The Housing Bubble

A weekend topic starting with the Los Angeles Times in California. “On any summer weekend, Venice Beach is the ultimate urban beach carnival. But unlike other tourist spots Venice is still primarily a residential neighborhood. Because of that, Venice has become an epicenter of Los Angeles’ struggle over short-term rentals, what you might call the Airbnb Problem. Over the course of four hours, I visited half a dozen buildings on or very close to the Boardwalk that have been converted, without permits, from long-term rental apartments to short-term rentals, or — yes — let’s call them what they really are: hotels.”

“InsideAirbnb is a website that tracks how Airbnb impacts city rental stock. It estimates that at least 76% of Airbnb rentals in Venice (or 1,582 out of 2,085 listings) are entire homes or apartments, which means, essentially, that those units have been removed from the rental market at a moment when the city’s housing shortage is Topic A on the lips of every politician.”

From ABC 7 Chicago in Illinois. “Despite Chicago’s ordinance limiting the use of Airbnb, some South Loop condo owners said their building has been inundated with people using the popular site. The roof deck of the building at 9th and Wabash overlooks Grant Park and is a short walk from Lollapalooza, - but only for full-time residents. Following the city ordinance, the building’s condo board submitted paperwork to ban home-sharing there. ‘We are seeing either the city is not enforcing this ordinance, or Airbnb is ignoring it,’ said Luke Hanley, condo board president.”

The Idaho Mountain Express. “As short-term rentals have grown in popularity in Ketchum, the rental units on the long-term market have dried up. That was the conclusion of a year-long research project by Genevieve Pearthree, a graduate student who was hired for a city of Ketchum fellowship to study short-term rentals. Pearthree found 471 units listed on short-term rental websites such as VRBO, HomeAway and Airbnb on one day in February. She analyzed listings on VRBO last fall and found 332 units consistently rented on that website.”

“At the same time, the number of long-term rentals declined precipitously in Ketchum, she said. Ketchum had 38 studios for rent in 2012 but only four in 2016. One-bedroom units dropped from 70 in 2012 to 12 in 2016. Two-bedroom units declined from 124 in 2012 to 16 in 2016.”

“William Glenn, a property owner in Warm Springs who uses VRBO, said he rented his property long-term from 1979 until 2013, and had a tenant trash the property before being forced to move out. After that, he said, he started listing his unit on VRBO and has had no damage to the property and only positive experiences renting it to short-term occupants. ‘I’m glad that the state Legislature tied your hands,’ he said. ‘I have no obligation to provide affordable housing.’”

The Canadian Press. “New research suggests a small number of large commercial property owners are the most successful on Airbnb and are eating up the local supply of housing in Canada’s three largest cities. A team of urban planners from McGill University looked at Airbnb trends in Montreal, Vancouver and Toronto and noted a 50 per cent increase in the number of short-term rental properties year over year. Lead author David Wachsmuth said his team found that 10 per cent of hosts account for nearly half of the $430 million yearly revenue in the three Canadian cities.”

“The study suggests the number of entire homes available, full-time listings, and hosts with multiple listings are all on the rise. ‘What ties them together in common is these are not families renting homes while they’re out of town … these are people using Airbnb and other short-term rental platforms as a platform for making money off housing and doing so in a way that’s reducing the available supply of housing in those cities,’ he said.”

From CBC News in Canada. “Officials in Canmore are trying to cut down on the growing number of illegal vacation rentals in the mountain town. Mayor John Borrowman says hundreds of homes in residential areas are posted on websites like Airbnb and VRBO, making an already dire housing shortage worse. ‘Effectively it’s beginning to turn residential neighbourhoods into hotel districts,’ he said.”

“Andrew Shepherd, president of the Canmore Hotel and Lodging Association, is happy the town is going after illegal short-term rentals. ‘The hotels have no problem with competition. But every competition should be on a fair playing field,’ he said. ‘So if we’re paying business taxes, they should too. If we have health and safety inspections, they should as well.’”

From Metro News in Canada. “Stories about a recent study from McGill that found the majority of money from Airbnb rentals is collected by a slim majority of property owners were right to focus on the growing unaffordability of housing. But to understand that properly, we need to recognize this: Airbnb is not part of a ‘share economy’.”

“On the contrary, Airbnb is designed – quite obviously – for people who already have property to make more money from it. In 2015, Chase released a study it conducted on over 200,000 randomized, anonymized banking customers who earned income from the platform economy. Among its findings, the study showed that 21 per cent of those sampled participated in labour platforms (eg. Uber), 71 per cent participated in capital platforms (eg. Airbnb), but only two per cent did both. This puts to bed any notion of a collective ‘share economy’ – there are two distinct industries at work.”

“Importantly, the study also found that capital platform participants made more money than their labouring counterparts. Effectively, it suggests that those at an advantage are continuing to gain more of an advantage, and those who are initially less advantaged are not catching up.”

“In context of figuring out how to regulate something like Airbnb, these kinds of numbers are important, but just as crucial is understanding that it is not a benign ‘sharing’ app, but a platform that perpetuates the creation of capital for a particular class of people. Which is fine; it can be that. But we should be clear on what that means. Whether someone is making $2,500 in eight months or tens of thousands a year, we should remember one thing: Airbnb is perpetuating – not solving – an income divide.”