> It vastly differs from how Airbnb often pitches itself: as a personal platform through which residents, either out of town or looking to put a second bedroom to good use, will occasionally rent out their spaces.
> Often, the largest “hosts” are in fact businesses that manage vacation rentals on behalf of homeowners.
City of Vancouver regulations (as ineffective as they are) explicitly targeted and banned these sort of commercial operators.
What does Airbnb's valuation look like if such a significant share of their revenue comes from the sort of activity that is actively being banned by more and more cities?
Our rental market is absolutely cut-throat right now. Affordable rentals on realtor.ca aren't lasting more than a couple days after they go up.
Airbnb changes the demand curve by letting residential zoned property be commercial short term rentals. It also doubles down by undermining actual hotels.
So you can react by saying just more houses. And I can react by saying “don’t do Airbnb, which is often illegal anyway.” We’re both right.
Capital shouldn’t have higher preference over citizens.
Most cities would like to keep their growth in check somehow so they have the appropriate infrastructure ready for it. Things that distort that (AirBNB, Chinese speculators, etc...) throw all of that off.
It sounds like you are claiming that it is impossible to out build housing demand. This cannot be true. There is a finite population of people that want to live in any one place.
The NY Metro area is the definitive example of what you are talking about. Every lane of highway or bridge built increased traffic because it enabled someone to get the house they wanted cheaper somewhere else.
Now, construction costs are too high and land is in tight supply. The result? Infill of formerly blighted areas (aka gentrification).
With housing, the induced demand is mediated by housing prices. More housing lowers prices, which attracts more demand, which raises prices. But it's not going to raise prices above where they would have been had no new housing been built. (If prices were higher in the more housing scenario, what's stopping the person who moved to the city at those higher prices from moving in the less housing scenario?)
Also there are cities where housing prices have stayed in check, and generally they have done it by building more supply. Here is a ink to a graph that show the difference between Dallas and Atlanta and San Francisco ( https://fred.stlouisfed.org/graph/?g=oe8E ). For reference Atlata had over twice as many new units constructed per year as San Francisco with half the population. This is why I say denying the supply side fix is dishonest. There is no reasonable measure where what you claim about supply attracting demand is true.
Dallas and Atlanta are nit great examples, as they basically have unlimited land to expand on.
House prices are not growth, and they generate the tax revenue that you say helps get the infrastructure ready.
> Building enough housing to roll back prices to the "good old days" is probably not realistic, because the necessary construction rates were never achieved even when planning and zoning were considerably less restrictive than they are now. Building enough to compensate for the growing economy is a somewhat more realistic goal and would keep things from getting worse.
Unless we do something dramatic and Bucky Fuller-istic like...
> If the (first) model is correct, it would take a 53% increase in the housing supply (200,000 new units) ... to cut prices by two thirds
There is no reason you couldn't build that many new units over a ten year period. In fact if San Francisco increased its construction to match D.C. it would have that many new units in less then a decade
edit: Just to clarify, the only limitation is political. People don't want to allow the construction required and would rather pass protectionist laws that effectively lead to the Housing and Homeless crisis you see in SF and LA. In so much that you can convince Rich San Franciscans that those poor people they keep saying they care about should be able to have a reasonable path to getting housing you could fix it in less then a decade
One the one hand, I grew up in SF and it's been hard coming to terms with the idea that I'll never be able to own my own home here. At this point I'm just glad that there's still (relatively) cheap land in the eastern part of the state.
One the other hand, I don't want the city I love to be changed for the worse by rampant growth with the admixture of profit-driven decision-making to make the situation even more complicated. I've already got the futureshock, I don't think more-of-the-same accelerated 10x would result in a great place to live.
One the gripping hand, I'd love to renovate the mega-structure of the Bay Area, clear off and revitalize the old creeks and replace the lost housing with arcologies.
The city has changed and its a hellscape. No one can live there unless they bought their house in the early 90's or before. Teachers, Police, Firefighters, and every other kind of public servant is paid below the poverty line for the city they are supposed to serve. Low income people are forced further and further out, and entire economic sectors are starting to experience people insolvency. The city is being slowly turned into a monoculture of tech workers, and office buildings. The only thing the people of the city can bring themselves to do is try to legislate ever more controls on change and try to keep the city in some sort of 80's time warp. However they just banned selling e-cigarettes, and passed a law making sure the government doesn't use facial recognition software so I guess they don't feel the crisis of homelessness or high rents is something that should be given their attention.
I am assuming that for the sake of discussion. Part of the reason I link to that article is because the author seems to me to be data-driven and careful about how much you can accurately predict from the data he collected and analyzed.
> people don't want the city to change.
I can't speak for everyone, but for me it's not about preserving the city in amber, I don't want it to become like Manhattan or Tokyo. Like I said above, I want to make cool high-tech arcologies and revitalize the ecology of the Bay.
> The city has changed and its a hellscape. No one can live there unless they bought their house in the early 90's or before. Teachers, Police, Firefighters, and every other kind of public servant is paid below the poverty line for the city they are supposed to serve. Low income people are forced further and further out, and entire economic sectors are starting to experience people insolvency. The city is being slowly turned into a monoculture of tech workers, and office buildings.
You're preaching to the choir here brother. You left out the traffic and insane drivers.
> The only thing the people of the city can bring themselves to do is try to legislate ever more controls on change and try to keep the city in some sort of 80's time warp. However they just banned selling e-cigarettes, and passed a law making sure the government doesn't use facial recognition software so I guess they don't feel the crisis of homelessness or high rents is something that should be given their attention.
Yeah, SF city politics is a shit-show. Everyone is so busy being Progressive that they can barely make any progress. (You like that line? You can use it. ;-) But you're being unfair IMO. I watch SFGOVTV and I can tell you that people are very much concerned about and working on homelessness and out-of-control rents (along with a lot of other weird stuff. Like "Legacy Businesses", what's up with that? I'm kind of a lefty and even I feel that that's "commie-pinko" level economic meddling. But then again, I like most of the businesses that get on the registry and receive money. I can't really hate something too much that if it helps them stay viable through the rough seas. But then again again, it's such a blatant political machination: you have to get a Supervisor to sponsor your business to be considered. Or what about this new system they're rolling out to make homeless people use a special card and account with the city to receive any help. Orwellian surveillance is fine if we are using it to help them, eh? Or the police whose job it is to board buses and trains and "check your papers" to make sure you're not evading fare. That's not progressive, it's imperial. What would be progressive is making the buses free to ride. Or doing like in Seattle: it's not the drivers' job to collect fares. You can ride the bus in Seattle without paying. You're supposed to, but if you're broke you can just mumble an apology to the driver and ride anyway.)
Er, um, rant over. Sorry about that. SF city politics is a hellofa drug...
Anyhow, we need to come together and think clearly about things to solve any of this. We have to balance growth (population and economic) with quality of life, advances in technology, ecological harmony, international politics and financial stuff, etc...
Commercial real estate is about cashing in quickly and selling shares of accelerated depreciation. Not gonna happen.
Woke rich people will continue to feel good about not chasing off the homeless people sleeping behind the garbage can and cash in. When the market tanks, they’ll walk away.
Sure, but how big is that change? The article references 31,000 homes in a country of 37 million people. If you assume the average of 3 people per home that's only "displacing" ~0.2% of the population.
So, now you not only displace people from that location you want the displacement to casecade across the rental market forcing large numbers of people to have a worse commute and or pay more in rent. Perhaps some people could possibly have a major problem with that idea.
PS: You can actually just search locations on Airbnb it’s rather concentrated magnifying this impact.
If by offering short term rentals you take 30% of the rentals off the market (which may only be 100 apartments), that has a huge impact. Rental prices are all about marginal demand.
There are other factors as well — there is a de facto price floor due to section 8 prevailing rent. Because of factors like the “just build” doesn’t work, as profitable new construction is high-end, and the older stock tends to turn into defacto hotels.
1 We had surplus housing. AirBnB would (probably) be fine from an availability perspective.
2 We have adequate housing. AirBnB would still not be good. A good portion of the available places for long term rent would be taken up by short term tenants and would drive up prices.
3 We have not enough housing. AirBnB same effects as 2, but even more so.
It seems to me that we live in situation 3. We need to build housing AND curb the excesses AirBnB. Just building more housing won't fix the problem. Just banning AirBnB won't suddenly give us an adequate housing supply.
I don't think anyone is going to get a lease somewhere just to visit.
What seems strange to me is the idea that tourists and small time local economic actors profiting handsomely from short term rentals should take priority over a majority of local citizens. If citizens don't like your plan, out your plan goes (very similar to how California residents keep killing upzoning).
If you're a local citizen and want to put a wrench in short term rentals, engage in the political process. Go to your representatives and tell them to enact legislation to do so if that's what you want, and if they won't you will assemble with other local citizen voters and vote them out. That's democracy.
Are you implying that it's impossible to construct an additional 31,000 homes across all of Canada?
If 100% of those units were converted into AirBnB that's another problem: why is the demand for short-term rentals so much higher than long-term ones? Again, not really AirBnB's fault.
I know that's partially the case in Ireland of why it's so hard to get housing. Landlords can make a full year's rental salary over the summer with AirBnB...Why rent long-term when you can do that?
It's also really unfavorable to be a landlord (at least in Ontario) as it's possible for a tenant to take up a lease and not pay for almost an entire year while you legally evict them. So I suppose it's understandable why people prefer to AirBNB their units, aside from making more money.
Really shitty situation all around.
Do you have evidence that the eviction issue is wide-spread enough to cause landlords to prefer AirBnB-ing to renting?
It looks like city centers have the highest density of AirBnBs. I find it hard to believe that people renting in city centers (let's be honest these are usually luxury apartments) not paying their rent are so frequently that the only recourse is for the landlord to turn to AirBnB to turn a profit.
To me, it seems the profit motive is a more likely explanation. The landlords have the ability to long-term rent, or use AirBnB. They _choose_ to use AirBnB because it is more profitable.
Just playing devil's advocate, but that assumes that the landlord didn't factor those things like eviction law into their decision of what type of property to buy and where to buy it.
Maybe the landlord made the decision between buying a rental property in a suburb and buying an AirBnB property in a city center and decided that the former case was infeasible due to eviction laws.
For instance, you can buy a small apartment building in metro vancouver for 2-5 million CAD. Same price as a couple of luxury apartments downtown.
But of course, who's going to pay for them and run them well? The nice thing about Airbnb is it created a competitive market, mechanisms to eliminate bad actors, customer service, price adjustments, insurance, and so on. You wouldn't get those things with a couple of hyper-efficient hotels. So it almost seems like we need the state to build the structure, and then allow people to bid on owning the rooms, and then renting them out on Airbnb. That way there could still be competition that drives all the useful features of Airbnb, but in a much more efficient form than the completely inefficient use of land that buying houses results in.
If landlords think short-term rentals are better for business than lease-based tenancy, then the amount of housing that would need to be built is much higher than demand.
Hopefully some regulation will be enacted as a result of this study but I won't hold my breath. Way too much money to be made by banks and RE agents in artificially restricting supply.
What if it's in a major international tourist destination?
Are you ideologically against the right of private property in general, or only against the specific right to own houses?
It's well accepted that the highway boom of twentieth century had a negative impact on city life. That's why the Big Dig put that city-cutting highway underground in Boston, and (one reason) why the viaduct in Seattle is going underground, and why the I-93 corridor in Massachusetts became a public transit route instead. Here's a longer list:
Transforming private residences into hotel rooms makes it easier to visit and harder to live. Acknowledging this doesn't mean people don't like Airbnb, it just means that both the positive and the negative impacts of their business model are being discussed.
In New York, for instance, Airbnb directly accounted for a US$380 increase in median annual rent costs, according to a separate report from Prof. Wachsmuth last year that was funded, in part, by a hotel-industry organization.
Publish the actual paper or this is just vaporware nonsense. This is a non-peer-reviewed paper with zero credibility, thats been seen by a small handful of people. They could literally write a paper about the moon being made of cheese and have the same credibility. They dont even make the source material available in their article.
I dont want to sound overly critical, this looks like a legit finding that matches up with my experience of the housing market, but Im completely fed up with people publishing their "findings" without reporting where the data came from and how they got to their conclusions. Until they publish the paper, this should be dismissed out of hand. There's such a long history of people completely messing up their statistical methodology that you cant believe anything until you see the actual numbers/methods.
The lead author has said that the paper will be available for download tomorrow: https://twitter.com/dwachsmuth/status/1141665262065860608
The G&M article says it's a peer-reviewed study and fully funded by the federal government, so the likelihood of moon cheese methodology is low.
All right, all right, perhaps we can we have some respect for other professions around here?
You know the human world isn't the robot world, it's not built on 'data' it's built on relationships, agreements and good faith.
Even without the data it's not non-sense. It's a pretty rational hypothesis. Being rational definitely doesn't make something right, but it's about as far away from non-sense as you can get.
How can you possibly do that when you can't see the raw data and methodology yourself?
>In the past, Prof. Wachsmuth has done consulting work and produced reports for governments, and civic and business groups, including a hotel-industry association. This study, which has been peer reviewed, was funded solely by the federal government, however.
A person can make substantially more money renting short term to a tourist than they can to a long term tenant, so accordingly the land valuation is less and less based on the underlying assumption of land being rented long term to a person that can only afford what a local income provides.
Those flats on Airbnb have to come from somewhere and there are rental agencies that specialise in managing properties exclusively for Airbnb, none of this existed before and some of those properties were taken from the long let market, which would drive prices up.
Too bad this has to remain a fantasy. https://www.vox.com/a/new-economy-future/urban-sprawl-housin...
For the record, I'd almost say increased tourism in most places isn't a net positive.
It's perfectly possible for immigration to be a net positive for the economy and for it to have negative affects on the availability of housing.
As the article states, 31,000 is 1.5 percent of rental accommodation. If we assume that half of the 300,000 immigrants rent, and that they tend to rent in couples, that's 75,000 rental properties consumed by immigration each year -- or about 3.5 percent. That's an additional 3.5 percent of rental housing stock each year, a much faster increase than the number of AirBNB rentals.
Regardless of whether you think immigration or AirBNB are major causes of a housing shortage, it's disingenuous to argue that immigration has less of an impact than AirBNB.
EDIT: It's also worth noting that construction is expected to slow over the next five years, whereas immigration is expected to grow.
Rallying against AirBnB is so silly -- no matter how you slice it it's always a minor factor in self-inflicted "housing crisis" scenarios.
- Crappy local policy prevents creation of 300,000 housing units: nobody panicks.
- Startup removes 30,000 housing units from the market: everyone loses their mind!
My neighbors airbnb their house every weekend. So nice loud music and rude guests to deal with fairly often. Of course why not? They are not accountable to rest of us full timers in my neighborhood.
My place was broken into by someone who stayed at it before using Airbnb.
One guest almost started a fire and had to be removed.
Checking in and out of airbnbs can be a bit of a nightmare. Everyone has their own process for checkin.
Airbnb destroying local real estate markets is no surprise. They've been doing it for several years and getting in trouble for it for several years.
Growth at all costs - no matter what it does to local markets or people's lives. I'm sure their impact on local economies is the least of their concern until the governments attached to those economies start to speak up.
I guess your experience may vary depending on what type of place you have and what type of owner of the unit. It’s really not hard to filter out the idiots with the review system.
The people who I have met waiting for the elevator were always super polite when I see them and our walls are thick enough with concrete where I don’t hear the music unless I’m close to my living room wall, which is far from my bedroom.
The owner of the unit, an older retiree from the area with just the one unit AFAIK, was very polite and open about it too and gave me his number in case I had any problems (which I’ve never used). But 99% of them seem to be European or Chinese travellers, who at most occasionally need some help with our complicated fob system. It’s only rarely young people who are partying and if it is it’s always the weekend where I’m more tolerant.
Plus I’ll never forget how Airbnb saved me when I flew into SF last minute as a 20yr old and the only option was a $500 hotel or not sleeping that night, because my prior arrangement with someone fell through when they were unexpectedly out of town. I was fortunate to find an Airbnb guy who accepted my request at 9pm after I got out of the BART with a dying phone. I was literally preparing to spend the night in a park with my luggage. So I’m a bit biased regarding Airbnb and the alternate options without it (which no one seems to offer or care about in their calls to ban it).
I don't see why people are so bothered by what other people do. Any normal community is going to have people doing things and some of those things make noise, smell or sound.
that's undeniably true for all property in most places that have any tourism value, but it's a short-term value akin to "if we light this city on fire, we can probably make a lot of money selling tickets to watch it".
People also have to live in the city for it to have any value as a tourism destination. If an apartment can host a hundred visitors a year but there's no service industry staff living within 50km because all their houses have been converted to AirBnB's, your tourism industry is going to collapse.
Real estate isn't really that controlled by market forces. Its a means to an end and pricing does not actually represent best utility.
I agree in part and disagree in part. I do think that regulatory arbitrage is part of what makes Airbnb, Uber, et al valuable. I don't think it's the exclusive source of their margins. They generate a lot of value through creating a liquid 2-sided market.
AirBnB properties were originally zoned for long-term housing and operate as not-long-term housing.
Coincidentally, I spoke with someone on the weekend who can't take it anymore and wants to sell their unit or put it to work as an AirBnb because of the amount of prostitutes, drug dealers, etc using the building as short term rentals through AirBnB.
Canada really needs to get a grip on foreign ownership. 10's - 100's of billions of capital outflows over the last decade from China, Hong Kong, Iran, etc have created a tough environment for the local population. Co-op's could possibly solve this problem by creating rules where short term rentals, foreign ownership, etc are not allowed. Although it's tough to get a mortgage for a co-op condo.
I had to stop here.
1. It is not always the case but that person (fortunately) has the freedom to choose another location.
2. Guarantees don't really exist unless you are talking physics theory and even that sometimes surprises people.
> much more money is to be made with Airbnb, because people who are staying for 5 days pay rates that are was higher than the typical yearly rental fee for the same place.
You made my original point. This transaction is a win-win for both parties involved.
The rest of your argument centers around stifling this transaction to subsidize an artificial-non-sustainable market.
Yes, this effects real people in real ways but they need to take _personal_ action and do what's best for them personally instead of effecting change on the rest of the area.
We should just suck it up, let foreign investors buy up property to rent to other foreigners, and commute a couple of hours to work every day instead? Canadians are polite, but we're not THAT polite.
I have a basement apartment that my friend rents out and when he goes on trips he rents it out. If he leaves I would consider AirBnB even if long term because it would save me a lot of trouble.