thehousingbubble@gmail.com
Blog

Big Fish That Are Free Of The Rules Little Fish Have To Play By

A weekend topic starting with Gothamist in New York. “Mayor Bill de Blasio announced that the city had issued a subpoena against the home-sharing giant Airbnb, demanding information on approximately 20,000 Airbnb listings in New York City. Chris Lehane, the head of global policy for Airbnb, urged the mayor to follow San Francisco’s lead. ‘At the end of the day, we know that home sharing is here to stay in the Empire State,’ Lehane wrote.”

From News 4 in Tennessee. “Nashville has a new issue as developers are turning entire neighborhoods into short-term rental properties. Metro Councilman Freddie O’Connell said the industry has run amok at a time when Nashville is in the midst of an affordable housing crisis.”

“‘Let’s say there’s 20 of them. That’s 20 permits that aren’t ever going to be housing again. They’re just going to be little hotels,’ said O’Connell. He said once the city issues a short-term rental permit, there’s no going back. A new state law says cities can’t let short-term rental permits expire.”

From WKRN in Tennessee. “‘One reason why we don’t just allow, we have zoning and why some places are zoned for residential areas and some are zoned for hotels and some for businesses it’s the idea that you know sometimes you don’t want to live around businesses and around a bunch of tourists and if Airbnb just comes in and just sort of ignores those zoning distinctions and says nope, if you’re in town in New Orleans for Mardi Gras you don’t have to stay at a hotel, just go stay in a residential neighborhood, that’s maybe not great for the neighbors or the long term residents there,’ said Josh Bivens with the Economic Policy Institute.”

“And we’re told in many areas where homeowners are supposed to have a permit to list their property on Airbnb, they don’t, and they’re able to just fly under the radar. Bivens said, ‘It’s all very murky. I would say one big problem is that Airbnb tends to not pay much attention to are we, or are we not allowed to have units rented in this particular building.'”

From Global News in Canada. “The City of Kelowna has revealed new rules for short-term rentals that could affect hundreds of hosts throughout the city. Alexandra Dagg, public policy director for Airbnb, said the proposed bylaw is too restrictive.”

“‘This is not a commercial activity. This is not a professional activity. This is people sharing a space in their home or their vacation home when they’re not using it,’ Dagg said. ‘And so rules need to be simple. They need to be affordable and easy to follow.'”

From Castanet in Canada. “Simply put, short-term rentals are toxic. They have a negative effect on the local economy, including tourism, due to the fact their extreme profitability encourages the conversion of long-term rentals, thereby reducing the rental housing supply employers and employees need.”

“Such loss of supply can be significant. There’s no data available for Kelowna, but in Toronto, researchers found that STRs reduced the rental vacancy rate by almost 4 per cent.”

“Developers and speculators will also reap the rewards on non-conforming uses. The regulation concerning the grandfathering of STR use will let as many as 16 residential buildings operate free of the principal residence rule.”

“While flying the banner of conscientious regulation, the City of Kelowna essentially plans to do what no other jurisdiction in the world has, which is create a virtual STR industry for big fish that’s free of the rules the little fish have to play by. This is an outrage.”

From Forbes. “Greeks are beginning to see the ugly side of the online marketplace and hospitality service site Airbnb. That’s according to a piece published recently in euronews. ‘Rents are skyrocketing, local residents are ‘expelled,’ and neighborhoods are deserted’ says the article.”

“‘Airbnb has made it difficult for local people to find and afford a place to rent,’ adds attorney Kyriaki Perrou. Theophanis Matsopoulos, Athens Chamber of Commerce and Industry Counsellor, agrees. ‘There’s a big shortage for long-term rentals, which pushes rents sky high’ he says. That’s the case even in areas that aren’t near city landmarks. Like Patisia, a low income area, where rents are up 25% over the last year.”

From Stuff. “Airbnb, which declined to comment for this story, does not share its listings data but an Australian, Murray Cox, opened a window into the company’s activity by scraping the website and making it available on Inside Airbnb. Cox said he found most Airbnb listings were entire homes and flats, many rented permanently.”

“‘The data dispelled the myth of home sharing and highlighted that commercial operators were turning their investment properties into illegal hotels at the expense of precious housing for residents,’ Cox said.”

“The top five Sydney Airbnb hosts have more than 100 listings, led by Sabrina with 197 properties and L’Abode Accommodation Specialist with 176 places. A Sydney Morning Herald analysis of Inside Airbnb data from December 2018 found at least 1000 properties listed in nine suburbs across Sydney but one in three listings have never been reviewed by a guest. No reviews may indicate a property has not been let out before.”

“Top 10 suburbs for listings were: Sydney (CBD) 9241, Waverley 5467, Randwick 3346, Manly 1800, Warringah 1794, Woollahra 1573, North Sydney 1370, Marrickville 1252, Pittwater 1192 and Leichhardt 999.”

“Tracey McArdle, who has facilitated short-term rentals in Sydney since the 1980s, said she resisted Airbnb as long as she could. ‘It’s terrible, they’re making the prices go down [because] they’ve over-supplied the market,’ she said. ‘It’s a very scary thing for owners … there are houses I’m renting out for a period of time for $10,000 that would have cost $20,000 a decade ago.'”

“McArdle said the ‘short-term party renters’ had also created havoc in the industry. In Redfern, where she lives, long-term tenants have been replaced by a stream of transient partiers. When she asked the owner of one of these properties why they’d changed to Airbnb rentals, the answer was simple.”

“‘The woman next to me said she did it because she can now get a week’s rent in three days,’ McArdle said. ‘She could get $900 a week long term, or $1200 a week short term.'”      

Related Posts
This Post Has 52 Comments

  1. ‘It’s terrible, they’re making the prices go down [because] they’ve over-supplied the market’

    There never was a shortage of shacks and there never will be. By encouraging speculation, it pushes up prices, which leads to more building. Irrespective of true demand. Glut!

    As I’ve long said, this is a side aspect to the mania as many were willing to scrub toilets while they thought the shack was going up in price week after week. Not so much now. How many toilet scrubbers shacks are among the crush of inventory going up for sale?

  3. Leftists/Milenials: Isn’t the sharing economy so awesome? It allows us the freedom to see the world and never have to worry about dealing with evil corporate hotels. Oh and with Uber we never have to own a car!!! This is so much better than the way you cousin humpers in red states live, what with owning cars and buying homes.

    Also Leftists/Milenials: Uber is the mostest worstest company in the world and AirBnb is destroying cities and keeping rents high.

      1. “Socialism only works until you run out of other people’s money” — Prime Minister Margaret Thatcher

        1. Thank goodness no one wants the USA to be a socialist country.
          “Too big to fail” and all the bank bailouts, and tax cuts for the 1% adding trillions to the nat debt, GM etc… came close enough for me. 😉

          1. AirBNB and Uber: some people must like it and it saves them money with more competition for hotels and taxis. I like competition. Its not like these millennials are builders using illegal labor to make a bundle.

          3. I like competition.

            Uber and Airbnb’s revenue streams derive from the evasion of regulations with which their competitors must comply. This is unfair competition.

            For someone who claims to like science, facts and now competition, you demonstrate quite the opposite.

      2. As someone who runs 20 short-term rentals, primarily on Airbnb, I think I can chime in here and give a few thoughts.

        Airbnb has good and bad aspects of it. When my wife and I wanted to visit eastern Canada several years ago (Quebec, Nova Scotia, New Brunswick, and Prince Edward Island) we used Airbnb and loved it. We spent a little over a month and we loved every guest we stayed with and the insight they shared. It was a much more authentic trip and we found places we would never have known about without a local guide. The Airbnb experiences that I like are ones where I am a guest in someone else’s house. Those are where you see the lowest prices. Plus, I am very sociable and have a high tolerance for ambiguity. But it is true that the bulk of Airbnb listings are coming from people that are doing this full-time rather than empty nesters renting out their spare rooms (though that is still a significant portion of the platform). A lot of people also want privacy, which is what all my units are.

        Airbnb is a love/hate story. A lot of people complain about it for various reasons, but they also still use it. Airbnb does disrupt and skirt regulation, mostly zoning regulations, and probably has an effect in reducing affordable housing, though that is probably the fault of zoning ordinances in the first place. For instance, there is a strong case to be made against zoning for single family homes only. But cities and municipalities have every right to intervene and regulate how they see fit with respect to Airbnb. But too much regulation and you end up with taxi cab medallions and stifled competition.

    2. Comedian Bill Maher Mocks Red States:

      Tony Katz and The Morning News
      Feb. 25, 2019

      Maher quoted Hillary Clinton, who has said that during the 2016 election she won the “places that represent two-thirds of America’s gross domestic product.” Clinton has also boasted that she won over voters in areas that are “optimistic, diverse, dynamic, moving forward.”

      “Maybe that has something to do with why Trump voters are obsessed with ‘owning the libs.’ Because the libs own everything else,” Maher quipped. “The blue parts of America are having a big prosperity party while that big sea of red feels like their invitation got lost in the mail.”

      The HBO host continued to pile on the insult for red state residents, saying that there are “no red carpets in Wyoming” and no one asks them what they’re wearing because “the answer is always Target.”

      “We have chef Wolfgang Puck, they have Chef Boyardee,” he said. “Our roofs have solar panels, theirs have last year’s Christmas lights.”

      WIBC host Tony Katz argued that Maher’s perspective is rooted in his hatred for middle America.

      https://www.wibc.com/blogs/tony-katz/morning-news/comedian-bill-maher-mocks-red-states-%E2%80%9Cwe-have-chef-wolfgang-puck-they

    3. Both Uber and AirBnB are the ultimate capitalists.

      Bypass socialist government controlled cabs where the cabbies have background checks so they won’t assault you in favor of predators with hardly any checks. Government safety inspected hotels bypassed to make way for AirBnB hovels that may or may not have smoke detectors?

      This doesn’t sound like Socialism to me. It sounds like Capitalism gone wild.

      1. These companies are like El Chapo except they use lawyers and fat envelopes to keep the thing running. It’s all about making it to the IPO. The usual Silicon Valley snake-oil. Cab drivers making less than minimum wage. The corporations barely making a profit, if at all. Keep their head above water with continuous rounds of funding. Real capitalists. Similarly I’m not impressed that Amazon drivers are taking a dump on peoples driveways cuz they can’t get a potty break.

  5. ‘Nashville has a new issue as developers are turning entire neighborhoods into short-term rental properties’

    Sounds like they are having trouble selling new shacks in Nashville, just like Boise. Anytime you see a conversion of purpose, there’s something wrong with the market.

    1. Airbnb is entirely a byproduct of the Fed’s cheap money scam. It is not only due to the hyperinflation in housing prices, both for sale and for rent, but also the fake eCONomy which has led to inflation in hotel prices due to a populace levered up to their teeth in debt, going on vacations they cannot afford. Further, a rigged stock market has provided outsized returns and made many already wealthy people obscenely wealthy, in turn producing a veritable sea of money searching for yield, buoying companies such as this.

      “Shortly after moving to San Francisco in October 2007, roommates and former schoolmates Brian Chesky and Joe Gebbia could not afford the rent for their loft apartment. Chesky and Gebbia came up with the idea of putting an air mattress in their living room and turning it into a bed and breakfast. The goal at first was just “to make a few bucks”..”

      You know things are bad when paying for a mattress on the floor in the rundown apartment of strangers is a viable solution for people who have no roof over their head. Heckuva job, Obama, heckuva job.

      https://en.wikipedia.org/wiki/Airbnb

      2. Airbnb is very good for local economies. It diverts profits from major multinational corporation into the hands of local property owners and local businesses. It also has driven down the price of hotels which has made tourism much cheaper for the average traveler. Short term rentals are a big gain for everyone besides the hotels that were making massive profits.

        Uber has had the exact same impact. Reduced fares across the board and increased efficiency for everyone.

        1. In my neighborhood all the guest parking is slammed all the time by the people renting on AirBNB. They park in the guest spots so their renters can park in their driveways. The home owners are renting out their ground floors to other people as well. Overpaid coming in and rent out rooms to make up for it.
          It’s annoying.

  7. “‘The woman next to me said she did it because she can now get a week’s rent in three days,’ McArdle said. ‘She could get $900 a week long term, or $1200 a week short term.’”

    Math is hard McArdle. Try 5 days and a few toilet cleanings.

  8. Here’s an article and a question. First, the article …

    Airbnb hosts can kick you out after you’ve checked in | TechCrunch
    https://techcrunch.com/2018/03/22/airbnb-hosts-can-kick-you-out-after-youve-checked-in/

    Now the question: Suppose the Airbnb decides to evict you and you decide you will not leave? Does the Airbnb need to spend many months getting you out of the house in the same manner that needs to be done with ordinary renters? If so, then with a littke bit of imagination this could be a nifty way to take the profit out of Airbnbs.

    1. The fun could begin five minutes after moving into the Airbnb just by changing the locks. This would place a (possibly expensive) “What now?” situation right into the hands of the Airbnb host.

    2. Does the Airbnb need to spend many months getting you out of the house in the same manner that needs to be done with ordinary renters?

      “Hosting” “paying guests” for “short periods” probably doesn’t involve a lease agreement. I could be totally wrong. I’ve neither used nor ever intend to use Airbnb.

    4. I have had to kick out Airbnb guests before. This was because it was a fraudulent booking (e.g. guest using someone else’s identity and the person showing up didn’t match). There is no lease agreement and no rights. If they don’t leave, you just call the cops. It was very easy for me, though the situation was problematic as the guest broke a window. I will say that the Airbnb platform is crawling with problems right now (e.g. drug users, homeless people using stolen identities and credit cards to get in a place). I have developed a way to screen out what I consider guests who have a high probability of causing grief.

  12. I’ve used Airbnb overseas, no complaints. No $35 “resort” fees. Also a good way to meet the locals. I think it is the older crown fearing change as usual. Damn iron horse!

    1. ‘I think it is the older crown fearing change as usual’

      Yeah, the old fall back. No compelling argument. Just say something like that and the discussion is over! Well you watch. Every month more cities ban these scammers. This is just Craigslist with huge amounts of VC money to hire lawyers and tie up the local governments. Where’s my self driving car?

      1. AirheadBNB is morphing into 2hr room rentals for hookers and johns. Anything illegal? Use AirheadBNB. And the empty pocketed home debtors in Californica have already established the trend. Washing sheets, disposing condom wrappers and cleaning toilets. Yep…. You’ve really come a long way.

        AirHeadBNB…. poster child for a money losing failed business.

        1. The vast minority, but yes it happens. I can tell you that the guests that book the same day with no reviews (or less than 3) are the ones that are questionable. As a host you can have strict requirements as to who you allow to book (e.g. guest must have valid government ID, guest must have previous positive ratings, guest must have selfie, etc.).

          1. Of course the thing to remember is a lot of the same stuff you mention happens at hotels and motels.

      2. Meet a ho on Tinder, take her in an Uber to an Airbnb, all paid for with Sh!tcoin. What an economy, huh?

        2. Meet a ho on Tinder, take her in an Uber to an Airbnb

          As soon as the self driving cars are here, no more need for Airbnb in that scenario. The mess moved to whoever has to clean the cars.

    1. EasyKnock’s model is not, however, a traditional investor purchase. The company gives the homeowner about 70 percent of the appraised value of the home. This protects EasyKnock from any depreciation in the home over the term of the lease and simultaneously gives the homeowner a future stake in any appreciation in the home’s value. That is because at the end of the lease term the former homeowner must either buy the home back or sell it to someone else. If they choose to have EasyKnock sell, they get the full value of the sale, including appreciation, minus the 70 percent EasyKnock paid and minus a 1.5 percent commission on the final sale price.

      What could go wrong?!

      1. LMAO. Absolutely no one in this economy adds value any longer. Let’s all of us build wealth by just stealing each other’s cheese.

        1. Some of us trying to can’t complete with these bull$shit business models and the current VC environment.

  15. Airbnb is a hassle for the property owner and I suspect many Airbnb property owners would prefer good long term tennants. In many places, however, the legal system is so tilted in favor of tennants that property owners don’t want the risk. The tennants can stop paying the rent and get the court to block an eviction. A friend of the family built his dream retirement home and decided to rent it out while he was waiting to retire. Right before he retired the tennant stopped paying the rent and got the court to block the eviction. Eighteen months later the court still hadn’t made a decision on the case. Meanwhile, the man was retired and couldn’t even live in his own home. He could die and never even spend a day in the place he built with his own money for his golden years.

    1. We are experimenting with 20 short-term units in the building I manage. We are 94% occupied and we just opened about 10 months ago. We started the Airbnb experiment because during a lease up you will just have idle units that are unoccupied so we put them in a short-term rental pool. We have had about half a dozen of our Airbnb guests sign leases and we typically waive the $200 application fee if a guest has stayed with us. Since we (management) are running the Airbnbs on behalf of the owners, it is a different value proposition than an Airbnb speculator taking out a lease and trying to rent the place out short-term (which is typically against almost every lease agreement I’ve ever read).

      Let me give you an example of some of the long-term tenants I have right now:

      1) Medical resident doing rotations at hospital
      2) Travel RN
      3) Energy working at local refinery
      4) C-level executive for in healthcare relocating family and looking for a 2-3 month place before deciding on purchasing a house in SLC area
      5) Skiers
      6) travelers

      I absolutely love the Airbnb experience that we give our guests. Our guests can get to the SLC international airport and ride Trax (light rail) directly to our place. They can take any of the ski buses up the mountains and the best thing about their trip is that we have partnered with UTA and so they don’t even need to rent a vehicle. Last week I had a retired professor who stayed for 1 month and skied almost every single day with her husband. Airbnb, VRBO, Homeaway, Booking.com are a great way to see the world. Some smart regulation should be done to mitigate some of the negatives that come with Airbnb, but as both a guest and a host it is the first way I try to travel.

      1. Last year I used Airbnb to stay in Boston when I ran the marathon. My father and I stayed for $35/night in a really sketchy place that was run by a Chinese girl who spoke basically no English. It was just a room in a townhouse and there were like 6 other rooms. It was okay though because I didn’t need a car and we were right by the metro station. It made the trip super cheap. Airbnb can reduce the cost of travel and thus bring in more demand in that regard.

        1. $35/night in a really sketchy place That’s about the price Wompatuck State Park in Hingham charges for camping a single night.

  16. Southlake, TX Housing Prices Crater 15% YOY As Dallas/Fort Worth Market Floods With New And Foreclosed Homes

Comments are closed.