Is AirBnB Making Our Housing Crisis Worse?


AirBnBAccording to a report released Wednesday by pro-labor group, Los Angeles Alliance for a New Economy (LAANE), AirBnB, a short-term rental listing website, is making the regional housing crisis even worse and driving up rents, especially in Santa Monica and on the Westside, where housing is scarce.

The LAANE report has been covered in KPCC, Curbed LA, and the L.A. Times.
The problem isn’t the website itself, necessarily but rather how it is being used by property to side-step rental regulations. AirBnB bills itself as a digital billboard of sorts where people who are looking to rent out a spare bedroom in their house to travelers. But, according to LAANE’s report [PDF], property owners are increasingly taking whole apartment units — and even buildings — off the rental market for use as hotels. And in a region in the midst of a historic housing crisis, that’s a problem.

“The promise of the sharing economy is belied by practice, when housing units and even whole apartment buildings are converted into de facto hotels,” said Santa Monica Mayor Kevin McKeown.

“Shared bedrooms in occupied residences, where the host is present, are compensated person-to-person hospitality. That’s very different from unsupervised standalone vacation rentals that displace our neighbors and erode our neighborhoods,” he said.

In the report, LAANE singles out an AirBnB with the single-most number of whole units available to rent. “A host going by the name ‘Ghc’ is the most prolific host in our Los Angeles AirBnB database, with 78 whole units in a dense cluster spanning the border between Santa Monica and Venice,” the report reads.

Still, AirBnB has said that its impact on the Los Angeles area’s rental market is negligible.

“I don’t think there’s almost any way you can use a reasonable methodology to conclude that Airbnb is having a large impact on rents or owner costs around Los Angeles,” Thomas Davidoff, a professor at University of British Columbia commissioned by AirBnB told KPCC. “Even if all the units on Airbnb represented a subtraction from the housing stock around L.A., that would be something like a percent and a half increase in rent — but that’s a huge overstatement.”

The report claims there are “11,401 AirBnB lodging units in the Los Angeles hospitality market.”

Santa Monica, where such short-term rentals are prohibited, is one of the area’s top 10 revenue generators for AirBnB, earning the company about $9.3 million a year, according to the report. While illegal, enforcement is an issue in Santa Monica.

“The violations are widespread, and the fact-gathering necessary to enforce is time- and staff-intensive.  We are in the process of recalibrating Code Enforcement’s workload, and if additional resources are needed that will be addressed at budget time,” McKeown said.

The city has 773 units for rent on AirBnB, according to LAANE’s report. Of those units, 538 are whole units, defined in LAANE’s report as, “An entire home, apartment or other accommodation. Host is not present in the unit during the guest’s stay.”

It’s only a fraction of the city’s 33,717 rental units, but with Santa Monica, like its neighbor Los Angeles, failing to build enough housing to keep up with demand, losing those units is only making matters worse.

“Removing rental units from these markets by the thousands appears to have contributed to declining vacancy rates, and consequent rising rents,” the report said.

The LAANE report makes the case that AirBnB incentivizes removal of housing from the market because property owners realize they can make a lot more money from short-term rentals, especially if their units are rent-controlled.

Of course, this problem is amplified because there is political resistance to growth of all kinds in the neighborhoods where AirBnB is thriving.

One commenter on Next’s Facebook page spelled out the problem: “SM’s anti-development policies make this a zero sum game. If the supply of housing were allowed to increase, vacation rental demand would lead to housing growth. SM doesn’t permit that more or less, so vacation rental demand just drives up rents for residents.”

So, this actually wouldn’t be a problem if the Los Angeles area had an abundance of housing, rather than a shortage.

The report makes other arguments against AirBnB that are unrelated to housing, though. Namely, the report claims that it is undermining the traditional hospitality industry, and the jobs it provides. The report also argues that cities are losing out on tax dollars hotels pay and that units rented out on AirBnB are harder to hold to health and safety standards.

Jason Islas
Jason Islas
Jason Islas is the editor of Santa Monica Next and the director of the Vote Local Campaign. Before joining Next in May 2014, Jason had covered land use, transit, politics and breaking news for The Lookout, the city’s oldest news website, since February 2011.


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