For millions of residents in coastal and mountain destination towns across the country, the phrase “We live where you vacation” is a point of pride. But these scenic destinations face a critical economic threat. As they grow in popularity, the influx of tourists and second-home buyers leads to a surge in housing demand. This demand routinely prices out the teachers, healthcare professionals, restaurant staff, and essential workers who keep these communities running. To strengthen their local economies and preserve their community identities, destination towns must prioritize affordable and attainable housing. By looking at the innovative, strategic solutions adopted across Cape Cod, Massachusetts, we can find a blueprint to overcome these obstacles.
The root of this crisis is a disconnect between housing costs and local wages. Surges in vacation home sales increase the strain on the housing supply to a breaking point. According to Housing Cape Cod: The Regional Strategy, 36 percent of all housing units in the region are used for seasonal or occasional use. The financial incentive to convert year-round homes into vacation properties is staggering. On average, it takes just two months for short-term rental income to exceed the income generated by a year-round rental. Consequently, the median single-family home sales price hit $638,500 in 2022. To affordably purchase a home at that price, a family needs an annual salary of $210,000, yet the median household in the area makes just over $90,000 a year. The toll this takes on the population is devastating. Cape Cod is losing more than 800 families a year who earn $100,000 or less. Essential workers are increasingly forced to commute one to two hours every day just to serve a community they can no longer afford to live in.
Faced with this existential threat, Cape Cod communities are responding by reforming zoning and creatively repurposing land. Restrictive zoning is a massive barrier. Roughly 80 percent of Cape Cod’s residential properties are single-family homes, and a mere 2 percent of the region allows multifamily housing developments to be built by right. To counter this, towns are embracing new policies. Massachusetts’ new Affordable Homes Act permits accessory dwelling units (ADUs) by right, unlocking thousands of potential new small-scale homes. Downtown Hyannis recently adopted a form-based code, creating a predictable regulatory framework to encourage dense, context-sensitive residential development. Because land is scarce, municipalities are getting creative with the space they do have. In Truro, developers recently broke ground on the 43-unit Cloverleaf project, situated on 3.9 acres of land taken from an unbuilt, obsolete state highway off-ramp. Similarly, the Town of Orleans purchased the former Governor Prence Inn for $2.9 million to build a 78-unit affordable housing community.
Additionally, destination towns must lean into regional collaboration and innovative funding. No single entity can solve this crisis alone. Towns like Falmouth and Provincetown are capturing local revenue by dedicating 100 percent of their short-term rental community impact fees to affordable housing initiatives. Regionally, Barnstable County launched a Shared Regional Housing Services Program, led by the Barrett Planning Group, to provide technical assistance and monitoring to help all 15 Cape towns manage their affordable housing stock. Employers are also stepping up to house their own workforce. In Chatham, Broadreach Healthcare launched a workforce housing initiative offering subsidized apartments and shared housing for its employees.
When public, private, and regional forces combine, they can successfully launch complex projects like The Phare in Orleans. Built on the site of a former bank headquarters, the 62-unit complex was made possible through a blended funding model. The necessity of these efforts is undeniable. When The Phare opened its housing lottery, 616 people applied for just 62 available units.
Ultimately, solving the affordable housing crisis in destination towns is as much an economic imperative as a social one. The authentic social fabric created by working-class families and essential workers isn’t just a byproduct of a destination town. It is the destination town. This sense of belonging and local identity is precisely what draws visitors in the first place. When residents are pushed out, a community risks becoming a hollowed-out version of itself, destroying the very appeal that sustains its tourism-driven economy.
Housing provides the foundation for durable social connection, allowing the elderly to age in place and young families to put down roots. The strategic solutions adopted across Cape Cod demonstrate that with creative land use and regional collaboration, destination communities can protect one of their greatest assets: the people who make the regional economy work.
