Rental sites like Airbnb aren’t as innocuous as they pretend
You could look at the recent proposals to clamp down on San Francisco’s short-term housing rental market as the city’s attempt to call Airbnb’s bluff.
Airbnb is the high-tech start-up that allows residents or owners of homes and apartments to connect online with would-be renters of their spare couches, rooms or entire units. The firm, the most prominent of several “room-sharing” sites operating nationally, says its “typical single-property host” rents out space for 66 days a year, which sounds fairly innocuous.
So San Francisco, like Los Angeles, New York and some other cities, is offering to go easy on modest “sharing,” in return for the collection of lodging taxes and strict enforcement of the rules against turning housing into unlicensed hotels.
The pushback from Airbnb suggests that there’s more to the phenomenon than a few families making a few bucks. Airbnb describes the influx of casual lodgers into residential neighborhoods as though it’s an unalloyed blessing. In an appeal this spring directed at small-business owners in San Francisco, the firm bragged that “72% of Airbnb properties are outside of traditional hotel districts, in neighborhoods that haven’t benefited from tourism in the past.” That’s a boon to businesses in those outlying districts, the firm implied.
City officials and many of their constituents aren’t so sure. “We want short-term rentals to be part of San Francisco,” says Dave Campos, a San Francisco County supervisor who proposed stricter regulations. “But there’s a commercial short-term rental industry that buys entire buildings and rents them all out. That’s changing the character of the neighborhood and taking housing stock away from people who need it.”
Campos says illegitimate rentals have effectively taken 1,900 long-term housing units off the San Francisco market at a time when the city is experiencing a historic housing shortage.
But fighting back against this trend hasn’t been easy, in part because Mayor Ed Lee has been supportive of San Francisco-based Airbnb. A Campos measure that would have limited all short-term rentals to 60 days a year per unit, raised penalties for violations and required quarterly reports of rental activity was rejected last week by the county Board of Supervisors. The board opted to retain a cap of 90 days per sublet, with no limit on rentals during which the host remains on hand. Campos says that’s a huge loophole, as it’s almost impossible to verify.
The battle isn’t over. A measure limiting all short-term rentals to 75 days a year has qualified for the city ballot in November.
At the heart of the debate is the question of just what business Airbnb is in. In a report the firm released last month, former Clinton and Obama administration economist Gene Sperling asserted that Airbnb was “an economic lifeline” to middle-class families beset by income stagnation over the last 15 years.
Sperling described the available space in a home as an “otherwise underutilized asset,” an odd way to describe a room, or even a couch, that no one may happen to be occupying at a given moment. He cited “internal Airbnb data” to assert that the “typical” single-property lister on Airbnb was collecting $7,530 a year for an average of 66 days a year, a sizable “raise” for a median household earning $52,770 in 2013.
But the reality that concerns municipal officials is the drastic expansion and commercialization of short-term rentals. There are indications that owners or managers of single or multiple properties available for rent year-round provide a disproportionate share of the market’s volume.
A study issued in March by the Los Angeles civic group LAANE found that although 52% of the listing hosts on Airbnb in L.A. were on-site hosts offering private or shared rooms, they accounted for only 11% of revenue in the market. Leasing companies offering two or more whole units constituted 6% of all listing hosts but accounted for 35% of revenue.
“We all agree on the principle of protecting real sharing,” Roy Samaan, the study’s author, told me. “But the scale and professionalism of these new platforms have really ramped up the negative effects.”
The Airbnb-style platform is a good example of how technology can turn an innocuous situation into a problem. It used to be no big deal, for instance, to have a listed home phone number when it appeared only in your local phone book; now that any listed number can be accessed from anywhere in the world with the click of a mouse, who doesn’t feel a certain loss of privacy?
The rental or subletting of rooms, apartments or homes to transient tenants, even where strictly illegal, used to be sufficiently scattered to be winked at. Once Airbnb and its fellows provided the means to turn this activity into a commercial enterprise, its potential to destabilize whole neighborhoods became impossible to ignore. The character of a building, block, neighborhood or entire city is inextricably linked to the nature of occupancy, whether it’s a community of owners, longtime renters or tourists. Cities thrive as melting pots of cultures, economic strata, and professionals and artists, not as homogenized housing for visitors.
In tight housing markets such as San Francisco or Los Angeles, the expansion of short-term rentals has been shown in some surveys to reduce the availability of long-term rental units. In San Francisco, accusations that landlords are evicting tenants have become commonplace.
“What we’re trying to stop is the phenomenon of people buying buildings and evicting tenants so they can rent to tourists for three to four times as much,” says Dale Carlson, a spokesman for Sharebetter SF, the community group that placed the short-term rental cap on the November city ballot.
Just last week, housing activists in Hollywood demanded the city investigate whether the owners of a local apartment house have illicitly converted it into a hotel by offering short-stay rentals via Airbnb.
The rules proposed or enacted by cities across the country have closely reflected local conditions. In New York, where the housing shortage is dire, the law forbids virtually any short-term rental of a residential unit. The city is proposing to sharply ramp up enforcement and penalties, in part because state Atty. Gen. Eric Schneiderman has charged that 72% of private short-term rentals violate the law.
Santa Monica, which treasures its aura of community, its history of rent control and its upscale single-family neighborhoods, enacted one of the strictest new laws in the country in May, banning as many as 1,400 of the 1,700 listings then appearing on Airbnb and two other rental sites.
In Los Angeles, Councilman Mike Bonin and Council President Herb Wesson have proposed allowing only the primary resident of a home or apartment to rent it out for short stays, and barring short-term rentals of rent-controlled units.
San Francisco’s housing crisis, which is heightened by demand from an influx of high-tech company employees, places the city “at the cutting edge of this issue,” says Carlson.
A proposal for a $300-million bond to build up to 1,200 units of affordable housing will appear on the same ballot as the proposed cap on short-term rentals. “The irony is that we’re asking taxpayers to pay more for a problem that Airbnb has created and exacerbated,” Campos says.
Michael Hiltzik’s column appears every Sunday. Read his blog, the Economy Hub, every day at latimes.com/business/hiltzik, reach him at email@example.com, check out facebook.com/hiltzik and follow @hiltzikm on Twitter.
MORE FROM HILTZIK:
Your guide to our new economic reality.
Get our free business newsletter for insights and tips for getting by.
You may occasionally receive promotional content from the Los Angeles Times.