I frequently agree with Michael Hiltzik who has a weekly column in the LA Times. He wrote a thought-provoking column today concerning the effect of AirBnb type of rentals on neighborhoods -- in particular in San Francisco. Rental sites like Airbnb aren't as innocuous as they pretend - LA Times. I'm not sure I completely agree with him on this one!
Having been in the "short term rental business" by renting our beach condo across the hall from us for many years, I do understand the difference in short, and long-term rental and the associated rental revenue. Short-term rentals do bring in more revenue per night, but there are many vacant nights. So the net revenue after the additional fees (such as business license, and advertising fees, such as AirBnb), the net is typically not a lot -- maybe 10% more than an owner could get on a long-term rental. There is windfall profits available, however if the landlord is living in subsidized housing, or in rent-controlled housing. That is unfair, for sure!
The hotel industry HATES the vacation rental business. During periods when demand is the highest and they could charge the highest rates, the vacation rentals help hold a lid on how much they can raise their nightly rates. I'm certain that their VERY deep pockets provide a lot of the "seed money" that stirs up antagonism against vacation rentals.
Hiltzik complains that AirBnb rentals in neighborhoods affects the character of the block, neighborhood or city. Yes, I agree it may change the character -- but does it change it "for the worse?" -- or "for the better?"
I can agree that in the short term, people doing rentals pulls long term rentals off the market. However, if all short-term rentals were banned, the hotel industry would reap a windfall! Eventually many more hotels would be built to respond to the short supply and high rent situation. To build hotels, other properties must be eliminated -- would they be commercial properties, or existing housing structures?
The main reason for shortage of housing in New York and San Francisco is the fact that they have rent control and subsidized housing. Those cities have very high employment rates of professionals. The housing in the cities is scarce, so workers have to commute to the city. Why is housing scarce? Because people who are not necessarily fully employed (such as retired) are occupying those homes because the rent is low and they know it will be higher if they move! If rent control were eliminated and building were allowed, the economics of supply and demand would result in adequate housing.
Having been in the "short term rental business" by renting our beach condo across the hall from us for many years, I do understand the difference in short, and long-term rental and the associated rental revenue. Short-term rentals do bring in more revenue per night, but there are many vacant nights. So the net revenue after the additional fees (such as business license, and advertising fees, such as AirBnb), the net is typically not a lot -- maybe 10% more than an owner could get on a long-term rental. There is windfall profits available, however if the landlord is living in subsidized housing, or in rent-controlled housing. That is unfair, for sure!
The hotel industry HATES the vacation rental business. During periods when demand is the highest and they could charge the highest rates, the vacation rentals help hold a lid on how much they can raise their nightly rates. I'm certain that their VERY deep pockets provide a lot of the "seed money" that stirs up antagonism against vacation rentals.
Hiltzik complains that AirBnb rentals in neighborhoods affects the character of the block, neighborhood or city. Yes, I agree it may change the character -- but does it change it "for the worse?" -- or "for the better?"
I can agree that in the short term, people doing rentals pulls long term rentals off the market. However, if all short-term rentals were banned, the hotel industry would reap a windfall! Eventually many more hotels would be built to respond to the short supply and high rent situation. To build hotels, other properties must be eliminated -- would they be commercial properties, or existing housing structures?
The main reason for shortage of housing in New York and San Francisco is the fact that they have rent control and subsidized housing. Those cities have very high employment rates of professionals. The housing in the cities is scarce, so workers have to commute to the city. Why is housing scarce? Because people who are not necessarily fully employed (such as retired) are occupying those homes because the rent is low and they know it will be higher if they move! If rent control were eliminated and building were allowed, the economics of supply and demand would result in adequate housing.
No comments:
Post a Comment