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I would like to know if you think the problem is AirBnB or the lack of building new houses. I find a lot of people who complain AirBnB drives up rent, but also

I would like to know if you think the problem is AirBnB or the lack of building new houses. I find a lot of people who complain AirBnB drives up rent, but also believe building more units won't push down rents.

toomuchtodo 7y ago
AirBnB causes damaging housing economics more rapidly than building more units can alleviate them. Is building more units a (long term) solution? Yes. Is banning AirBnB a solution? Also yes. 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.
- dkhenry 7y ago
  I can't speak to the nature of the Canadian market, but in the bay area where people also say banning AirBnB will help I always like to remind people that there are approximately 7,000 AirBnb units in SF[1], and there is was an estimated housing shortage of 300,000 units in 2016[2]. Even if you outlawed all AirBnb listings, it would not change rent prices at all, its a rounding error on the shortage of available housing. 1. http://insideairbnb.com/san-francisco/ http://insideairbnb.com/san-francisco/ 2. https://en.wikipedia.org/wiki/San_Francisco_housing_shortage https://en.wikipedia.org/wiki/San_Francisco_housing_shortage
  - deleted 7y ago
    [deleted]
  - toomuchtodo 7y ago
    I'm sure it would matter to the local residents who could occupy those units of course (excepting shared tenancy with an owner/renter, arguably a fair use of AirBnB in extremely tight housing markets).
- ng12 7y ago
  > AirBnB causes damaging housing economics more rapidly than building more units can alleviate them Are you implying that it's impossible to construct an additional 31,000 homes across all of Canada?
  - wanderer2323 7y ago
    Are you assuming that Airbnb and demand for housing is somehow spread 'across all of Canada'? Are you also assuming that the new 31K homes (if you manage to build them) won't also just become Airbnb fodder?
    - ng12 7y ago
      They could be built anywhere (yes, even Toronto and Vancouver) as long as the political will is there. 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.
      - dorchadas 7y ago
        I wouldn't say that the demand for short-term rentals is so much higher than that for long-term ones. I'd say that landlords know they can make a lot more money with short-term rentals, and that's why they do it. The rentals don't even go to the long-term market. 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?
peterwwillis 7y ago
Replacing cheap hotels with Airbnbs is like replacing buses with cars. Pretty soon you run out of room on the road. The problem isn't that we aren't building more roads or cars, the problem is the cars are space-inefficient. By using buses, we decrease the amount of road used per person, which eases congestion, and lowers cost (buses are much more cost-effective per person per mile than cars). So we don't need more houses, we need more (and cheaper) hotels. This would reduce demand for Airbnb, and thus reduce the number of homes bought explicitly to rent out. 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.
- fjsolwmv 7y ago
  Airbnb doesn't replace cheapo hotels. It replaces expensive hotels. People go to airbnbs because hotels are too expensive for them.
Spooky23 7y ago
You have supply and demand, both drive prices. 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.
- deleted 7y ago
  [deleted]
- dkhenry 7y ago
  There are a lot of people out there who argue that building more houses won't help solve the high cost of housing. I have also found a lot of those people complain Airbnb is driving up pricing. To not acknowledge the supply problem ( and the supply solution ), but to say the minimal change in demand caused by Airbnb is the problem to me is just dishonest.
  - seanmcdirmid 7y ago
    Name one mega city with lots of housing where the prices have actually gone down. It isn't rocket science: add more supply in a hot area, it attracts more demand. Kind of like how building wider highways doesn't really do anything for traffic jams. 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.
    - fjsolwmv 7y ago
      Chinese speculators reduce growth by keeping property vacant. Airbnb doesn't affect growth. House prices are not growth, and they generate the tax revenue that you say helps get the infrastructure ready.
      - seanmcdirmid 7y ago
rchaud 7y ago
Building more units might push down rent, but that assumes that the increase in housing supply won't be offset by owners who will simply convert those new units into more Airbnbs. 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.
- dkhenry 7y ago
  Its only as high as the amount of demand for _both_ of those things. It may be that landlords convert some percentage of units into short term rental units, but even that has a limited return on investment. There are only so many people that are going occupy those short term rentals, so even if you kept the price of them the same the decrease in occupancy is going to hurt enough to limit the total number of units going onto that market.
  - 9387367 7y ago
    > Its only as high as the amount of demand for _both_ of those things. What if it's in a major international tourist destination?
    - Consultant32452 7y ago
      It doesn't matter. If you doubled the number of housing units in New York City you'd crash the real estate market there. It would suddenly become laughably cheap to live there. Even if they all became Airbnbs competition for tenants would drive prices for those short term rentals to basically zero. And if you don't believe it for doubling the housing units, try tripling, or 20x. Don't let me hamper your imagination.
britch 7y ago
I think it's both. There's a few different situations with AirBnb 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.
- fjsolwmv 7y ago
  If you had surplus housing, Airbnb would not exist because there is no point.
  - britch 7y ago
    I think it would exist for it's marketed purpose: to let people stay in a city they don't live in for a short period of time (a week or so). I don't think anyone is going to get a lease somewhere just to visit.
eljimmy 7y ago
I think it's a combination of many factors, for sure. Definitely also being impacted by the tighter mortgage regulations that our government enacted recently. 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.
- britch 7y ago
  I admit that eviction situation sounds difficult for landlords. I know I would be frustrated if I was a landlord in that situation. 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.
  - Macross8299 7y ago
    >that the only recourse is for the landlord to turn to AirBnB to turn a profit. 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.
libraryatnight 7y ago
It's also things like Invitation Homes. They buy hundreds of thousands of houses and charge really high rents (even in areas where it makes you scratch your head how they can charge that much), they also have a guaranteed 5-6% rent increase each year you stay. So renting from them is never a long term possibility, you will always eventually hit a point where the rents just too high and will be forced to move.
- fjsolwmv 7y ago
  It is more likely that IH knows the rental market price and you don't. 5% growth per year is totally normal in desirable areas . It's lower than real estate appreciation.
  - libraryatnight 7y ago
    I don't think so? First, if that were true they wouldn't be significantly higher than other houses in the neighborhood if that were true. Also, In 15 years of renting I've never had a guaranteed rent raise - ever. Rent only rose when the market made a raise make sense. Guaranteed regardless of the market is not normal in residential renting in my area.
jbay808 7y ago
I'm not sure if you live in Toronto or Vancouver or elsewhere, but I have noticed a lot of comments like yours are from Bay area residents. It's a valid comment for the Bay area, but not in Canada where the nature of the situation is quite different. In Vancouver the construction industry has been going more or less full throttle for the past decade or more, and the city is being continuously rezoned for higher density. Supply is still short but it's not for lack of construction.
ryanbrunner 7y ago
Increasing supply isn't always a silver bullet. Rent prices are a huge problem in places like Toronto, where there is a tremendous amount of new multi-unit residential development.

toomuchtodo 7y ago

AirBnB causes damaging housing economics more rapidly than building more units can alleviate them. Is building more units a (long term) solution? Yes. Is banning AirBnB a solution? Also yes. 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.

dkhenry 7y ago
I can't speak to the nature of the Canadian market, but in the bay area where people also say banning AirBnB will help I always like to remind people that there are approximately 7,000 AirBnb units in SF[1], and there is was an estimated housing shortage of 300,000 units in 2016[2]. Even if you outlawed all AirBnb listings, it would not change rent prices at all, its a rounding error on the shortage of available housing. 1. http://insideairbnb.com/san-francisco/ http://insideairbnb.com/san-francisco/ 2. https://en.wikipedia.org/wiki/San_Francisco_housing_shortage https://en.wikipedia.org/wiki/San_Francisco_housing_shortage
- deleted 7y ago
  [deleted]
- toomuchtodo 7y ago
  I'm sure it would matter to the local residents who could occupy those units of course (excepting shared tenancy with an owner/renter, arguably a fair use of AirBnB in extremely tight housing markets).
ng12 7y ago
> AirBnB causes damaging housing economics more rapidly than building more units can alleviate them Are you implying that it's impossible to construct an additional 31,000 homes across all of Canada?
- wanderer2323 7y ago
  Are you assuming that Airbnb and demand for housing is somehow spread 'across all of Canada'? Are you also assuming that the new 31K homes (if you manage to build them) won't also just become Airbnb fodder?
  - ng12 7y ago
    They could be built anywhere (yes, even Toronto and Vancouver) as long as the political will is there. 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.
    - dorchadas 7y ago
      I wouldn't say that the demand for short-term rentals is so much higher than that for long-term ones. I'd say that landlords know they can make a lot more money with short-term rentals, and that's why they do it. The rentals don't even go to the long-term market. 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?

peterwwillis 7y ago

Replacing cheap hotels with Airbnbs is like replacing buses with cars. Pretty soon you run out of room on the road. The problem isn't that we aren't building more roads or cars, the problem is the cars are space-inefficient. By using buses, we decrease the amount of road used per person, which eases congestion, and lowers cost (buses are much more cost-effective per person per mile than cars). So we don't need more houses, we need more (and cheaper) hotels. This would reduce demand for Airbnb, and thus reduce the number of homes bought explicitly to rent out. 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.

fjsolwmv 7y ago
Airbnb doesn't replace cheapo hotels. It replaces expensive hotels. People go to airbnbs because hotels are too expensive for them.

Spooky23 7y ago

You have supply and demand, both drive prices. 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.

deleted 7y ago
[deleted]
dkhenry 7y ago
There are a lot of people out there who argue that building more houses won't help solve the high cost of housing. I have also found a lot of those people complain Airbnb is driving up pricing. To not acknowledge the supply problem ( and the supply solution ), but to say the minimal change in demand caused by Airbnb is the problem to me is just dishonest.
- seanmcdirmid 7y ago
  Name one mega city with lots of housing where the prices have actually gone down. It isn't rocket science: add more supply in a hot area, it attracts more demand. Kind of like how building wider highways doesn't really do anything for traffic jams. 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.
  - fjsolwmv 7y ago
    Chinese speculators reduce growth by keeping property vacant. Airbnb doesn't affect growth. House prices are not growth, and they generate the tax revenue that you say helps get the infrastructure ready.
    - seanmcdirmid 7y ago

rchaud 7y ago

Building more units might push down rent, but that assumes that the increase in housing supply won't be offset by owners who will simply convert those new units into more Airbnbs. 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.

dkhenry 7y ago
Its only as high as the amount of demand for _both_ of those things. It may be that landlords convert some percentage of units into short term rental units, but even that has a limited return on investment. There are only so many people that are going occupy those short term rentals, so even if you kept the price of them the same the decrease in occupancy is going to hurt enough to limit the total number of units going onto that market.
- 9387367 7y ago
  > Its only as high as the amount of demand for _both_ of those things. What if it's in a major international tourist destination?
  - Consultant32452 7y ago
    It doesn't matter. If you doubled the number of housing units in New York City you'd crash the real estate market there. It would suddenly become laughably cheap to live there. Even if they all became Airbnbs competition for tenants would drive prices for those short term rentals to basically zero. And if you don't believe it for doubling the housing units, try tripling, or 20x. Don't let me hamper your imagination.

britch 7y ago

I think it's both. There's a few different situations with AirBnb 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.

fjsolwmv 7y ago
If you had surplus housing, Airbnb would not exist because there is no point.
- britch 7y ago
  I think it would exist for it's marketed purpose: to let people stay in a city they don't live in for a short period of time (a week or so). I don't think anyone is going to get a lease somewhere just to visit.

eljimmy 7y ago

I think it's a combination of many factors, for sure. Definitely also being impacted by the tighter mortgage regulations that our government enacted recently. 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.

britch 7y ago
I admit that eviction situation sounds difficult for landlords. I know I would be frustrated if I was a landlord in that situation. 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.
- Macross8299 7y ago
  >that the only recourse is for the landlord to turn to AirBnB to turn a profit. 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.

libraryatnight 7y ago

It's also things like Invitation Homes. They buy hundreds of thousands of houses and charge really high rents (even in areas where it makes you scratch your head how they can charge that much), they also have a guaranteed 5-6% rent increase each year you stay. So renting from them is never a long term possibility, you will always eventually hit a point where the rents just too high and will be forced to move.

fjsolwmv 7y ago
It is more likely that IH knows the rental market price and you don't. 5% growth per year is totally normal in desirable areas . It's lower than real estate appreciation.
- libraryatnight 7y ago
  I don't think so? First, if that were true they wouldn't be significantly higher than other houses in the neighborhood if that were true. Also, In 15 years of renting I've never had a guaranteed rent raise - ever. Rent only rose when the market made a raise make sense. Guaranteed regardless of the market is not normal in residential renting in my area.

jbay808 7y ago

I'm not sure if you live in Toronto or Vancouver or elsewhere, but I have noticed a lot of comments like yours are from Bay area residents. It's a valid comment for the Bay area, but not in Canada where the nature of the situation is quite different. In Vancouver the construction industry has been going more or less full throttle for the past decade or more, and the city is being continuously rezoned for higher density. Supply is still short but it's not for lack of construction.

ryanbrunner 7y ago

Increasing supply isn't always a silver bullet. Rent prices are a huge problem in places like Toronto, where there is a tremendous amount of new multi-unit residential development.