With no short-term rental regulations and the tourism draw of nearby Acadia National Park, Ellsworth ranked eighth nationwide as the best place to invest in an Airbnb or VRBO unit, a 2023 outlook released Tuesday by AirDNA found.
The short-term rental business has expanded strongly the past two years, recovering from COVID-19 shock in 2020. With a predicted recession and the maturing of the market, growth is expected to moderate this year in terms of supply and demand for units, AirDNA said. More regulation of rentals also could dampen investment in markets where it is taking place.
So far, Ellsworth has resisted that. It is one of the Maine cities benefiting from the crackdown on short-term rentals in nearby Bar Harbor in 2021, when voters approved a major proposal to regulate vacation rental housing.
The concern was that it has contributed to high local housing costs that have pushed many young working families out. Now, real estate agents and vacation home buyers are looking at Ellsworth and other area towns.
AirDNA ranked Ellsworth as having a low regulatory risk for investors, with a score of 4 out of 10. Fairbanks, Alaska, which ranked first on the list overall, had a low regulatory risk at 1.
The Hancock County city of about 8,400 people had 471 active short-term rentals in the last three months of last year, up from 408 during the same time in 2021, according to AirDNA.
It has 233 active listings now, most of which are entire homes. Some 55 percent of those are Airbnb listings, 23 percent through VRBO and 22 percent are listed on both short-term rental services.
The occupancy rate for Ellsworth’s short-term rentals is 73 percent, with an average daily rate of $290. That means the average investor would make $67,000 in annual revenue. The city also has vacation amenities including large grocery stores, restaurants and an L.L.Bean Outlet store.
AirDNA said investors wanting to buy a home will find Ellsworth a bargain compared with the average home values topping $500,000 in cities on nearby Mount Desert Island, Ellsworth has a comparatively low price point at around $267,000.
That low entry price, good occupancy prospects and the expanded tourist season from May through the end of October gave the city a high AirDNA investor score of 84.7. Just above it was New Haven, Connecticut, and one spot below Ellsworth was Cheboygan, Michigan, which sits on Lake Huron.
Correction: An earlier version of this story had an incorrect ranking for Ellsworth. It is eighth.