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Airbnb is squeezing Toronto’s housing market (vice.com)
51 points by ericzawo 10 days ago | hide | past | web | favorite | 66 comments

It appears that unfair and exclusionary zoning is squeezing Toronto's housing market: https://www.cbc.ca/news/canada/toronto/landlords-housing-adv.... 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....

The framing of the article's headline is bad.

> The framing of the article's headline is bad.

Vice's view of politics is always like a naive high school kid who hasn't ever had a real job or read a single book on economics. Which probably accurately describes their (largely freelance) 'journalists' or more accurately bloggers.

Makes for good clickbait for their demographic though. In an ideal world they should really have stuck to fashion and culture (which their 'talent' is good at) and left the serious topics to people who have a strong grasp of the subjects. But that's boring and doesn't generate outrage on social media aka clicks -> ad views.

> Vice's view of politics is always like a naive high school kid who hasn't ever had a real job or read a single book on economics. Which probably accurately describes their (largely freelance) 'journalists' or more accurately bloggers.

> Makes for good clickbait for their demographic though. In an ideal world they should really have stuck to fashion and culture (which their 'talent' is good at) and left the serious topics to people who have a strong grasp of the subjects. But that's boring and doesn't generate outrage on social media aka clicks -> ad views.

The author of this piece worked at Bloomberg and CBC prior to her position as the Economics & Money editor at Vice.

"But that's boring and doesn't generate outrage".

Which part of that discredits what I said about the quality of content at Vice news? Her 18 years working as a “fill in“ news anchor/talking head? In between a short stint as PR pusher a bitcoin advocacy company in Toronto before earning the title as ‘editor’ of the Finance section of Vice?

Even if she’s somehow an exception to the rule at Vice as the editor, aka top tier in her category, she’d be a rarity. But looking at her previous output (only a few as she’s a recent hire) there are quite a few that fit into the clickbait vs signal ratio pandering to an ideological niche.

That’s fine if that’s your thing but I put higher standards on the HN front page.

Although I haven't been to Toronto, there's an alternative to zoning: great public transportation.

In Zurich I can get from any place to any other place easily because the tram/bus/train connections are always waiting for each other, and are almost never too early / late.

People can use cars if they need it, but it shouldn't be the first choice generally.

Are you saying that Zurich is a champion of affordable housing? Why is Zurich a model we should look to when trying to fix zoning?

I'm not knocking their transit. I'm sure it's great. But you can have good transit, zoning, and affordable housing. See Berlin.

And, yes, Berlin has it's problems, and I'm sure somewhere else is doing things even better. I'm just curious why Zurich is a model we should look to.

Zurich is very expensive, so of course I'm not saying this. But it's a beautiful city, so by allowing destroying its center and making houses higher you trade something for something else. To tell you the truth I'm all for getting rid of zoning generally, but it's not as clear cut case as making sure that trains / trams / metros / buses are clean, and run on time, never too crowded, and have predictable connections.

Many of my colleagues were living outside Zurich in smaller towns / villages (me too), and we could get to work in 20 minutes, which was for me great actually, I loved sitting on the train and enjoying the beautiful view.

Toronto does have good public transportation. Every day, almost a million people use the Toronto subways/buses/streetcars.

In addition, a large number travel to/from the suburbs daily by via regional train system (GO Transit)

I commuted from Kitchener to Toronto for work every day from September to December for co-op on the GO "Express" train. It was 2 hours each way to travel about 100km. It's just about the farthest thing I'd call from "good public transit."

You're living two cities over from where you work. What did you expect? This is not a normal "commute".

If you drove that during rush hour, you wouldn't be travelling at max speed the whole time, and likely would also take two hours to travel, potentially more (Google predicts up to 2 hours and 40 minutes).

Step 1: define "good"

Step 2: compare to alternatives, factoring in geography, culture, scale of operations, political environment

It's a hugely complex issue. I wouldn't define Toronto's public transit as bad, but it's not world class.

Step 1: define "good"

The train takes 2 hours to travel 100km. Cars can do that distance in one hour, despite having to cope with traffic. That's pretty appalling. Good public transit should be faster than a car along its main corridor.

Apart from geography, those other factors are reasons, not excuses. Lots of people here look down on public transit and associate it with poor people. That's a problem to be rectified.

I completely agree with you!

And if it only were so easy!

Toronto, and Canada, is very much like the US in terms of its reliance on the car to get around. Except in urban centers, and NYC, the first choice of transportation is almost always the car. This is not just a mindset. The lack of a proper transportation infrastructure and the sprawling nature of North American cities make it difficult to get around without a car.

In fact, I would say urban sprawl and traffic are worse in Toronto than in most American cities (I'm originally from Toronto and I've lived in the US for more than two decades). And what about the surrounding regions, like York and Peel regions? I would say the prospects for an adequate public transportation infrastructure in the surrounding regions of Toronto are even worse, and the population in the surrounding suburbs rivals the population of Toronto proper.

That was not my experience with Toronto at all. I lived in the Liberty Village area over the summer and could very easily get around the city via public transit. The only time we drove was to get to get to the movie theater in Etobicoke. Eastern Toronto was extremely easy to get around.

Yes, exactly. Liberty Village is very close to downtown Toronto. I wasn't commenting on the public transportation close to city centers.

Public transport is easy when the city is reasonably sized. Toronto is a huge spread out city. The surface area it covers makes public transport really difficult which is not great for the standard of living.

Then why are cities in the US where the population is currently declining also seeing significant increases in real estate pricing?

Do you think it is at all interesting that housing pricing on the west coast of Canada and the US recently flattened out at the exact same time the economy slowed in China?

Every single city in Canada and the US currently has this problem. Including Houston which has very permission zoning.

Actually, the flat lining investment from the Chinese in Vancouver and Toronto is partially due regulations put in place exactly for that purpose. Additional taxes on non-primary properties and vacant properties were aimed at curbing this.

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?

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.

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).

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.

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.

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.

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

With limited livable space on the Earth, "rights over their community" is not a tenable position. If every person had significant rights over a large area of land beyond where they explicitly own, there'd be no space left for other people.

It seems to me that people want to live in a place because it's a good place for living.

In your opinion what is the end game of not zone restrictions?

I was trying to tackle the "too many people" problem directly. You've given a counterexample to the `manicdee's assertion that '"too few houses" is the same problem as "too many people."': well done!

Freedom of movement only allows you to get to a destination: it doesn't guarantee that you'll have sufficient resources at your disposal to do something once you at your destination (e.g. acquire a house, or find a job).

Population growth in developed nation's is generally below replacement levels.

People migrating to more dense areas is the problem.

Because people add value to a community... what would you suggest, blockading the routes into the city?

Unless you have an idea for reversing the trend of urbanization, telling people where they can and can't live is going to be a tough sell.

I think "too few houses" is the solution to "too many people". There's always somewhere else to go where there's "too many houses".

Immigration is good for the economy and is a fundamental liberal value.

Economic growth, pensions...

Both of those things can be correct. They can both contribute towards the housing squeeze.

Yes, but one of these things is increasing freedom, and the other is restricting it. In an ideal world, homeowners would be able to rent their place son AirBnB, and we'd have enough housing for everyone. The reason we can't live in that world is exclusionary zoning.

In such an ideal world, the neighbors could then charge the Airbnb-owner for the value he derives from their presence making the AirBnb a desirable option (after all, AirBnB markets its services to people who want to "live like locals), and for any negative externalities imposed upon them by the AirBnb, such as increased traffic, liability risks, etc.

Ya, some kind of externality pricing there might be reasonable.

Zoning is there for a reason. Airbnb does not follow zoning for commercial or hotel/motel regions and invades on residential zoning. The zoning system would work a lot better if Airbnb did not literally break the law. People buy residential apartments and houses then rent them out on Airbnb because that is a more profitable business model than leasing them to new tenants or selling them. If there needed to be more house zoning, then the price of prime real estate in a residential zoning area would be worth more to lease than rent out.

> The zoning system would work a lot better if Airbnb did not literally break the law

The zoning system was completely broken long before AirBnB showed up. Yes, Airbnb does exacerbate the already existing issues with zoning laws...but that's not an argument for eliminating Airbnb, it's an argument for eliminating or changing zoning laws.

Precisely this. Go to any city in the world where new housing is not artificially constricted by local governments and you will find that the effect of airbnb rentals on housing prices are minimal.

I will not deny that the presence of airbnb rentals in a city can drive up the incremental cost of housing, but it is a proximate cause, not the root cause. The root cause is artificially constrained supply.

Toronto is a sea of construction cranes[1], so it's not certain that zoning is the issue. Sure if you want a single detached house you have to be a millionaire, but the supply of multi-unit dwellings is increasing quite quickly.

1: https://www.blogto.com/city/2018/08/toronto-has-highest-numb...

Hey look over there, that guy is doing it too!

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.

I've noticed the issue in Ireland too. People will rent out AirBnBs for the summer to tourists, then hit students for the school year. They can easily make more money than they would renting it to a long-term renter year-round. It's quite frustrating when you're looking for a year-round one, as they'd rather have that tourist money. It's really hurting cities like Galway and Dublin. Though, of course, it's not the only issue in the country with housing.

Ideal market regulations also need to discourage negative externalities and encourage positive ones. A chemical plant dumping toxic waste into a river is neither monopolistic nor fraudulent, it's simply causing other people problems for private gain.

> 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.

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.

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

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!

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).


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...)

Airbnb has its own risks, which you multiply by having many, many, many times more people going through your place, and not caring about it like a home.

There's also far more overhead in terms of managing it.

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.

Airbnb is squeezing every metropolitan housing market.

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.

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... [1]http://www.austinrelocationguide.com/2012/Tourism-in-Austin/ [2]https://www.bizjournals.com/austin/news/2011/09/28/survey-re... [3]https://www.bizjournals.com/austin/news/2018/01/30/airbnbs-m...

> 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.

Are you really comparing the number of foreign tourists visiting Japan with the number of out-of-city tourists visiting Austin? Does anything strike you as off about the numbers you cited?

like some of the other commenters, I would say without data, it is hard to say how much Airbnb is a factor but I would hypothesize that it is a contributing factor to tight housing markets. I was wondering about this impact particularly when using Airbnb for longer stays (like 2weeks - 1 month or longer).

Nobody gets their shit together until there's an existential threat. That's just how local government works. The system is biased toward the status quo and inaction (by design, this is not a bad thing). You really need a super-majority of the population to want something before the politicians can actually do that thing. Expect them to keep squeezing until politicians start losing elections because of it.

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


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.


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

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.

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

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