
Airbnb is squeezing Toronto’s housing market - ericzawo
https://news.vice.com/en_ca/article/bjqjda/how-airbnb-is-squeezing-torontos-tight-rental-market
======
jseliger
It appears that unfair and exclusionary zoning is squeezing Toronto's housing
market: [https://www.cbc.ca/news/canada/toronto/landlords-housing-
adv...](https://www.cbc.ca/news/canada/toronto/landlords-housing-advocates-
hope-council-loosens-arbitrary-rules-on-secondary-suites-1.4895814). Looks
like Toronto is, like most North American cities, is legally constricting the
supply of housing, leading to higher prices:
[https://www.vox.com/cards/affordable-housing-
explained/suppl...](https://www.vox.com/cards/affordable-housing-
explained/supply-side-of-affordable-housing-matters-most).

The framing of the article's headline is bad.

~~~
manicdee
Just remember that "too few houses" is the same problem as "too many people."

Why doesn't anyone suggest that there are too many people and that we need to
control population growth to rates below zero?

~~~
tareqak
Can you suggest ways to eliminate the "too many people" problem without
restricting the freedoms and privileges of people?

You can theoretically restrict the movement of people by decreasing
immigration, or restricting local people to move into places with too many
people. You can theoretically restrict having more children. Both of those
restrictions have been hugely unpopular in places that have tried them. You
cannot hold onto power in a democracy or democratic republic if you are
sufficiently unpopular.

~~~
toomuchtodo
You don’t have a right to live wherever you want. This is economics at work
(housing costs increase until reaching equilibrium with supply, with supply
being constrained by geographic or governance limitations).

~~~
chrischen
Economics also dictates if that more people want to live in a place, more
housing will be built. But intervention by law to prevent housing or slow it
alters this.

~~~
toomuchtodo
Zoning trumps economic forces. Local citizens are exerting their rights over
their community, which they’re entitled to do.

These are hard problems to solve, I readily admit.

~~~
tareqak
Zoning is reactionary though and there is a relatively long delay from when a
problem with zoning first occurs, to when it is reported, to when locals
organize, to when it reaches municipal government, to when it finally gets
passed. I know municipal governments have a lot on their plate, but it'd be
nice if there was a mandatory review of zoning laws zone by zone to
preemptively investigate if the laws are helping or if the laws are hurting.

~~~
toomuchtodo
Yes, agree entirely. You have to balance the wants of existing citizens with
the housing demand from potential citizens.

------
nis10
In an ideal free-market you only need 2 regulations:

1.Prevent monopolies and 2. Fight fraud.

1\. According to insideairbnb.com there are 8,946 full time high-availability
airbnbs in Toronto. However if we look regular apartments available for rent
on zillow , padmapper.com etc, there are only 8,429 or less units available.
This means airbnb has a monopoly on available living space. We don't need new
regulation, monopolies are illegal. It's no surprise during the busy summer
events a 1 bedroom airbnb can shoot up to 800$/night.

Annectodal evidence confirms this. I've been living here for 13 years. 2/3 of
the new condos are usually empty, I'm not exaggerating. Wether you look at
them year round from the outside, ask people if anyone actually lives on their
floors, talk to the concierge in different buildings, they're more than half
empty. This is a combination of airbnb and also the foreign investor market
for condos that are "never livded-in". Also this is not uber, uber is great
because it has competition from lyft. AirBnb does not, landlords are basically
their contractors, i don't pay them, i pay airbnb, they set the price and
promos. They control more than half the market. They further enhance scarcity
because airbnb's are profitable even if they're unused for 2/3 of the time, so
if we look at housing as units of a 'good-nights-sleep' , we can clearly see
how this is anti-competitive behaviour.

2.Fight fraud: There are no employment checks for foreigners getting a
mortgage in Toronto, as long as they provide a 34% downpayment and have in the
bank about a year of mortgage payments. I can't legally compete with that. I
don't have some third world factory, gambling business, foreign politicians in
the family laundering money through me. I'm just a hard-working citizen, my
student landlord has literally never had a job in their life, this is
borderline feudalism at this point.

~~~
chillacy
> This means airbnb has a monopoly on available living space

Unlike Uber and Lyft, AirBnB doesn't set prices, condo owners do. If condo
owners are colluding then that's a different issue.

~~~
nis10
More than half the prices are set and paid on AirBnb. The app has no
competition, they're a monopoly. Landlords don't give out $75 promo credits
for new users.

~~~
chillacy
Let's say tomorrow VRBO takes over 50% of the market. How would apartment
listings change in price and why?

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canada_dry
To play devil's advocate... Airbnb is a much better alternative (for
landlords) vs leasing out and that's why it's wildy successful in Toronto.

Landlords often find themselves in a costly and exasperating battle dealing
with a shitty tenant.

Once a shitty tenant moves in, it can be several months of legal battles to
remove them... and the landlord is out-of-pocket thousands of dollars.

Airbnb does away with most of this risk.

Update: www.airbnbhell.com demonstrates, it has it's own risks!

~~~
dr_orpheus
There are a lot of people that are preferring to do Airbnb instead of
traditional rentals. Your comment reminded me of another article (may have
been previously posted on HN).

[https://www.theguardian.com/cities/2018/nov/29/empty-
dublin-...](https://www.theguardian.com/cities/2018/nov/29/empty-dublin-
housing-crisis-airbnb-homelessness-landlords)

~~~
dorchadas
My thoughts always turn to Dublin (and Galway) on this too. It's an issue I've
noticed firsthand there when I was looking for a place to live. Really
difficult to get a year long lease. Landlords like to rent out in summer to
tourists, then try to get undergrads in the fall (if they make the switch at
all with it...)

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KingMachiavelli
Besides the effect on the housing market, I think many towns and cities are
regulating short term rentals (AirBnB) in a manner that falls prey to the
classic XY problem. (You want X so keep suggesting and focusing on Y) This
often tags the form of enacting severely limiting occupancy limits in the name
of reducing parking demand despite the fact that the majority of the occupants
are often children. (Family reunions are very common so having 6 adults +
children can quickly _seem_ like a lot of people).

I would argue that local municipalities should _actually_ enforce noise,
parking, and other peace keeping ordinences _instead_ of (heavily) regulatting
short term rentals directly. If the current laws are insufficient at keeeping
tourists/renters in check, they should enact additional laws based on actual
input from their constituents to address real complaints instead of regulating
AirBnB and short term rentals.

A shitty neighbor is a shitty neighbor independent of if they are a home owner
or a renter. If local ordinences were actually levied against the owners of
properties with misbehaving guests, they would have an economic incentive to
regulate their tenants more carefully.

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cde-v
Airbnb is squeezing every metropolitan housing market.

~~~
samlevine
It isn't in Tokyo and other Japanese cities.

Which don't exactly have laissez-faire approaches to folks renting out their
properties, but the larger issue is that Japanese cities are just generally
better about building enough housing to meet demand compared with most
American and Canadian cities.

~~~
yao420
Not really a fair comparison.

For example the whole of Japan had 28 million visitors in 2017[0].

I couldn't find more recent stats but Austin TX had 20 million visitors in
2011-2012.[1][2]

Tokyo metro has a population of 13million Austin tops out at 2 million.

Austin also has some of the highest airbnb usage, 400k+ guests in a year.[3]

I'm bring up Austin because I live there and definitely experience Airbnb
affecting the prices.

Sure we all want more housing but the fact is that investors love to buy homes
in cash to rent out for events driving the existing stock prices higher.

[0] [https://www.cnbc.com/2018/03/23/japan-welcomed-20-percent-
mo...](https://www.cnbc.com/2018/03/23/japan-welcomed-20-percent-more-
tourists-in-2017--and-the-number-is-growing.html)
[1][http://www.austinrelocationguide.com/2012/Tourism-in-
Austin/](http://www.austinrelocationguide.com/2012/Tourism-in-Austin/)
[2][https://www.bizjournals.com/austin/news/2011/09/28/survey-
re...](https://www.bizjournals.com/austin/news/2011/09/28/survey-reveals-more-
people-are.html)
[3][https://www.bizjournals.com/austin/news/2018/01/30/airbnbs-m...](https://www.bizjournals.com/austin/news/2018/01/30/airbnbs-
most-popular-places-to-stay-in-austin.html)

~~~
greeneggs
> For example the whole of Japan had 28 million visitors in 2017[0]. I
> couldn't find more recent stats but Austin TX had 20 million visitors in
> 2011-2012.[1][2]

These numbers are apples and oranges. For Japan, the number is for foreign
tourists, while for Austin it is for all tourists. Tokyo and other Japanese
cities also have domestic tourists, which aren't being counted in your 28
million number.

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personlurking
One can see the Airbnb data for Toronto in the link below:

[https://www.airdna.co/vacation-rental-
data/app/ca/ontario/to...](https://www.airdna.co/vacation-rental-
data/app/ca/ontario/toronto/overview)

------
refurb
Interesting article considering Toronto's housing market is rolling over in a
bad way.

 _In fact the average detached house in the jewel of the GTA is changing hands
for 12% less than in the Spring of last year and a crispy 25.6% under what it
commanded the previous year._

[https://www.greaterfool.ca/2019/02/06/nowhere-to-
hide/](https://www.greaterfool.ca/2019/02/06/nowhere-to-hide/)

~~~
woah
We’re either in an affordability crisis or a housing crash. Either way, AirBnB
must be the one to blame.

------
motohagiography
Interesting to view Airbnb as a kind of capital flight for property. The
risk/reward of short term rentals is better than that of tenants, and so
owners are switching.

The main gap is between the risk adjusted value of a lease vs. the potential
income on short term rentals. Theoretically, over the long term, the net value
of a lease should be greater than what you can net from the short term market,
but something has broken that.

Also, given that rental income is taxed as regular income at the top marginal
rate that the owner pays, does that not mean an owner must charge at least %40
more than their mortgage payment to break even? Given most of those condos
have mortgages from people with middle class jobs, pricing that in creates a
dead loss that would cause rent increases by itself.

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dawhizkid
Ironic to think how damaging Airbnb can be to cities with tight housing
markets and yet run by mostly leftist executives and employees...

