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Vancouver is about to do the same with a new bylaw governing short term rentals. The cause is an unbelievable shortage of actual long term rentals for people wh

by ttul 9y ago

Vancouver is about to do the same with a new bylaw governing short term rentals. The cause is an unbelievable shortage of actual long term rentals for people who live in the city. But the cause of THAT shortage is not AirBnB. It’s rampant speculation by both locals and foreign investors. Rather than fix the tricky speculation issue, government focused on Airbnb. IMHO this will hurt both cities by making it more expensive to visit.

mjfern 9y ago
If you own a property, why not just rent it for cash flow? What's the benefit of letting a property sit vacant? So the property owner doesn't have to deal with finding tenants and property wear and tear?
- karthikb 9y ago
  If property value appreciation is significant (in SF, about 12% in 2017) the benefit of renting out (AirBnB or otherwise) may actually be minimal - as you said, the overhead of finding and managing the rental. $3k/month on a rental makes you far less than just 12% appreciation on a $1.5M place.
  - maxxxxx 9y ago
    And renting out is a lot more work than keeping something empty.
  - usaar333 9y ago
    Where are you getting 12% appreciation from? Paragon (https://www.paragon-re.com/trend/san-francisco-home-prices-market-trends-news https://www.paragon-re.com/trend/san-francisco-home-prices-m...) shows it at 7% for houses and 5% for condos. That's ~6% after property taxes (assuming recently set cost basis) or $90k/year. Maintenance, HOA fees (if any) further drop this return. (Besides future appreciation isn't something you can bank on..) A $1.5M home should rent for at least $4.2k (P/R ratio of 30). That's $50k a year, smaller than the appreciation of $90k but still very significant. The only reason I see to not at least hire a rental management company to do the renting for you is if you are subject to rent control and fear not being able to evict the tenant/raise their rents.
    - karthikb 9y ago
      https://www.zillow.com/san-francisco-ca/home-values/ https://www.zillow.com/san-francisco-ca/home-values/ - 12.8% last year and projected lower this year. The reason I have a lower rent figure is that rents haven't gone up as quickly, as much of the new construction has been focused on rental stock.
      - usaar333 9y ago
        Thanks for the citation. I'm a bit skeptical of Zillow's numbers; they look pretty volatile (e.g. they show 2016 with 0% appreciation) Anyway, according to zillow last 2 years is 7% average - and since depth of recession 8 years ago, 8.6%. 12.8% is likely a statistical abnormality. (Of note 10 year average is 5% vs. ~8.5% for SP-500 index funds)
  - geebee 9y ago
    This isn't a bad point. If you purchased a house in SF for $1m in 2009, there's a good chance it would sell for $1.8 mil today[1]. Rents have varied over time. I'd say the rent on a place like this would be $3k a month in 2009, and maybe $4k now. This is harder to estimate. Also, rent control is different for SFH than for apartments - in this case, I'll assume rent control is in place [1]. So, lost rent is 3k a month for 8 years, $288,000. Ok, that's some serious lost money. Gain in equity is $800,000. If your tenant make is hard to see and realize that gain, it really might make sense to leave it vacant. I have seen houses in SF sell for vastly below market due to existing tenants, with powerful rights (there are certain protected classes of tenant). There's a lot of room between 300k and 800k. It's not so simple, of course. It's expensive to be a landlord, and time consuming, and that income is taxed. So the loss of renting actually isn't $288,000, it's lower. Also, the house may be enjoyable as a pied a Terre. Think of it as any investment - you park your money somewhere, hope it will grown. Owning this house is no different from owning gold, or stock. You buy it, you hope it will appreciate. Buying and not renting could make sense as a mildly risk-averse approach - you give up some yields in exchange for the lower risk of not having a tenant. . At the same time, cash flow is tough. Many people simply can't afford to pay the mortgage for 8 years without that rental income. And they figure, eh, eventually the tenant will leave, and then they can sell. But overall? Yeah, I can see how it's economically rational to buy a place to speculate and simply leave it vacant[2]. Or, alternatively, rent only to extremely trusted people (family members or others treated as such). [1] I'm cherry picking dates and rent control policy to show the best case scenario for not renting a place out. [2] I believe this is harmful. Pointing out that something is economically rational (and in this case, perfectly legal) does not mean I endorse it!
- sdenton4 9y ago
  Fwiw, my understanding is that the Vancouver ordinances are also levying heavy fines for letting properties sit vacant. There are lots of vacant properties: people happy to just watch the home value go up without dealing with renters...
- JumpCrisscross 9y ago
  > why not just rent it for cash flow? Depending on the jurisdiction, letting go of a tenant--or dealing with a problem tenant--can eat up months, if not years, of expected profits. Two ends of a spectrum: India, with squatter rights, versus most American cities, with speedy courts and contract law.
- jessriedel 9y ago
  The other problem with renting out a place which will eventually be taken over by a (new, impatient) owner is that you face a low-level risk that the current tenants welch on the lease and refuse to leave. For better or worse, there are large legal hurdles to evicting people, and the fight can drag out for months or even years.
- hkmurakami 9y ago
  Wear and tear. Psychologically not wanting "other people" to have occupied your property. Basically if you have a lot of money, the marginal extra income isn't worth the headache.
- astura 9y ago
  Being a landlord is a serious job with serious legal requirements. Tenants can also be surprisingly good at destroying your property and they have a surprisingly large amount of legal rights.
  - erroneousfunk 9y ago
    Amen. I rented in Boston, Somerville, and Medford after college, and it's amazing the number of landlords who are just random people who happen to have an extra property, or bought a house with an extra unit, and decide to rent it out. They print a template lease, we sign, and they hand over the keys. Two landlords in particular didn't know about things like escrow account and interest laws for security deposits, contact information posting for vacant landlords, who's responsible for things like snow removal and smoke detector maintenance. I left those units in good condition (thankfully for them!) but nearly sued twice and, in one case, received triple damages on my security deposit. One landlord said "To keep costs low, tenants generally organize snow shoveling" I said "Oh, sorry, I didn't realize we were breaking the law here." There are some states with very few tenant rights where landlords can get away with a lot. California and Massachusetts are not those states. It's a very serious part time job that requires a lot more than just owning a property.
    - astura 9y ago
      I had a previous landlord who was a shady motherfucker who wanted to "play businessman" but had no business skills and ignored the law with his various "businesses" and was a general terrible human being. After I moved out I reported him to the town (for violation of various town rental ordinances), the EPA (for violation of lead paint safety statutes), and the banking department (for violation of security deposit collection laws). He got his comeuppance.
- pfarnsworth 9y ago
  They don’t need the money. My wife’s friends own multiple houses in Hillsborough that they leave empty most of the year unless they are visiting during the summers.
  - mjfern 9y ago
    Hillsborough NC?
    - pfarnsworth 9y ago
      CA
SRasch 9y ago
I think overall housing supply is the primary driver. This regulation is just the sort of red tape that incompetent governments impose, fooled by rent seeking interests to implement a barrier to entry to reduce competition.
- autokad 9y ago
  >"rent seeking interests" I agree with you to a large part, but thats exactly what a host of AirBNB is after as well (seeking rent). I dont like how people try to use it as if its a bad word.
  - baby_wipe 9y ago
    "Rent-seeking" is referring to something different than literally seeking rent money. It's basically when people lobby the government to get special favors for themselves, even though it negatively impacts almost everyone else. https://en.wikipedia.org/wiki/Rent-seeking https://en.wikipedia.org/wiki/Rent-seeking It's not a very descriptive term and I see why people get confused by it.
    - pash 9y ago
      To expand on that: “Rent” is a term of art in economics that means a “payment to an owner or factor of production in excess of the costs needed to bring that factor into production” [0]. Economic theory shows that in a perfectly competitive market the price of a good equals its marginal cost of production. So prices above marginal cost demonstrate either a lack of competition in the market or other deviations from the theoretic ideal that give producers what economists call “market power”, the ability to charge higher prices for a good than they should be able to charge in a market in which many producers compete to sell more or less indistinguishable items. Financing costs and all other costs are included in this calculus, so economic “rents” (as a term of art) in the context of the rent charged on homes and other real-estate means something like “excess profits due to a dysfunctional market”; in this case the dysfunctionality of the market is largely the result of regulation that prevents local supply of housing to rise to the level of local demand. 0. https://en.wikipedia.org/wiki/Economic_rent https://en.wikipedia.org/wiki/Economic_rent
jordanb 9y ago
Speculation shouldn't drive up the price of rent. If anything, it should drive rents down because more units will be built to satisfy speculators which will then be contributed to the pool of available rental housing. We saw this during the housing bubble: rents were detached from the price of housing and stayed low. The problem here is that short term rental brings more revenue than long term rental. Before Airbnb you had to be a hotel to offer short term rental, so most landlords stayed out of that business and stuck to long term rental even though there's less revenue per unit. But with Airbnb you can take your units out of the long term rental pool and put them in the short term rental pool, and because regulation has been slow to catch up, you don't have to take on the regulatory burden of being a hotel to do so. Fewer units in the long term rental pool obviously, then, causes rents to go up. Given that Airbnb makes units more valuable (by converting them to short-term rental and increasing the expected cashflow), they would of course then be more attractive to investors and that is perhaps part of the increase in housing prices in Vancouver. But even in that case the causality is increased rental cashflow driving up prices, rather than vice versa.
- maxxxxx 9y ago
  In theory you are right but I think the problem is that a lot of property bought by investors stays empty so the rental supply goes down.
  - usaar333 9y ago
    Is this that common of an issue? I find it hard to believe that someone buying a property to maximize their returns (an investor) fails to increase their returns by renting. (Though I could see people buying vacation homes, status homes, etc. doing this)
    - y4mi 9y ago
      Buying property as a foreign investor is mostly an attempt to store your money in a pretty stable product. If you were to let renters use that property and they don't take care of it properly, you'd have lost a lot of money. It's often just not worth the effort for these people.
kenpratt 9y ago
I disagree that Airbnb is not one of the causes of the shortage. As of 2011 there were 306,105 renter-occupied units in Metro Vancouver (http://www.metrovancouver.org/services/regional-planning/PlanningPublications/MV_Housing_Data_Book.pdf http://www.metrovancouver.org/services/regional-planning/Pla...) As of April 2017 there were an estimated 5,000 units on Airbnb (https://www.straight.com/news/943456/average-airbnb-prices-and-earnings-vancouver-are-miles-above-most-canada https://www.straight.com/news/943456/average-airbnb-prices-a...), but unclear if that's Metro Vancouver or a greater area. The City of Vancouver estimates that 1,600 rental units could be returned to the rental supply (http://www.metronews.ca/news/vancouver/2017/11/14/vancouver-cracks-down-on-airbnb.html http://www.metronews.ca/news/vancouver/2017/11/14/vancouver-...). The vacancy rate was 0.9% as of Nov 2017 (https://www.biv.com/article/2017/11/metro-vancouver-rental-vacancy-rate-remains-under-/ https://www.biv.com/article/2017/11/metro-vancouver-rental-v...). So, let's do some rough math: 306k units * 0.9% vacancy rate = 2,754. So Airbnb is holding up somewhere in the range of 50% - 100% of the vacancy rate of units in Metro Vancouver. It isn't a giant number, but if they were released back onto the market, that's a significant amount of stock to be available for renting, and I'd expect would relieve some upward pressure on rent prices. That said, I don't disagree that there are other causes too, such as zoning, lack of many new builds until the last 10 years, and empty apartments. But my hunch is that Airbnb is a bigger factor than empty apartments, and a lesser factor than zoning/builds.
- CryptoPunk 9y ago
  >>So Airbnb is holding up somewhere in the range of 50% - 100% of the vacancy rate of units in Metro Vancouver. Which is insignificant, given the vacancy rate is a very small fraction of the total housing supply and has a natural level not affected by rental supply increases.
Tiktaalik 9y ago
Airbnb and speculation go hand in hand. A condo may be unaffordable as an investment with a long term rental, but when one can get higher rents with short term rentals it then becomes profitable. Now instead of investor landlords doing long term rentals you have those persons outbid by people who are willing to pay more because they're running virtual hotels. Resultantly the price of condos rises and vacancy decreases. This is explicitly the sort of group that the Vancouver regulations are targeting. Vancouver regulations allow you to rent out a room in your primary residence, but will not let you rent out a full house that is not your primary residence. A huge part of Airbnb's revenue comes from commercial operators that buy condos to rent out exclusively, so expect Airbnb's Vancouver revenue to drop like a stone. If this trend catches on Airbnb revenue could decrease quite a bit...
notatoad 9y ago
BC implemented a 15% tax on home purchases by foreign buyers, and Vancouver's got a fairly aggressive empty home tax, both to target the speculation issue. neither has really caused a drop in home prices. It's not like the government is doing nothing. They've already tried other avenues, now it's time to try targeting short-term rentals.
- YokoZar 9y ago
  Why not try legalizing the construction of more housing?
  - jeffbax 9y ago
    Fucking this https://www.seattletimes.com/business/real-estate/seattle-area-rents-drop-significantly-for-first-time-this-decade-as-new-apartments-sit-empty/ https://www.seattletimes.com/business/real-estate/seattle-ar... "Build baby build" / reforming zoning and the massive influence disparity of current homeowners is the only way to fix housing in major cities.
    - Tiktaalik 9y ago
      Seattle and Vancouver aren't really comparable because even though they're both building dramatically more multi-unit buildings than in previous decades, what they're building isn't the same. For various reasons Seattle builds almost entirely purpose built rental apartments and nearly no condos. In Vancouver it's the reverse. Seattle now has a 5% vacancy rate whereas Vancouver has sub 1%, despite the fact that Vancouver has multi unit construction at all time highs (33k at the moment). It's a deeply complex problem and there's more to it than just building more. Clearly what Vancouver is building is not the right product to increase vacancy.
  - ttul 9y ago
    IMHO it needs to be a very aggressive combination of both approaches. Single family homes should be converted to townhouses or apartment blocks in a grand manner and across basically the entire city, until the vacancy situation is brought under control. Ideally, politics would be cut out of the equation by implementing a rule on zoning that automatically adjusts density based on demand. Additionally, developers should be forced to provide rental units when building condos. An indication that something is wrong in Vancouver? The richest people in the city are developers, who have been reaping enormous profits by converting precious density into cash. The city needs to make that density far less precious by greatly increasing its supply - and quickly. Finally, speculation must be targeted provincially with a steep increase in property taxes across the board. Property owners who declare income and pay income tax in the province can have their property tax reduced dollar for dollar down to the original property tax rate. But investors - foreign and local - will have to pay more, making speculation far less profitable.
intrasight 9y ago
So your saying that the government can't walk and chew gum at the same time?
anonymous5133 9y ago
It also helps the problem because people can't find an airbnb rental in the city anymore so they stop coming.

by ttul 9y ago

mjfern 9y ago

If you own a property, why not just rent it for cash flow? What's the benefit of letting a property sit vacant? So the property owner doesn't have to deal with finding tenants and property wear and tear?

karthikb 9y ago
If property value appreciation is significant (in SF, about 12% in 2017) the benefit of renting out (AirBnB or otherwise) may actually be minimal - as you said, the overhead of finding and managing the rental. $3k/month on a rental makes you far less than just 12% appreciation on a $1.5M place.
- maxxxxx 9y ago
  And renting out is a lot more work than keeping something empty.
- usaar333 9y ago
  Where are you getting 12% appreciation from? Paragon (https://www.paragon-re.com/trend/san-francisco-home-prices-market-trends-news https://www.paragon-re.com/trend/san-francisco-home-prices-m...) shows it at 7% for houses and 5% for condos. That's ~6% after property taxes (assuming recently set cost basis) or $90k/year. Maintenance, HOA fees (if any) further drop this return. (Besides future appreciation isn't something you can bank on..) A $1.5M home should rent for at least $4.2k (P/R ratio of 30). That's $50k a year, smaller than the appreciation of $90k but still very significant. The only reason I see to not at least hire a rental management company to do the renting for you is if you are subject to rent control and fear not being able to evict the tenant/raise their rents.
  - karthikb 9y ago
    https://www.zillow.com/san-francisco-ca/home-values/ https://www.zillow.com/san-francisco-ca/home-values/ - 12.8% last year and projected lower this year. The reason I have a lower rent figure is that rents haven't gone up as quickly, as much of the new construction has been focused on rental stock.
    - usaar333 9y ago
      Thanks for the citation. I'm a bit skeptical of Zillow's numbers; they look pretty volatile (e.g. they show 2016 with 0% appreciation) Anyway, according to zillow last 2 years is 7% average - and since depth of recession 8 years ago, 8.6%. 12.8% is likely a statistical abnormality. (Of note 10 year average is 5% vs. ~8.5% for SP-500 index funds)
- geebee 9y ago
  This isn't a bad point. If you purchased a house in SF for $1m in 2009, there's a good chance it would sell for $1.8 mil today[1]. Rents have varied over time. I'd say the rent on a place like this would be $3k a month in 2009, and maybe $4k now. This is harder to estimate. Also, rent control is different for SFH than for apartments - in this case, I'll assume rent control is in place [1]. So, lost rent is 3k a month for 8 years, $288,000. Ok, that's some serious lost money. Gain in equity is $800,000. If your tenant make is hard to see and realize that gain, it really might make sense to leave it vacant. I have seen houses in SF sell for vastly below market due to existing tenants, with powerful rights (there are certain protected classes of tenant). There's a lot of room between 300k and 800k. It's not so simple, of course. It's expensive to be a landlord, and time consuming, and that income is taxed. So the loss of renting actually isn't $288,000, it's lower. Also, the house may be enjoyable as a pied a Terre. Think of it as any investment - you park your money somewhere, hope it will grown. Owning this house is no different from owning gold, or stock. You buy it, you hope it will appreciate. Buying and not renting could make sense as a mildly risk-averse approach - you give up some yields in exchange for the lower risk of not having a tenant. . At the same time, cash flow is tough. Many people simply can't afford to pay the mortgage for 8 years without that rental income. And they figure, eh, eventually the tenant will leave, and then they can sell. But overall? Yeah, I can see how it's economically rational to buy a place to speculate and simply leave it vacant[2]. Or, alternatively, rent only to extremely trusted people (family members or others treated as such). [1] I'm cherry picking dates and rent control policy to show the best case scenario for not renting a place out. [2] I believe this is harmful. Pointing out that something is economically rational (and in this case, perfectly legal) does not mean I endorse it!
sdenton4 9y ago
Fwiw, my understanding is that the Vancouver ordinances are also levying heavy fines for letting properties sit vacant. There are lots of vacant properties: people happy to just watch the home value go up without dealing with renters...
JumpCrisscross 9y ago
> why not just rent it for cash flow? Depending on the jurisdiction, letting go of a tenant--or dealing with a problem tenant--can eat up months, if not years, of expected profits. Two ends of a spectrum: India, with squatter rights, versus most American cities, with speedy courts and contract law.
jessriedel 9y ago
The other problem with renting out a place which will eventually be taken over by a (new, impatient) owner is that you face a low-level risk that the current tenants welch on the lease and refuse to leave. For better or worse, there are large legal hurdles to evicting people, and the fight can drag out for months or even years.
hkmurakami 9y ago
Wear and tear. Psychologically not wanting "other people" to have occupied your property. Basically if you have a lot of money, the marginal extra income isn't worth the headache.
astura 9y ago
Being a landlord is a serious job with serious legal requirements. Tenants can also be surprisingly good at destroying your property and they have a surprisingly large amount of legal rights.
- erroneousfunk 9y ago
  Amen. I rented in Boston, Somerville, and Medford after college, and it's amazing the number of landlords who are just random people who happen to have an extra property, or bought a house with an extra unit, and decide to rent it out. They print a template lease, we sign, and they hand over the keys. Two landlords in particular didn't know about things like escrow account and interest laws for security deposits, contact information posting for vacant landlords, who's responsible for things like snow removal and smoke detector maintenance. I left those units in good condition (thankfully for them!) but nearly sued twice and, in one case, received triple damages on my security deposit. One landlord said "To keep costs low, tenants generally organize snow shoveling" I said "Oh, sorry, I didn't realize we were breaking the law here." There are some states with very few tenant rights where landlords can get away with a lot. California and Massachusetts are not those states. It's a very serious part time job that requires a lot more than just owning a property.
  - astura 9y ago
    I had a previous landlord who was a shady motherfucker who wanted to "play businessman" but had no business skills and ignored the law with his various "businesses" and was a general terrible human being. After I moved out I reported him to the town (for violation of various town rental ordinances), the EPA (for violation of lead paint safety statutes), and the banking department (for violation of security deposit collection laws). He got his comeuppance.
pfarnsworth 9y ago
They don’t need the money. My wife’s friends own multiple houses in Hillsborough that they leave empty most of the year unless they are visiting during the summers.
- mjfern 9y ago
  Hillsborough NC?
  - pfarnsworth 9y ago
    CA

SRasch 9y ago

I think overall housing supply is the primary driver. This regulation is just the sort of red tape that incompetent governments impose, fooled by rent seeking interests to implement a barrier to entry to reduce competition.

autokad 9y ago
>"rent seeking interests" I agree with you to a large part, but thats exactly what a host of AirBNB is after as well (seeking rent). I dont like how people try to use it as if its a bad word.
- baby_wipe 9y ago
  "Rent-seeking" is referring to something different than literally seeking rent money. It's basically when people lobby the government to get special favors for themselves, even though it negatively impacts almost everyone else. https://en.wikipedia.org/wiki/Rent-seeking https://en.wikipedia.org/wiki/Rent-seeking It's not a very descriptive term and I see why people get confused by it.
  - pash 9y ago
    To expand on that: “Rent” is a term of art in economics that means a “payment to an owner or factor of production in excess of the costs needed to bring that factor into production” [0]. Economic theory shows that in a perfectly competitive market the price of a good equals its marginal cost of production. So prices above marginal cost demonstrate either a lack of competition in the market or other deviations from the theoretic ideal that give producers what economists call “market power”, the ability to charge higher prices for a good than they should be able to charge in a market in which many producers compete to sell more or less indistinguishable items. Financing costs and all other costs are included in this calculus, so economic “rents” (as a term of art) in the context of the rent charged on homes and other real-estate means something like “excess profits due to a dysfunctional market”; in this case the dysfunctionality of the market is largely the result of regulation that prevents local supply of housing to rise to the level of local demand. 0. https://en.wikipedia.org/wiki/Economic_rent https://en.wikipedia.org/wiki/Economic_rent

jordanb 9y ago

Speculation shouldn't drive up the price of rent. If anything, it should drive rents down because more units will be built to satisfy speculators which will then be contributed to the pool of available rental housing. We saw this during the housing bubble: rents were detached from the price of housing and stayed low. The problem here is that short term rental brings more revenue than long term rental. Before Airbnb you had to be a hotel to offer short term rental, so most landlords stayed out of that business and stuck to long term rental even though there's less revenue per unit. But with Airbnb you can take your units out of the long term rental pool and put them in the short term rental pool, and because regulation has been slow to catch up, you don't have to take on the regulatory burden of being a hotel to do so. Fewer units in the long term rental pool obviously, then, causes rents to go up. Given that Airbnb makes units more valuable (by converting them to short-term rental and increasing the expected cashflow), they would of course then be more attractive to investors and that is perhaps part of the increase in housing prices in Vancouver. But even in that case the causality is increased rental cashflow driving up prices, rather than vice versa.

maxxxxx 9y ago
In theory you are right but I think the problem is that a lot of property bought by investors stays empty so the rental supply goes down.
- usaar333 9y ago
  Is this that common of an issue? I find it hard to believe that someone buying a property to maximize their returns (an investor) fails to increase their returns by renting. (Though I could see people buying vacation homes, status homes, etc. doing this)
  - y4mi 9y ago
    Buying property as a foreign investor is mostly an attempt to store your money in a pretty stable product. If you were to let renters use that property and they don't take care of it properly, you'd have lost a lot of money. It's often just not worth the effort for these people.

kenpratt 9y ago

I disagree that Airbnb is not one of the causes of the shortage. As of 2011 there were 306,105 renter-occupied units in Metro Vancouver (http://www.metrovancouver.org/services/regional-planning/PlanningPublications/MV_Housing_Data_Book.pdf http://www.metrovancouver.org/services/regional-planning/Pla...) As of April 2017 there were an estimated 5,000 units on Airbnb (https://www.straight.com/news/943456/average-airbnb-prices-and-earnings-vancouver-are-miles-above-most-canada https://www.straight.com/news/943456/average-airbnb-prices-a...), but unclear if that's Metro Vancouver or a greater area. The City of Vancouver estimates that 1,600 rental units could be returned to the rental supply (http://www.metronews.ca/news/vancouver/2017/11/14/vancouver-cracks-down-on-airbnb.html http://www.metronews.ca/news/vancouver/2017/11/14/vancouver-...). The vacancy rate was 0.9% as of Nov 2017 (https://www.biv.com/article/2017/11/metro-vancouver-rental-vacancy-rate-remains-under-/ https://www.biv.com/article/2017/11/metro-vancouver-rental-v...). So, let's do some rough math: 306k units * 0.9% vacancy rate = 2,754. So Airbnb is holding up somewhere in the range of 50% - 100% of the vacancy rate of units in Metro Vancouver. It isn't a giant number, but if they were released back onto the market, that's a significant amount of stock to be available for renting, and I'd expect would relieve some upward pressure on rent prices. That said, I don't disagree that there are other causes too, such as zoning, lack of many new builds until the last 10 years, and empty apartments. But my hunch is that Airbnb is a bigger factor than empty apartments, and a lesser factor than zoning/builds.

CryptoPunk 9y ago
>>So Airbnb is holding up somewhere in the range of 50% - 100% of the vacancy rate of units in Metro Vancouver. Which is insignificant, given the vacancy rate is a very small fraction of the total housing supply and has a natural level not affected by rental supply increases.

Tiktaalik 9y ago

Airbnb and speculation go hand in hand. A condo may be unaffordable as an investment with a long term rental, but when one can get higher rents with short term rentals it then becomes profitable. Now instead of investor landlords doing long term rentals you have those persons outbid by people who are willing to pay more because they're running virtual hotels. Resultantly the price of condos rises and vacancy decreases. This is explicitly the sort of group that the Vancouver regulations are targeting. Vancouver regulations allow you to rent out a room in your primary residence, but will not let you rent out a full house that is not your primary residence. A huge part of Airbnb's revenue comes from commercial operators that buy condos to rent out exclusively, so expect Airbnb's Vancouver revenue to drop like a stone. If this trend catches on Airbnb revenue could decrease quite a bit...

notatoad 9y ago

BC implemented a 15% tax on home purchases by foreign buyers, and Vancouver's got a fairly aggressive empty home tax, both to target the speculation issue. neither has really caused a drop in home prices. It's not like the government is doing nothing. They've already tried other avenues, now it's time to try targeting short-term rentals.

YokoZar 9y ago
Why not try legalizing the construction of more housing?
- jeffbax 9y ago
  Fucking this https://www.seattletimes.com/business/real-estate/seattle-area-rents-drop-significantly-for-first-time-this-decade-as-new-apartments-sit-empty/ https://www.seattletimes.com/business/real-estate/seattle-ar... "Build baby build" / reforming zoning and the massive influence disparity of current homeowners is the only way to fix housing in major cities.
  - Tiktaalik 9y ago
    Seattle and Vancouver aren't really comparable because even though they're both building dramatically more multi-unit buildings than in previous decades, what they're building isn't the same. For various reasons Seattle builds almost entirely purpose built rental apartments and nearly no condos. In Vancouver it's the reverse. Seattle now has a 5% vacancy rate whereas Vancouver has sub 1%, despite the fact that Vancouver has multi unit construction at all time highs (33k at the moment). It's a deeply complex problem and there's more to it than just building more. Clearly what Vancouver is building is not the right product to increase vacancy.
- ttul 9y ago
  IMHO it needs to be a very aggressive combination of both approaches. Single family homes should be converted to townhouses or apartment blocks in a grand manner and across basically the entire city, until the vacancy situation is brought under control. Ideally, politics would be cut out of the equation by implementing a rule on zoning that automatically adjusts density based on demand. Additionally, developers should be forced to provide rental units when building condos. An indication that something is wrong in Vancouver? The richest people in the city are developers, who have been reaping enormous profits by converting precious density into cash. The city needs to make that density far less precious by greatly increasing its supply - and quickly. Finally, speculation must be targeted provincially with a steep increase in property taxes across the board. Property owners who declare income and pay income tax in the province can have their property tax reduced dollar for dollar down to the original property tax rate. But investors - foreign and local - will have to pay more, making speculation far less profitable.

intrasight 9y ago

So your saying that the government can't walk and chew gum at the same time?

anonymous5133 9y ago

It also helps the problem because people can't find an airbnb rental in the city anymore so they stop coming.