July 20, 2026
Samuel Foote | REALTOR® DRE# 02081916
San Diego remains one of the country’s top tourist destinations, welcoming more than 32 million visitors in 2025 and ranking fourth nationally in hotel occupancy. Yet, as of July 2026, the City reports that more than 800 short-term rental licenses remain available outside Mission Beach.
At first glance, these numbers seem like a contradiction. Previous estimates placed the number of AirBnbs in San Diego between 12,000 and 13,000 before STRO licenses became mandatory. If thousands of rentals were already operating, why weren’t all 5,661 Tier 3 licenses claimed? Why are more than 800 still available three years later?
The answer involves more than tourism demand or investor interest. San Diego’s licensing rules are only one part of the equation. HOA restrictions, program eligibility, operating requirements and financial feasibility all narrow the pool of potential short-term rentals. Another important factor is the City based its Tier 3 cap on San Diego’s housing supply-not on a verified count of existing Airbnbs.
The broader estimate likely included home shares, primary residences rented occasionally, Mission Beach properties, seasonal or inactive listings, and possibly listings outside the City’s jurisdiction. Not all of those properties would have required a license.
To understand why more than 800 licenses remain available, we first need to examine how the license tiers work and what those earlier Airbnb estimates actually represented.
How The License Tiers Work
San Diego’s short-term rental licenses are divided into four tiers based on how frequently a property is rented, whether the host lives onsite and whether it is located in Mission Beach.
That’s how the tiers work, but it doesn’t answer the question - why are there still 800 Tier 3 licenses available? Did all the owners simply give up their property?
Licenses are only the first layer of approval
Obtaining a license is only part of the picture. Getting one based on your appropriate tier does not automatically allow you to rent out any property you own. There are often HOA restrictions, deed limitations, lease limitations, ADU limitations, and potentially others.
The HOA caveat deserves particular emphasis. In San Diego it is very common for HOA’s to require a minimum 30 day lease when renting a unit. A condominium might qualify for a Tier 3 license under City rules, but be constrained by the rules and restrictions of the HOA. The City’s license does not cancel the restriction.
Another important hoop that operators have to jump through is the need for multiple hosts to operate multiple AirBnbs. Only one license can be issued per host and per individual housing unit. So, for example, if someone owns 5 properties and want to obtain licenses for each one, they would need to have 5 individual hosts obtain separate licenses.
This loophole was made infamous by a local landlord in Ocean Beach who spoke openly about this on a public platform. He cleverly used a “certificate of authorization” to allow multiple hosts to obtain licenses on his behalf. This method garnered acute criticism, but has yet to be banned.
These additional barriers would certainly help narrow the number of properties that can realistically operate as short-term rentals, regardless of how many licenses the City makes available. There are likely owners who simply didn’t want to build an army of hosts to acquire all the licenses needed to operate. But we still haven’t fully answered why thousands of Airbnbs were believed to be operating before the ordinance and subsequently the Tier 3 cap was never reached.
Reading the Tea Leaves
When San Diego first accepted Tier 3 applications in 2022, the City anticipated that demand might exceed the cap and require a lottery. Instead, it received fewer than half of the 5,416 applications available. Possible explanations include owners moving back into their properties, switching to long- or mid-term rentals, avoiding the licensing costs, or earlier estimates overstating San Diego’s short-term rental inventory.
Investors have continued entering the market since then. As of July 17, 2026, the City had issued 4,840 Tier 3 licenses, leaving 821 available. The market has not been abandoned; applications have simply not reached the cap.
High home prices and financing costs help explain why new investors have not filled the remaining licenses, but they do not explain the original shortfall. If 12,000 to 13,000 Airbnbs were already operating before licensing became mandatory, shouldn’t existing operators alone have exceeded the cap?
The better explanation is that the reported number of “San Diego Airbnbs” was never equivalent to the number of properties requiring a Tier 3 license. Those estimates likely included home shares, primary residences rented occasionally, Mission Beach properties, and seasonal or inactive listings. Existing owners also had to decide whether they wanted to meet Tier 3 requirements, including at least 90 days of annual use, quarterly reporting, tax compliance, a local contact, a two-night minimum and licensing fees.
The remaining licenses do not show that hundreds of established investors walked away from profitable properties. They show that the pre-regulation estimates were broader than the number of active, eligible operators who needed-and were willing to maintain-a Tier 3 license.
The Bottom Line
The fact that more than 800 Tier 3 licenses remain available does not indicate weak demand for San Diego vacation rentals. Instead, it shows that the City’s license cap was based on housing supply-not the number of eligible or profitable short-term rentals. Many properties are excluded by HOA rules and other restrictions, while others simply do not fit the Tier 3 model or make financial sense.
For investors, the takeaway is simple: an available license creates an opportunity, but it does not guarantee a successful investment. Before purchasing, an investor must confirm that the property is eligible, that its HOA and other restrictions permit short-term rentals, and that its projected income supports the purchase price and operating expenses.
