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A Digital Grim Reaper

A report from Geek Wire on Washington. “Loftium, the Seattle real estate startup that helped people buy homes in exchange for renting out an extra room on Airbnb, has shifted its focus to rentals. ‘Given how quickly home prices have risen, we realized that a large portion of our customer base were not able to buy a home even with Loftium’s down payment assistance, and that was a very frustrating part of the business,’ said CEO Yifan Zhang.”

The Jersey Journal on New Jersey. “There was a time when short-term rentals went something like this: To help offset the cost of a two-week vacation, Couple A would seek out people who wanted to vacation in their town. They’d then rent their home or apartment to Couple B for the time they were off on their dream trip.”

“Airbnb contends that the proposed ordinance goes too far and would, as the saying goes, throw the baby out with the bathwater. Downtown Councilman James Solomon disagrees, saying ‘thousands of units’ are being taken up by ‘developers and corporations’ rather than local residents looking to earn some money while away.”

From NBC DFW in Texas. “After years of debate, the Arlington City Council hopes to make a final decision on the future of short-term rentals. Kari Garcia said her two children have witnessed fist fights and public urination outside the house where she said prom and bachelor parties are being held.”

“‘I live across the street from a 4,000 square foot short term rental that’s listed in Airbnb to seat 15 guests and I live in a very quiet neighborhood,’ she said. ‘[There is] a constant group of strangers — not neighbors in that house every night.'”

From US News & World Report. “Airbnb argues that it provides an economic equalizer, helping even hosts of few means to boost incomes and manage otherwise unaffordable housing costs. Yet a growing army of critics allege that, in dozens of cities around the world, the proxy hotel service more often does the opposite.”

“Breonne DeDecker, a program manager at Jane Place, a housing rights nonprofit in New Orleans, says Airbnb rentals have displaced so many locals that many traditionally residential districts ‒ including in working-class black neighborhoods like the Seventh Ward and Treme ‒ now resemble weekday ghost towns. ‘Thursday, Friday and Saturday it’s just awash in young white tourists.'”

“Even with rules in place, regulatory agencies are often overwhelmed, and savvy listers find ways to evade requirements: In Miami Beach one property manager was associated with more than $1.2 million in dozens of illegal listing fines; in February investigators in New York exposed a vast, city-wide scheme, orchestrated by an Israeli former real estate broker, that generated $20 million in revenue by using multiple identities, manipulated addresses and proxy corporations to flout city rental laws and the company’s ‘one host, one home’ rule – specific to New York and a handful of other cities.”

“As the platform has expanded beyond homeowners with a spare room to profit-minded investors who buy and then rent entire homes, it’s also put a new squeeze on housing markets. Particularly for renters in high-demand cities, Airbnb can increasingly feel like a kind of digital grim reaper: In Toronto the platform has eliminated some 6,500 homes from the city’s badly pinched housing market, according to a recent report from the coalition group Fairbnb.”

From CBC News in Canada. “Sporting a crisp button-up shirt in his profile photo, smiling Airbnb host ‘Alejandro’ states he’s been around the world and thus understands other travellers ‘much better.'”

“The profile pic for ‘Mike’ shows him bearded, grinning, and relaxing to whatever’s playing on his iPhone – remarkably chill for someone who runs 61 listings on Airbnb and has hosted more than 7,900 stays. ‘Aj’ organizes bachelor party trips when he’s not managing his 90-plus Airbnb listings.”

“They are all among Canada’s most prolific Airbnb hosts, according to a CBC News tally of 32,000 entire apartment, condo and house listings that appeared on the popular accommodation-booking website in 16 major cities in the country. Its biggest players in Canada are actually — and sometimes secretly — multimillion-dollar for-profit corporations, a CBC News data analysis found.”

“‘Most of what’s happening on Airbnb isn’t home-sharing,’ said McGill University urban planning professor David Wachsmuth, who has studied the company for several years. ‘Instead, it’s something much more like commercial short-term rental operations.'”

“It turns out Alejandro had help. An internet image-matching search using his profile photo shows he was actually a paid employee, described as an ‘Airbnb specialist,’ for Montreal-based Corporate Stays, a multimillion-dollar company.”

The West Australian. “The Augusta-Margaret River region was packed over the Easter weekend, but a glut of unregistered short-stay homes left many of the region’s accommodation providers short of their usual peak-season highs. There are now more than 1000 active listings in the Shire according to data and analysis site AirDNA — nearly 15 per cent of total private dwellings in the area.”

“Over the Easter long weekend, more than 99 per cent of those houses were booked, but vacancy signs were up at most registered providers. Registered Accommodation Providers Margaret River spokeswoman Debbie Noonan said the oversupply of short-stay accommodation was crippling professional tourism operators and choking up the town’s infrastructure.”

“‘Easter overall was busy for the two days in the middle, but otherwise most properties had vacancies, which is definitely not normal,’ she said.”

The Australian Financial Review. “The race to make more money on short-term Airbnb rentals, along with a glut of apartments hitting the inner-city areas of Melbourne, Sydney and Brisbane, has led to an oversupply of Airbnb units, and crimped the supply of rental homes for local residents.”

“An oversupply of Airbnb units in metro Melbourne means one in four one- and two-bedroom apartments are vacant. For bigger units it’s worse, with 50 per cent of three- and four-bedroom units vacant, property investor Yan Davies’ real estate agent LongView Real Estate says, using data from Airdna.”

“‘Most investors and landlords assume that an Airbnb works best if it’s a small apartment located in the city. Whilst this is true in some cases, unfortunately, a lot of these Airbnbs are making the same return as those in traditional rent,’ she said.”

“‘This is partly due to the oversupply of small apartments located in CBDs on Airbnb,’ LongView co-founder Evan Thornley, who counselled Ms Davies to stay away from Airbnb, said.”

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This Post Has 38 Comments

  1. ‘Loftium, the Seattle real estate startup that helped people buy homes in exchange for renting out an extra room on Airbnb, has shifted its focus to rentals’

    So why didn’t they just throw in the towel and give the “investors” back what’s left of their money? Cuz then they might have to get a real job. These tech startup people are largely scumbags, that would sell out their grandmother for a buck.

    1. Yes they would sell their grandmothers for a buck even if the transaction cost them $2 as long as they could find investors willing to buy stock in the company

    2. I know more “entrepreneurs” than I can count who are constantly trying to dream up something like Loftium.

      They’ll throw anything against the wall to see if it will stick long enough to execute the “exit strategy” and make their big score. It used to be the dream exit strategy was to IPO. Now, it’s to be bought out by a “Unicorn” company. Find some niche thing they can quickly throw together an app and service for and tout it as the next big thing.

      I’m sure that a bunch of these guys (and a few gals) are looking around at Zillow, Redfin, AirBnB, etc etc and thinking “Hmm… there’s a lot of big companies and investor money floating around in the housing/rental sector. What kind of startup could we quickly make that would catch the attention of one of those companies and get them to think they need to acquire us before their competition does?”

      I liked it better when my friend said “I think there’s an opportunity to let people play games like chess and scrabble on the go with their phones against other people they may not even know asynchronously.” I’ll admit I ate crow for pooh-poohing that idea.

  3. ‘her two children have witnessed fist fights and public urination outside the house’

    Klassy! How inevitable this all is, resistance is useless these low life corporations tell us.

    ‘Airbnb argues that it provides an economic equalizer, helping even hosts of few means to boost incomes and manage otherwise unaffordable housing costs. Yet a growing army of critics allege that, in dozens of cities around the world, the proxy hotel service more often does the opposite’

    It takes a real money grubbing mindset to assume a moral high ground when you obviously don’t give a rats ass about anything but stuffing your pockets full of money for no work.

    1. AirBnB is a cancer.

      It’s going to end one of two ways — either government will reign them in, or there will be violence.

  4. ‘Its biggest players in Canada are actually — and sometimes secretly — multimillion-dollar for-profit corporations…working-class black neighborhoods like the Seventh Ward and Treme ‒ now resemble weekday ghost towns’

    Where’s Senator Running Dear on this? The article talks about Boston too. Or that California windbag Harris?

    1. If the KnowNothing dingbats and floozies are quiet they can always call on Barney Sanders. He’s always good for a spaceshot idea.

    2. Harris/Warren 2020! tough chicks who are not gonna take it anymore. No more handouts!

      1. I like chicks that carry guns and want to make bankers cry. If I could actually trust that they would leave my guns alone and not get in bed with the bankers later.

        1. “I like chicks that carry guns…”

          You’d appreciate one of the women of the Israeli Defense Forces websites. Hawtness that doesn’t quit!

        2. Cant trust any politicians, but gotta pick anyhow. Warren seems to really be on the side of the consumer, more than any other clown.

  5. What happens next if Denver voters pass Initiative 300?

    “If Denver voters approve Initiative 300 on May 7, the municipal code would be rewritten to end the camping ban and another ordinance barring people from sitting or lying downtown except for overnight. The mayor would have to sign off on 300, also known as Right to Survive, but that’s largely a formality. And in six months, the City Council would be able to weigh in to make tweaks.

    The campaign debate has, of course, focused on what it will mean for the future if 300 does take effect. Proponents and opponents of 300 clash on many points, but agree at least that its passage would be significant for Denver.

    Here’s what the ballot language says: “Shall the voters of the City and County of Denver adopt a measure that secures and enforces basic rights for all people within the jurisdiction of the City and County of Denver, including the right to rest and shelter oneself from the elements in a non-obstructive manner in outdoor public spaces, to eat, share, accept or give away food in any public space where food is not prohibited, to occupy one’s own legally parked vehicle or occupy a legally parked vehicle belonging to another, with the owner’s permission, and to have a right and expectation of privacy and safety of or in one’s person or property?”

    https://denverite.com/2019/05/06/what-happens-next-if-denver-voters-pass-initiative-300/

    1. ‘The building that Whole Foods calls home in downtown Denver has changed hands — and residents soon may be encountering more short-term visitors on their floor.’

      ‘Denver-based Daydream Apartments, a company founded last year that calls itself “an entirely new concept for the apartment market,” said Monday that it has purchased the Union Denver complex at 1770 Chestnut Place. The company did not disclose the sales price, and it was not included in a deed recorded Monday. But public records do show that Deutsche Bank provided the buyer with a $200 million loan.’

      ‘The company’s website said it was founded in 2018 to “create a new type of urban residential community, one with real opportunities for residents to lower their housing expenses with managed homesharing.”

      ‘The website said homesharing is similar to “subletting or ‘Airbnbing’ an apartment while a resident is away.”

      “Instead of the resident dealing with the hassles of bookings, key exchanges and cleanings, daydream apartments professionally manages the hosting on residents’ behalf,” the website reads. “Homesharing is not allowed in most apartment communities and if it happens, it often does so in violation of a resident’s lease or city regulations. Daydream’s program is designed to be in compliance with city requirements and has safeguards in place to make it more beneficial for all.”

      https://businessden.com/2019/04/30/whole-foods-anchored-apartment-complex-by-union-station-sells/

      Sure, we’re slightly less illegal than airbnb.

      1. I’ve done electrical work in that building, posted a picture of the pool deck and outdoor amenities area as seen from an upper floor on the HBB last summer.

        The building has three towers that rise from the base that occupies the whole block. One of them is very high-security and high-privacy, some of the Colorado Avalanche and Denver Nuggets live there.

        1. Wouldn’t surprise me if they lose some of those tenants once they see strange people coming and going at all hours every day. Unintended consequences and all that.

      2. Interesting work-around. I guess all tenants go into the lease knowing that they, and other tenants, can participate in a scheme to rent out the unoccupied apartments when they are away?

        My father has a couple of units like this in Vegas. They are at high-end resorts and can be taken out of the reservation pool or put back in at any time.

  6. Sponsored content narrative provided by the National Association of REALTORs, note that MarketWatch is owned by the same parent company of “real journalists” that publishes the Wall Street Journal.

    https://www.marketwatch.com/story/7-times-you-should-pay-more-than-the-offering-price-when-buying-a-house-2019-05-06

    This story originally appeared on Realtor.com

    Daniel Bortz has written for the New York Times, Washington Post, Money magazine, Consumer Reports, Entrepreneur magazine, and more. He is also a licensed Realtor in Virginia.

      1. “The reason the Vestals started to consider buying a home is “sort of hilarious,” Caitlin Vestal said: it was “how crazy the rental market is.”

        Even though the process of finding a home – and paying for it – was stressful, Caitlin Vestal and her husband are “very excited” to move into their new neighborhood, she said.

        Plus, since they navigated Portland’s crazy real estate market for their first home, the Vestals will be well prepared if they ever decide to move.

        “I don’t know any other market,” Caitlin said. “So to us, this is the game we’re playing. It’s completely insane, but that’s just how it is. You gotta roll with it.”

        https://www.oregonlive.com/front-porch/2016/04/looking_for_a_home_in_the_red-.html

        1. “I don’t know any other market,” Caitlin said.

          Betcha her mother lives in the area.

      2. How about Im going to die in this house so I’ll spend the kids inheritance now and let them suffer later.

  7. MarketWatch dot com contradicts its own REALTOR narrative (published on the same day), and even dares to bite the REALTOR hand that feeds advertising dollars by asking “Should we worry about non-bank lenders?”

    Lax standards for home equity lines of credit repeat bubble-era madness:

    “Non-bank lenders — mainly private firms without a deposit base — have become the dominant mortgage lenders after Dodd-Frank legislation was passed in 2010. Their share of mortgage originations has skyrocketed from 13% in 2011 to more than 50% as of 2018. They stepped in to fill the vacuum left when large banks essentially abandoned lending to low- and moderate income buyers with less than stellar credit. Non-bank lenders dominate mortgage loans, which are guaranteed by the FHA and the VA.

    In addition to being the primary source of first mortgage loans for those with less than pristine credit, non-bank lenders are now the dominant source for second liens. Their willingness to go up to 100% CLTV for a borrower strongly suggests that they are not afraid to take much higher risks than the banks.

    Non-bank lenders don’t provide so-called “liar loans” or mortgages that require no income or asset verification (NINAs), as the sub-prime lenders did during the nutty bubble years. Yet most of their borrowers would qualify as sub-prime under bubble-era classification.”

    https://www.marketwatch.com/story/lax-standards-for-home-equity-lines-of-credit-repeat-bubble-era-madness-2019-05-06

  11. Ecological narrative shared by major publications of “real journalists” published today, headlines all appearing near the top of their respective websites:

    New York Times — Civilization Is Accelerating Extinction, Altering the World at an ‘Unprecedented’ Pace

    The Guardian — ‘We are in trouble’ Human society under urgent threat from loss of Earth’s natural life

    Washington Post — Human activity has put 1 million species on verge of extinction, U.N. says. We will suffer the consequences

    2. “Human activity has put 1 million species on verge of extinction,”

      The local news in SE Region IV is running the 1 million species on verge of extinction Climate infomercial today.

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