Very weak evidence presented in the article. Airbnb is surely a factor in rental price increases, but if it were in fact a leading causative factor, how come municipalities that ban airbnb do not see rental prices drop materially?
The focus clearly needs to be put on adding substantial supply, and in Canada at least, reigning in the demand from new immigration.
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% increase in Airbnb listings is causally associated with a 0.018% increase in rental rates and a 0.026%"
This is about a fifth of the overall increase. We're talking about a $9-10 a month difference in rent in most urban areas. Not great, but clearly Airbnb is a small part of the problem.
The article you cite is not supporting your view. In fact it lists many cases where Airbnb (or short term leases in general) have a significant effect on both sales and rental property supply and is pushing up prices as a result.
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.
I think it's reasonable to assume Airbnb reduces supply. I don't see how you can conclude the 30% rent increase you experienced was largely driven by Airbnb.
Lets say anyone renting out their unit for less than half a year wouldn't have put the unit on the rental market anyways. If you download and dive into the data, you'll see that there are ~9550 "Entire home/apt" listings, of which 5992 are available for less than half the year, leaving only 3558 units. In a city the size of Toronto, that seems negligible.
Even if we took Fairbnb's number at face value, it still seems small relative to Toronto's total number of rental units.
Here is a report published by McGill's School of Urban Planning, commissioned by the Hotel Trades Council, that found Airbnb responsible for a 1.3% rent increase over a 3 year period in New York: https://mcgill.ca/newsroom/files/newsroom/channels/attach/ai...
"When demand is inelastic, even relatively small changes in housing supply can cause significant changes in the cost of housing.10 This intuition is clearly validated in a number of careful empirical studies looking precisely at the effect of Airbnb introduction and expansion on housing costs." [https://www.epi.org/publication/the-economic-costs-and-benef...]
"At the median owner-occupancy rate zipcode, we find that a 1% increase in Airbnb listings leads to a 0.018% increase in rents and a 0.026% increase in house prices. Considering the median annual Airbnb growth in each zipcode, these results translate to an annual increase of $9 in monthly rent and $1,800 in house prices for the median zipcode in our data, which accounts for about one fifth of actual rent growth and about one seventh of actual price growth" [https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3006832]
I mean, it's an article on gentrification and rise in housing market costs. I'm sure Airbnb adds some to the general price rises, but it surely is just a small part of the many factors that have led to this effect in most cities in the Western World over the past 30 years?
That article is just anecdotal, as such claims always seem to be, whether the claim is that rents are going up because of Airbnb or going down because of Airbnb.
Airbnb is a part of the reason. There are studies out there that show that the rents in nicer neighbourhoods have gone up more than the average increase in the city. It is easier for the landlords to Airbnb the unit and make more money compared to renting it out long term. This decreases the supply of available long term units, which in turn increases the rent. Now is Airbnb the only cause for increase in rental prices? Hell no, but it definitely is a catalyst. I do think that Airbnb is beneficial if it was used the way it was meant to be, but it just has become another investment avenue for the rich now while fucking over people who actually work and live in the city but can't afford to buy a place.
Why would that drive AirBnB prices up? If anything, I'd expect it to drive rental prices down because there would be fewer owner-occupied units and more rental units as investors rent out.
As one example, Vancouver, notorious for huge amounts of international money buying up property, has relatively cheap AirBnb units
Both of us look at the same evidence, just interpreted differently.
If the stats you brought are correct, that means that there exist a considerable amount of tenants which couldn't afford their apartments if not for Airbnb. Ultimately, as rental markets balance their price against vacancies, market rates will go up.
I'm from Toronto and work in the apartment rentals industry, and I think it's pretty clear that nobody actually believes that Airbnb rentals are having any sort of real impact on home prices and rents in the city. Since Airbnb listings in units people purchased just to Airbnb make up such a tiny portion of the housing stock, it's not sensible to think that this regulation is really targeted at impacting rents.
It's also worth mentioning that unlike NYC and SF where this may actually be a real issue, buying a place just to put on Airbnb in Toronto is hard to do in a profitable way. Airbnb rents in most parts of Toronto make it impossible to turn a profit worth the hassle, and most I know who have considered it decided not to based on the economics.
I suspect the political motivations are the mayor (who is generally sensible) wanting to be seen at least doing "something" to address rising rents, as well as catering to the various industry lobbies and other politicians who are generally uncomfortable with any industry operating in a largely unregulated way.
No one is arguing that Airbnb is solely responsibly for rent increases. It's one of many contributing factors, including limited supply as you point out.
Just wanted to point out that the article you reference says 660k listings in the US, not hosts. I was initially concerned by your wording that the number of properties for rent on Airbnb was much higher (since often hosts have multiple properties, or the host is listed as a management company), but it does seem that 660k is the number of listings.
And I agree with you that number is much lower than I would have expected, and doesn't seem like enough to meaningfully move housing prices overall. Also consider that some number of those listings are people renting out a spare room in their owner-occupied property, which I don't think is fair to count "against" Airbnb; not sure what that number is, though.
It would be interesting to also see more local numbers. Like what percent of units in each of SF, NYC, downtown LA, Chicago, DC, etc. are listed on Airbnb? There are a lot of housing units in small towns and cities across the US that don't have much tourist appeal, so they likely don't see many Airbnb listings. But they also likely don't have housing-cost issues like some cities that are more attractive to tourists.
I think people try to invent complicated reasons for skyrocketing home prices, when it's fairly simple: we aren't building enough in the places where people want to live. Sure, other things (Airbnb, foreign investment[0], cheap credit, etc.) don't help matters, but I think they're pretty minor factors. If there's demand, and you don't meet it, prices go up. Econ 101.
It's interesting to note that Vancouver and Toronto instituted 20% and 15% (respectively) foreign buyer taxes for home purchases a bunch of years ago. These taxes did actually do their job of deterring foreign buyers, but, sadly, home prices still continued to go up, undeterred. And now Canada overall has barred foreign buyers for two years. I doubt it will help. I expect Airbnb bans would have a similar non-effect.
The focus clearly needs to be put on adding substantial supply, and in Canada at least, reigning in the demand from new immigration.
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