Living and working in paradise: Housing strategies for tourism communities

William S. Hettinger

Abstract

When the supply and demand for a product is cut of balance, a market intervention is often necessary to bring supply and demand back into balance. This research focuses on tourism communities where there is a housing supply and demand imbalance and where market interventions have been used to address this imbalance. The motivations for the market interventions and the effect of the interventions were studied in multiple case explanatory case study of four tourism communities in the United States and Canada. Data was analyzed using the explanation-building analytic technique, and cross case analytic generalizations were developed from the findings in the individual cases. Housing and market failure theory identifies externalities as the cause of the supply and demand imbalance. This research has confirmed the theory, identifying significant externalities affecting housing in tourism communities, including second home demand, and growth management and land use and zoning regulations as the causes of market failure in these communities. Housing market failure was identified in each of the case site communities, with unaffordable housing and displaced local residents. The research identified several motivations for the interventions, including reaction to a community crisis, which the existing theory identifies as a reason for intervention, and proactively acting to provide housing in recognition of the conditions of market failure, to prevent a crisis from occurring, which is an addition to the existing theory.