AirBnB units drop by 74% due to SF regulations(m.sfgate.com)
m.sfgate.com
AirBnB units drop by 74% due to SF regulations
http://m.sfgate.com/business/article/Airbnb-loses-thousands-of-hosts-in-SF-as-12496624.php?t=1be8549d57
105 comments
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...
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...
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/Pla...)
As of April 2017 there were an estimated 5,000 units on Airbnb (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-...).
The vacancy rate was 0.9% as of Nov 2017 (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.
As of 2011 there were 306,105 renter-occupied units in Metro Vancouver (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-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-...).
The vacancy rate was 0.9% as of Nov 2017 (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.
>>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.
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.
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.
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.
Your notion of “supply and demand” doesn’t allow for the predicates to the problem: new buildings are regulated through zoning and permits.
While life might be simpler with your model, it doesn’t fit reality well.
Here’s a decent analysis of the California situation with mismatched supply and demand and the headache that goes along with the state’s governance: http://www.latimes.com/business/la-fi-home-prices-20170725-s...
While life might be simpler with your model, it doesn’t fit reality well.
Here’s a decent analysis of the California situation with mismatched supply and demand and the headache that goes along with the state’s governance: http://www.latimes.com/business/la-fi-home-prices-20170725-s...
I'm not sure why you presented this as contradictory to the post you replied to.
> High prices (demand) attracting speculation (supply) should drive down rents (prices) ... [but they're not]
Should? Then why aren't they?
> new buildings are regulated through zoning and permits.
> High prices (demand) attracting speculation (supply) should drive down rents (prices) ... [but they're not]
Should? Then why aren't they?
> new buildings are regulated through zoning and permits.
Because it is contradictory. Sure, in a vacuum where there's infinite land available and no rules, supply would meet demand. In a vacuum Antarctica would be a great vacation destination with amazing views of the ocean.
In reality Antarctica is freezing cold and difficult to get to. And in reality there is a shortage of places to build new housing at an affordable price in either location mentioned.
In reality Antarctica is freezing cold and difficult to get to. And in reality there is a shortage of places to build new housing at an affordable price in either location mentioned.
>new buildings are regulated through zoning and permits.
yes, and AirBnB has built a business off ignoring those pesky laws.
yes, and AirBnB has built a business off ignoring those pesky laws.
Speculation is not based on the market of people who want housing. Speculation is based on the price of housing going up consistently. Vancouver had the issue where many buildings were sold and kept completely empty. They were investment vehicles because the market was always going up. It wasn't to do with "how much you can make in rent" it was being able to invest large sums of money in a property.
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.
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)
(Though I could see people buying vacation homes, status homes, etc. doing this)
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.
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.
There's also the upkeep and management costs of being a landlord. If you're a foreign investor, you have no interest in that. So you can either outsource it to a third party, deeply cutting into your rental revenue (and also being on the hook for any repairs required)...
Or you just sit and hold it. Maybe send in a cleaning and maintenance crew every once in a while to keep the dust at bay. Much less headache than renting.
Or you just sit and hold it. Maybe send in a cleaning and maintenance crew every once in a while to keep the dust at bay. Much less headache than renting.
On top of that there's some pretty stringent protection of renters which can cause major headaches down the road.
Personally I'm inclined to be in favor of these protections, but I can also understand a wealthy investor wanting to take the hit of leaving the place empty to avoid these kinds of troubles.
Personally I'm inclined to be in favor of these protections, but I can also understand a wealthy investor wanting to take the hit of leaving the place empty to avoid these kinds of troubles.
Depends on the property tax rate. That is definitely true in china where there is no property tax, but less true in the west given that high property taxes act to effectively deprecate your property yearly. If they sit on the property for 10 years and the rate is 1%, that is 10% gone, and it only gets worse as the property appreciates (well, outside of California).
Property tax acts as a stick to put property to productive use rather than just sit on it, otherwise the USA property market might be as dysfunctional as china’s.
Property tax acts as a stick to put property to productive use rather than just sit on it, otherwise the USA property market might be as dysfunctional as china’s.
Do China's 70 year land leases not function as an equivalent to a property tax?
Not really, because everyone assumes they will be easily and cheaply rolled over like they were done in Wenzhou a few years ago.
It is expected that the Chinese government will eventually abandon the land lease system and replace it with a property tax one. But they won't do so until the current bubble pops.
It is expected that the Chinese government will eventually abandon the land lease system and replace it with a property tax one. But they won't do so until the current bubble pops.
If you Google "warehousing apartments", you'll see quite a few stories.
Remember that renters can block your ability to convert the property to something else, as you can't instantly evict them, so the value of the property can be higher the more empty apartments there are.
In cities where there are businesses on the bottom floors, and apartments above, they sometimes only rent out the business spaces, as they lack the same level of legal protection from short term evictions.
Remember that renters can block your ability to convert the property to something else, as you can't instantly evict them, so the value of the property can be higher the more empty apartments there are.
In cities where there are businesses on the bottom floors, and apartments above, they sometimes only rent out the business spaces, as they lack the same level of legal protection from short term evictions.
Well, if the regulations say you can never raise the rent or terminate the lease, why bother with that risk?
http://kalw.org/post/growing-number-san-francisco-landlords-...
https://sf.curbed.com/2017/7/12/15961486/sf-tax-landlord-hom...
https://www.theatlantic.com/business/archive/2011/05/empty-a...
http://kalw.org/post/growing-number-san-francisco-landlords-...
https://sf.curbed.com/2017/7/12/15961486/sf-tax-landlord-hom...
https://www.theatlantic.com/business/archive/2011/05/empty-a...
London literally charges money to people for leaving a residence empty. The intent was, foreign investors will now have a powerful incentive to lease out the property. Nope, overwhelmingly they just eat the extra cost.
The zoning and building regulations usually restrict supply side of the equation.
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.
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.
Why not try legalizing the construction of more housing?
Fucking this 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.
"Build baby build" / reforming zoning and the massive influence disparity of current homeowners is the only way to fix housing in major cities.
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.
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.
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.
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.
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.
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.
>"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.
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.
"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
It's not a very descriptive term and I see why people get confused by it.
https://en.wikipedia.org/wiki/Rent-seeking
It's not a very descriptive term and I see why people get confused by it.
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
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
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?
> 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.
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.
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.
Tenants can also be surprisingly good at destroying your property and they have a surprisingly large amount of legal rights.
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.
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.
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.
He got his comeuppance.
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.
Where are you getting 12% appreciation from? Paragon (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.
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.
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.
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.
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)
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)
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!
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!
And renting out is a lot more work than keeping something empty.
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.
Basically if you have a lot of money, the marginal extra income isn't worth the headache.
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...
There are lots of vacant properties: people happy to just watch the home value go up without dealing with renters...
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.
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.
It also helps the problem because people can't find an airbnb rental in the city anymore so they stop coming.
So your saying that the government can't walk and chew gum at the same time?
The most significant points (that weren't discussed ad nauseam in previous discussions over the last few years) from the article:
"About 2,000 people listed their homes but never rented to tourists." The percentage is artificially skewed by the effects of eliminating stale listings, and the real effect attributable to regulation is less significant than the headline suggests.
"San Francisco charges a $250 registration fee plus a $90 business registration fee for all hosts." This is a scarier prospect for AirBnB and other companies. If $340 is really enough to scare off a significant percentage of people, how much are these hosts making?
"About 2,000 people listed their homes but never rented to tourists." The percentage is artificially skewed by the effects of eliminating stale listings, and the real effect attributable to regulation is less significant than the headline suggests.
"San Francisco charges a $250 registration fee plus a $90 business registration fee for all hosts." This is a scarier prospect for AirBnB and other companies. If $340 is really enough to scare off a significant percentage of people, how much are these hosts making?
> Tenants and condo owners who can’t sublet: When renters register as hosts, the city notifies their building owner. “We think a good number of folks might meet city eligibility requirements, but may be renters with ‘no subletting clauses’ in their leases,” Guy said. Similarly, some condo associations bar subletting.
I'd suggest this one of the major killing factors. Many sf units are basically condo titles, which cc&r usually forbid Airbnb.
I'd suggest this one of the major killing factors. Many sf units are basically condo titles, which cc&r usually forbid Airbnb.
It's more that the fees serve as a small barrier to entry for new hosts. While you can likely expect to make that initial cost back up after a few bookings, the fees—along with the paperwork and process associated with them—are a huge change from the earlier status quo. Before, you could have reasonably chosen to list your property on AirBnB on a whim with no financial risk. Now, it's a much more involved decision that requires spending money up front.
I'd love to see some numbers on how many hosts de-listed after a short while without any bookings or stopped after one or two at the most. It seems like a given that those kinds of hosts are pretty much gone now.
I'd love to see some numbers on how many hosts de-listed after a short while without any bookings or stopped after one or two at the most. It seems like a given that those kinds of hosts are pretty much gone now.
> along with the paperwork and process associated with them
We (airbnb) have integrated with the city for registration requirements so that you can do it from the web UI. Go into the "Manage Your Space" section and click the "Registration" tab. I work on appsec and did the security shepherding for this integration.
We (airbnb) have integrated with the city for registration requirements so that you can do it from the web UI. Go into the "Manage Your Space" section and click the "Registration" tab. I work on appsec and did the security shepherding for this integration.
That's definitely a solution for easing your member's burden. And that kind of integration is surprisingly citizen-focused for any local government red tape.
Though I do wonder what the impact is on potential new hosts when they're in the "maybe I will, I maybe I won't" phase. It strikes me as more of a PR problem: convince potential hosts in SF that Airbnb makes compliance painless—fees aside—so they can get to the point where they're willing to pony up and try it for themselves in light of the new rules' publicity.
Though I do wonder what the impact is on potential new hosts when they're in the "maybe I will, I maybe I won't" phase. It strikes me as more of a PR problem: convince potential hosts in SF that Airbnb makes compliance painless—fees aside—so they can get to the point where they're willing to pony up and try it for themselves in light of the new rules' publicity.
If the integration is so friendly, then you should consider being able to register by using the amount received by the first booking(s), to avoid having to put money upfront.
It may be doable, it might also run into issues as your're advertising and charging for a product you're not licensed to sell.
I mean this is, in part, a business registration fee we're talking about... are there other regulated businesses where you can charge first and get licensed second? Trash disposal, flammable material production, health care services? Liquor wholesaling? Gynecological services? Radioactive material transport? ...
From a regulatory standpoint the entire point of licensing actors is to deny poorly behaving actors licenses. If AriBnB were facilitating the sale in expectation of a license being granted then AirBnB is trying to act as a regulatory body, a no-no, and at the very least liable for any problems with the transaction or host, a no-no for AirBnB.
I mean this is, in part, a business registration fee we're talking about... are there other regulated businesses where you can charge first and get licensed second? Trash disposal, flammable material production, health care services? Liquor wholesaling? Gynecological services? Radioactive material transport? ...
From a regulatory standpoint the entire point of licensing actors is to deny poorly behaving actors licenses. If AriBnB were facilitating the sale in expectation of a license being granted then AirBnB is trying to act as a regulatory body, a no-no, and at the very least liable for any problems with the transaction or host, a no-no for AirBnB.
That's not what's being proposed, as I understand it. Rather, the poster is proposing that airbnb pay the registration fee for you, and then withhold it from bookings made through them after. There is no advertising and charging for a product you're not licensed to sell, it's more like the advance fees in a book publishing contract.
> If $340 is really enough to scare off a significant percentage of people, how much are these hosts making?
It's not the money. It's the fact that you will be on record and people can check up on you.
All this tells me is that a huge chunk of the AirBnB folks actually knew when they were in violation of something and, now that they might get caught, have decided that AirBnB really isn't worth it anymore.
It's not the money. It's the fact that you will be on record and people can check up on you.
All this tells me is that a huge chunk of the AirBnB folks actually knew when they were in violation of something and, now that they might get caught, have decided that AirBnB really isn't worth it anymore.
Many years ago, the IRS didn’t require you to list the social security numbers of your dependents when claiming them on your taxes. Once the requirement was put into place, the number of fliers claiming dependents dropped dramatically.
Trust but verify.
Trust but verify.
>Trust but verify
What is true of all human interactions is, not surprisingly, true here too.
> It's not the money. It's the fact that you will be on record and people can check up on you.
And beyond the compliance checking here and now, it also means you're subject to and pre-registered for any and all forthcoming regulation.
I think, though, it's only fair. If private rentals are gonna compete with hotels then private rentals need to start addressing some of the issues we have regulated mostly out of existence with how hotels used to be. Like having a registered business, or perhaps the right kind of insurance, or the right kinds of fire safety systems that are monitored on a schedule. Business ain't easy, and shortcuts are how we get unthinkable tragedies. It's only fair the economics of AirBnB hosts reflect that.
And beyond the compliance checking here and now, it also means you're subject to and pre-registered for any and all forthcoming regulation.
I think, though, it's only fair. If private rentals are gonna compete with hotels then private rentals need to start addressing some of the issues we have regulated mostly out of existence with how hotels used to be. Like having a registered business, or perhaps the right kind of insurance, or the right kinds of fire safety systems that are monitored on a schedule. Business ain't easy, and shortcuts are how we get unthinkable tragedies. It's only fair the economics of AirBnB hosts reflect that.
> I think, though, it's only fair.
Oh, I agree. Things like "pest control" are really damn important to people living around you.
Oh, I agree. Things like "pest control" are really damn important to people living around you.
I think one the most impactful parts of the regulation is getting your landlord's ok. God knows how many people were doing AirBnB knowing either their landlord would not be ok with it or their lease strictly forbidding it.
I think this will basically kill AirBnBs for any sizable multi-tenant building, which is basically 90% of the inventory in certain areas of the city. I don't know of any condo associations or professionally-managed apartment buildings that allow short-term rentals.
Sure, single family homes or very small condo units (e.g. just a couple units where the owners all know each other) may allow it, but if other cities take this lead it will be a large, significant blow to AirBnB.
Sure, single family homes or very small condo units (e.g. just a couple units where the owners all know each other) may allow it, but if other cities take this lead it will be a large, significant blow to AirBnB.
Well they exist and they list on airbnb. Forget where but I noticed a whole bunch of very similar looking listing and I thought it was spam at first but realized it was just an apartment/condo complex putting their unleased inventory to work. Kinda smart I guess?
In many cases, this isn’t people renting out unused inventory. It’s landlords taking their apartments out of circulation for long-term tenants in order to rent to short-term tenants on AirBnB. Think about it - an Airbnb listing has to be furnished, so the landlord has to make a decent investment in order to put such a listing on the market. It’s not like they’re furnishing apartments in between tenants moving in/out to get a few night’s rent.
This is also really unfriendly to tenants, you now have a bunch of strangers traipsing through the hallways with no relationship or accountability to the neighbors.
This is also really unfriendly to tenants, you now have a bunch of strangers traipsing through the hallways with no relationship or accountability to the neighbors.
> This is also really unfriendly to tenants, you now have a bunch of strangers traipsing through the hallways with no relationship or accountability to the neighbors.
The root of the problem is that tourists have diverging interests compared to locals, because they don't have to share the same building for many years. In situations where agents have to deal again and again, tit-for-tat works. But not where they meet just once.
It should be solved by good reputation tracking over rentals, so they don't escape responsibility - maybe reputation tracking should be outside the hands of a private company that has an interest in the game, like an independent organisation.
The root of the problem is that tourists have diverging interests compared to locals, because they don't have to share the same building for many years. In situations where agents have to deal again and again, tit-for-tat works. But not where they meet just once.
It should be solved by good reputation tracking over rentals, so they don't escape responsibility - maybe reputation tracking should be outside the hands of a private company that has an interest in the game, like an independent organisation.
> Well they exist and they list on airbnb.
My whole point is they won't anymore in SF after this policy goes into full effect.
Unless it's something like a hotel or real bed and breakfast (the article explains these exemptions), only primary residents are allowed to list short term rentals (this legislation was put into place to prevent investors from buying up places just to put on AirBnB). It's illegal for the building owner to put up short term (i.e. < 30 days) rentals for multiple units in a building zoned for apartments or condos.
My point is that almost all large, multi-tenant buildings prevent their residents from doing short term rentals through subleases (or, if it's a condo building, in their HOA rules).
My whole point is they won't anymore in SF after this policy goes into full effect.
Unless it's something like a hotel or real bed and breakfast (the article explains these exemptions), only primary residents are allowed to list short term rentals (this legislation was put into place to prevent investors from buying up places just to put on AirBnB). It's illegal for the building owner to put up short term (i.e. < 30 days) rentals for multiple units in a building zoned for apartments or condos.
My point is that almost all large, multi-tenant buildings prevent their residents from doing short term rentals through subleases (or, if it's a condo building, in their HOA rules).
Landlord or HOA.
Internet technologies have been constantly disrupting the rule of law for individual interests.
I have no political statement to make about it, but there are so many issues between the internet and the law: content copyright, airbnb, uber, money laundering with bitcoin... If you're a technologist, I can clearly see how a libertarian agenda fits perfectly.
Governments are not following on technologies to take advantage of them, or at least not quickly enough...
I have no political statement to make about it, but there are so many issues between the internet and the law: content copyright, airbnb, uber, money laundering with bitcoin... If you're a technologist, I can clearly see how a libertarian agenda fits perfectly.
Governments are not following on technologies to take advantage of them, or at least not quickly enough...
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Chicago has hard a hard time enforcing its ordinance: http://www.chicagobusiness.com/realestate/20171218/CRED03/17...
Hopefully SF's measure has more teeth.
Hopefully SF's measure has more teeth.
"HOW DO THEY SLIP THROUGH? - The problem: The city has yet to rule on about 1,300 applications that are missing a unit number or specific address. Until the new ordinance required that Airbnb collect that information, most hosts would list their home without an address or specific location, one way to avoid detection if the unit was in a building that prohibited vacation rentals. It's possible that some hosts deliberately filed an application without an address, hoping it would allow them to stay one step ahead of city regulators."
Interesting you brought this up. Unless the listing is unbelievably attractive, a listing without a number or address just seems sketchy to me. Makes me think its the analog of a hourly rented motel.
Interesting you brought this up. Unless the listing is unbelievably attractive, a listing without a number or address just seems sketchy to me. Makes me think its the analog of a hourly rented motel.
Airbnb usually doesn't show the exact address to the customer before you've rented it, or at least it doesn't make it easy to find. I've always assumed this was to make it a little harder for landlords, neighbours or regulators to see that a property was being listed without their permission.
If you're visiting an unfamiliar city and the place has good reviews, I don't see anything sketchy about only being able to narrow down the location to within a few hundred metres.
If you're visiting an unfamiliar city and the place has good reviews, I don't see anything sketchy about only being able to narrow down the location to within a few hundred metres.
These are not burdensome regulations. And, as was mentioned in this discussion, Airbnb makes the registration easy. So clearly the reduction is from (a) illegals getting out of the act, and (b) activation energy barrier of that registration fee.
Glad I'm leaving SF. Way too much red tape and too little freedom. One one hand it touts innovation, and with the other it strangles it. Typical government interference for the bad.
On one hand, (mostly) new residents complain about lack of housing, on the other, an "innovative" company disincentivizes keeping that housing available for an increasing population.
Might I suggest Kansas? I hear that they are a utopian dream for lack of government interference. Please take a few people with you as well, if you can, thanks.
The nice part about this is that with so many fewer AirBnB things going on, some rental units are likely to come back on the market.
The nice part about this is that with so many fewer AirBnB things going on, some rental units are likely to come back on the market.
"WARNING: This comment contains ideas known to the State of California to cause cancer and birth defects or other reproductive harm."
I once got a swag-bag at a job interview in Switzerland. It contained a long thin object with just such a Californian warning on it. I was hoping it would be a giant glow stick or a rocket. You something with actual chemicals in it. But it turned out to just be a selfie stick.
At this point, we may as well put one of those stickers on the entire State of California.
"WARNING: The State of California contains chemicals known to the State of California to cause cancer, birth defects, or other reproductive harm."
"WARNING: The State of California contains chemicals known to the State of California to cause cancer, birth defects, or other reproductive harm."
I'm also glad you're leaving SF and so is everyone else who likes living here
The GP was a ranty ideological and unsubstantive comment, and so not good for HN. But replying to that with a personal attack is considerably worse.
You've unfortunately posted quite a lot of comments that break the HN guidelines. We ban accounts that do that, so would you please read the rules at https://news.ycombinator.com/newsguidelines.html and take the spirit of this site to heart when commenting here?
You've unfortunately posted quite a lot of comments that break the HN guidelines. We ban accounts that do that, so would you please read the rules at https://news.ycombinator.com/newsguidelines.html and take the spirit of this site to heart when commenting here?
You know what, actually, if you could both ban me and delete my account, that would be excellent. I've been trying to find a way to delete my content from here for years. Seems like it'd be in everyone's best interest. I only ever come on here anymore to see what the most insane, reactionary take on the news is anyway, and I could do without it.
I mean not everyone will have a chance right away to register their listings. Give it a month or so, then check back on the numbers.
I just read in Amsterdam they are introducing regulation that limits airbnb rentals to max 30 days/year.
A friend of mine rents out her apartment using Airbnb and I remember it was a max of 60 days p/y. Are they reducing it?
EDIT: Yea it looks like the city is reducing the legal number of days someone can rent out something via Airbnb [0,1]
[0] https://techcrunch.com/2018/01/10/amsterdam-to-halve-airbnb-...
[1] https://www.engadget.com/2018/01/10/amsterdam-airbnb-rental-...
EDIT: Yea it looks like the city is reducing the legal number of days someone can rent out something via Airbnb [0,1]
[0] https://techcrunch.com/2018/01/10/amsterdam-to-halve-airbnb-...
[1] https://www.engadget.com/2018/01/10/amsterdam-airbnb-rental-...
I'd be interested to understand two things:
1) How has the average price for similar priced airbnb offerings changed pre and post regulations
2) How do vacancy rates for airbnb offerings in SF change following the purge?
I can see trends in both directions. Would be an interesting empirical analysis of how supply changes outcomes.
1) How has the average price for similar priced airbnb offerings changed pre and post regulations
2) How do vacancy rates for airbnb offerings in SF change following the purge?
I can see trends in both directions. Would be an interesting empirical analysis of how supply changes outcomes.
Hmm... so it used to be just 8453 rentals for a large city. It was a drop in the bucket.
Not surprising. Airbnb (and similar services) will lead to such abuse.
Rather than fix the tricky speculation issue, government focused on Airbnb. IMHO this will hurt both cities by making it more expensive to visit.