estate investors throughout California to evaluate those options and understand the financing before they make an offer.

Michael Belfor

Branch Manager | American Pacific Mortgage

NMLS #264700

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