Airbnb's Devastating Effect on Canadian Housing
thewalrus.ca
thewalrus.ca
Don’t blame Airbnb when you refuse to build enough housing, the markets going to figure out how to market.
You ever see a hotel on a Tuesday? No one is there. Now stretch that across all the airbnbs in a city.
I don't understand how someone can't see how that isn't bad and is crating artificial scarcity. Homes are not hotels.
https://www.cmhc-schl.gc.ca/blog/2023/estimating-how-much-ho...
https://assets.cmhc-schl.gc.ca/sites/cmhc/professional/housi...
The problem is not the hosts on Airbnb that are listing spare bedrooms or their vacation homes. It's corporations and ambitious individuals that are depleting the supply.
Canada is building plenty of housing. It's the entire economy besides oil and gas.
Sure, you might be under-building slightly in B.C. and Toronto (mostly due to your gov's immigration policy specifically to prop up your housing bubble) - but that doesn't explain why prices have been going ape-shit literally everywhere in Canada for 30 years...
That's double the next closest industrial country.
Canada doesn't have a supply issue, it has a demand issue.
The demand isn't real. It's synthesized from unsustainable government policies.
Set interest rates to -100% - see what happens to housing demand.
Is that a supply problem? Should Canada build 800 trillion houses to fill the appetite for free government money that will eventually implode? Or is it a demand problem because your government is dumb?
Looking a bit online it feels like this might be a disproven theory https://financialpost.com/real-estate/busting-the-myth-of-ca...
Also just on a very fundamental level - outside of luxury housing, why wouldn’t investors rent out the houses they’re sitting on? Sure it’s nice to own an appreciating asset but isn’t it also nice to rent it for 10% of its value yearly?
Most investors aren't keeping their properties empty. The empty places are generally owned wealthy people as a second/third home, or as means for foreigners to offshore their wealth. And this accounts for a tiny fraction of the housing supply compared to domestic/corporate real estate investors.
And I agree that a lot of our economy and workforce is already dedicated to building housing - increasing this is not a realistic solution.
The only realistic way to improve the supply/demand is to disincentivize the investors from gobbling up the majority of our new housing supply.
Furthermore, what solutions are there? People advocate building to allow for natural supply<->demand relationships to curb the absurd home price increases.
Isn't more supply simply one of the biggest factors to lowering the prices? Of course, purchasing homes via speculation is also a huge issue - but that affects supply too, no? So does AirBnB, Renters, etcetc. All things which reduce supply of owner avail homes, driving up the price of homes and furthering the cycle.
My understanding of all this is absurdly minimal, though. I just own a home (in the US), and that's about it. So please correct me if i'm wrong. Thoughts?
I'm not familiar with the immigration issue in Canada, i'll have to peek at that. Appreciate your clarity
Source? No really. This is shocking to me. 3% of Canadians work in construction and I suspect the majority of them are not working on housing. Do you mean 7% of the workforce participates in housing development and maintenance tangentially? Like, including lawyers, lobbyists, politicians, the portion of construction workers who aren't building roads and film sets, other craftsmen, people doing renovations, plumbers, hvac, insurance, inspection, etc.
Canada also has a lot of red tape around new builds that draws out the development process significantly, a lot of which necessitates all the other labor going into building too little housing for the population growth.
https://www.fraserinstitute.org/studies/canadas-growing-hous....
If everything worked based on the most basic econ101 principles, we wouldn't have any bubbles in the first place.
I've read a lot by economists on this over the years and they all agree lack of new housing is the problem in the Canadian home market so if you've got an alternative take I'd love to hear it.
This is the case in the US - not Canada.
China peaked at ~25% of GDP coming from Real Estate Development. Canada has been in the high teens for the last decade.
The US and most non-housing bubble countries are around ~5%.
No. Canada in 'in the high teens' is mostly reselling the same stock over and over.
Canada is only a country of 38 million and they are expected to take in 1 million migrants this year, all of whom don't bring a home with them. They took in half that last year. Their population is growing much faster than ours, but new housing starts are only around a quarter million per year.
I don't assume they are correct just because they are in wide agreement which is why I'm asking what you know that I (or they) don't. The total percent of GDP from the real estate market doesn't indicate much other than that houses are unsustainably expensive.
Side note: K-W represent! :-)
Khrushchevka were a creation of socialist housing programs.
>stop taking over 50% of everyone’s property tax payments to pay for the socialist housing projects
Good news. Prop taxes are local and mostly go to pay for schools and other county owned infrastructure.
Socialism is happy to provide the housing you want and funding can come from the same non-municipal sources it always has.
There are few if any common values or objectives that unite into coherent leadership across levels of government. Everyone for themselves, and the results are quite often ludicrous and to the severe negative for citizens.
[0] - https://www.cbc.ca/news/canada/canada-record-population-grow...
What we've seen in the last few years is that the existing crisis that started in Vancouver has spread to the entire of the country, and it's no surprise because housing policy in the rest of the country is not really any different than Vancouver.
An example of the future is already here, just not evenly distributed I guess.
The problems of systemically not creating enough housing hit Vancouver first, but it was inevitable that they'd hit everywhere else eventually.
It's a circular problem too. People buy an expensive house somewhere and it becomes a substantial part of their net worth. Home values decreasing would impoverish them. Home values increasing would enrich them. Homeowners vote a lot more than renters, especially in local elections. So you quickly end up with local governments full of people (most of whom are also local homeowners) incentivized to keep property values high.
The problem must be taken out of the hands of local governments, but even at the national level, there's never going to be political will to slash home values.
https://dailyhive.com/vancouver/david-eby-housing-supply-mun...
https://www.timescolonist.com/local-news/bc-government-docum...
https://globalnews.ca/news/9979895/bc-municipal-housing-fund...
Canada is adding less housing stock than new residents (births plus immigrants minus deaths) every year, and the housing stock was already inadequate for the population 5 years ago.
I love that Canada is known as a welcoming country to people from diverse backgrounds, but the fact that the government treats housing and immigration policies separately is absolutely unhinged.
It seems less than ideal, or maybe even illogical, but calling it "absolutlely unhinged" feels a bit dramatic. I'm not from Canada - how does Canada currently relate housing and immigration policy, and how would you propose they change it?
A more direct method would be to apply hard caps to the following year's immigration numbers based on the previous year's actual measured housing completions. I think this would much more powerfully align pro-immigration interest groups with pro-housing-construction interest groups, resulting in much more home construction, whereas presently there is substantial conflict between the two (especially landowners who benefit from rising demand for scarce housing).
* (Or in some places like Kyoto and Venice, it's due to over-tourism complaints, but I don't think anywhere in Canada is struggling with that problem.)
I don't think the federal government does that at all but please someone correct me. Immigration is a federal issue that gets decided mostly on the federal level. Housing is not a (direct) federal responsibility, again correct me if I'm wrong. The government can give incentives but it can't dictate how much housing needs to be build by the provinces/territories, municipalities, etc.
Here's an example, how the BC government is explicitly trying to get more housing built: https://www2.gov.bc.ca/gov/content/housing-tenancy/local-gov...
Edit: It's actually not that simple as I thought. This is a good read about the topic: https://theconversation.com/housing-is-a-direct-federal-resp...
The numbers you've cited don't sound completely out of line. The counterpoint is that housing prices have increased so dramatically.
I don't see it mentioned, but I assume wealthy people without price sensitivity around the world are purchasing extra properties in Canada as climate refuges in a relatively stable democracy, and using AirBNB to generate income from them while they are not needed.
Yes, this has been happening exactly. Although some foreign investors are also just speculating without running an Airbnb. Recent taxation introduced on unoccupied housing has combatted this somewhat, but it's still a problem. But it's also worth noting that this only accounts for a small portion of the housing stock, probably dwarfed by Canadian nationals or corporations buying multiple properties and using them to run Airbnbs, or real estate companies buying property and keeping it unoccupied while it's on market.
I do think the "foreign investor" complaint is exaggerated as a root cause of our systemic housing issues (likely because people find it easier to point the finger abroad), though it is still a contributing factor.
Housing supply, healthcare, broad service capacity, everything that is meaningfully impacted by adding more residents, has mostly been ignored for years.
Housing supply in particular was already in bad shape 10 years ago, so we are seeing the compounding effects of that in 2024 as immigration skyrockets.
Imagine adding 1.2 millon people to a country with only 39 million already, in just one year! I think it's pretty clear there are many wrong/bad ways to pull that off, and we chose most of them.
If you can't increase the housing stock by 1.3% every year (I suspect it's more like 0.2%-0.5% growth per year, but can't find numbers), but you choose to increase the population by 1.3% every year, you can see how this would contribute to a soaring cost of housing and consequently the record numbers of homelessness in Canada (which includes tens of thousands if not hundreds of thousands of people now living in their vehicles).
BC is moving in the right direction with recent policies which make it much more difficult to run an Airbnb, which will return some of the housing stock to the long-term housing supply when the changes come into effect, but the municipal governments of most of its largest cities (including Vancouver, whose metro area has 50% of BC's population) have made it difficult to build housing in general, as well as restrictive of high-density housing.
If you're not from Canada, you honestly can't fathom how bad things have gotten for people living here.
100%. People outside of Canada really don't realize how bad it has gotten here.
Yes, housing costs are up all over the world - but Canada's housing crisis is off the charts. Hell, even many Canadians that are comfortably housed don't even realize how bad it has gotten.
That's why the two are unrelated.
The majority of Canadian property developers — at least, the majority of the ones who can afford to buy up lots for redevelopment in this market — seem to have an overt, almost monomaniacal focus on developing only top-of-market properties. Municipalities have to essentially force them at gunpoint to take any consideration for creating any housing stock to sell to the rest of the market.
• When you look at any new condo development in a Canadian city (without government affordable-housing involvement), there end up being no bachelor, 1bd, or even 2bd units in the development; it's all 3bd+. Picture a condo tower where every floor is the penthouse. Many Canadian property developers only build this type of condo building.
• Likewise, when you look at any new SFH development in a Canadian city (without government affordable-housing involvement), there end up being no small-lot developments; instead, contiguous previously reasonably-sized lots are almost always bought up and merged, to create space to plop down a McMansion. Again, many Canadian property developers only build McMansions.
Letting these kinds of developers loose on a city, results in a sort of "second-wave gentrification", where neighbourhoods previously affordable to the middle class, get rebuilt to be only affordable by the upper class (for whom this is mostly not their primary residence, but rather a rental property/airbnb, investment property, vacation home, property to lend to friends/family visiting them, etc.)
Classical "first wave" gentrification pushes the working class out of the city — creating a situation where the service economy of the city becomes driven by those commuting from outside the city, and low-margin service-economy businesses struggle to retain talent. (Which in turn forces the city to look into the creation/expansion of high-speed regional transit — because suddenly all the service-worker commuters are clogging the highways to get to work from the cheap exurbs.)
"Second wave" gentrification, in the places it happens, pushes the professional class outside the city as well. Now, even people like doctors, corporate managers, etc. struggle to afford to live near their place of work.
Unlike the service workers being pushed out — which is mostly a "silent" problem observable only to the service workers themselves, those trying to hire them, and city infrastructure planners — the professional class being pushed out is a problem observable by the public. The professional class often includes small-business owners, who previously operated some retail/office/clinic/etc in the city, out of street-fronted commercial rental space close to where they live. Having had their living space pushed out of the city, rather than commuting, these business owners will often choose to simply move their business, so that they can continue to live close to work. This "empties out" the city of amenities, as anything run by this class relocates to the cheaper exurbs.
Big corporate offices do remain in the city, as big corporate executives — the ones who decide where to put their office — are exactly the kind of upper-class who can still afford to live in the city. So you now get "suits" commuting into the city. And big chain businesses still manage to exist in the city to cater to these workers' needs (though even some of these do start to shutter their unaffordable urban-core locations.) But all the independent restaurants and other nice after-work things that made these bigcorp workers want to take a job in that city, are gone. So these workers start heading straight home after work. And that causes the revenue of even chain businesses within the city begins to crumble. The city becomes "sleepy." Things start closing at 10PM or earlier, because the revenue past that hour isn't worth staffing a graveyard shift. The city stops being known for its "vibrant nightlife."
(See also: Manhattan, one of the earliest victims of property-development-driven second-wave gentrification ~40 years ago. All the amenities shifted to the other boroughs of NYC, and now there's nothing for locals "in" Manhattan any more — save for a few family businesses that have fully owned their properties for decades, and who could be overnight millionaires by selling, but keep holding off.)
---
Mind you, I do understand why the housing developers have this focus. As profit-driven companies, property developers aim to increase margins; and if you're in a market where there is high demand from the every "level" of the market, then you're going to gravitate toward building for the top-of-market bidders, as the accepted cost-plus-percentage pricing model of for real estate translates into higher absolute profits when building more expensive properties. As well, there's less bureaucratic overhead (both in terms of labor dealing with bureaucracy, and in terms of government fees) involved in building + selling fewer, larger lots, vs. more, smaller lots. And there's the fact that the most in-demand lots, if you luck into developing one, can be fought over by buyers, resulting in bids skyrocketing, and you the developer pocketing most of that first-sale surplus.
But these factors are exactly why governments in Canada, at all levels, must step in (and lately, increasingly are stepping in) to regulate property development. Developers aren't gonna just stop obeying market forces on their own. Governments either have to tweak the market forces themselves (e.g. by blocking foreign purchase of investment properties for speculation, as has been done in BC), or require the building of at least some lots/units designed to be affordable as part of larger developments.
Of course, a property developer that wasn't driven by a profit motive, would be able to just build entirely affordable housing. No level of Canadian government has gone so far as to propose setting one of these up as a Crown corporation... just yet. But that might be where things end up. Because, as you say, the only other lever the government has — decreasing the value of existing housing — isn't one any government is ever going to pull.
This is just blatantly wrong.
https://www.cmhc-schl.gc.ca/professionals/housing-markets-da...
This is why people blame airbnb and PE. It makes them uncomfortable to blame the government, and by extension their parents, for creating this situation. It's much easier to blame a faceless other.
What we are doing is massively overpaying for land and massively overpaying for government ineptitude on each of those units, which is why housing is such a large part of the GDP when it is embarrassing on an actual production basis.
https://www2.gov.bc.ca/gov/content/taxes/speculation-vacancy...
This is mostly for show, similar to the foreign buyers tax - the vast majority of investment properties are bought by local investors, but they're going to completely ignore that and blame everything on the tiny portion of foreign investors.
So who is in the housing then?
Vancouver has near ~0% rental vacancy as does many, many other cities across the country. Most cities in BC are below 3% vacancy.
The fact that so much housing in Canada is being bought by investors is unsurprising. There's enormous demand for rentals and incredibly low supply.
Vancouver now has an empty homes tax and BC also has a speculation tax, which is effectively an empty homes tax. Since the creation of both those taxes the amount of empty homes has steadily dwindled.
It's not likely that there are a remarkable amount of empty investment condos that is having an impact on rental vacancy. The most likely cause of near zero rental vacancy is that there's not enough rental apartments in existence.
Why does it matter who owns the property. If the market worked well there would be no gains from asset inflation, and income from renting would be pushed towards the cost of providing renting, like it does with well functioning markets.
The problem is the lack of supply, not who owns them. Now you could argue that short-term-rents are not "valid" demand, but again with UK stats outside of very specific areas the number of short-term rentals is a tiny portion of the housing market.
Purpose-built rentals. Also, the need for rentals and rent prices in general would go down if most of the new builds weren't scooped up by investors and people could actually buy homes to live in.
Purpose-built rentals are purchased by big pension funds and other investors.
> Also, the need for rentals and rent prices in general would go down if most of the new builds weren't scooped up by investors and people could actually buy homes to live in.
Are you saying there will be more supply of home built per year if higher % of rental is built? If so, then logically, it will tend to lead to lower rent and lower home price, but I was under the impression that the industry cannot build any faster than it is now and that changing the mix does not help.
[0] https://betterdwelling.com/home-builder-profit-margins-incre...
[0] https://betterdwelling.com/canadian-cities-have-seen-up-to-9...
[1] https://betterdwelling.com/canadian-real-estate-investors-co...
If you're a working class renter that never really expects to be able to have the wealth to buy a home, the "investor" boogieman that is "buying up housing" is creating more places for you to live.
Unlike residents, tourists do not vote, and are not really entitled to cheap accomodations wherever they go.
Do landlords vote? Are they residents? Many normal people are landlords. You will never be a billionaire. Some people will never be guilded professionals or make it to the Ivy League. Many of the normal people who "make it" in life will be landlords.
Everyone's income is someone else's expense.
In San Francisco, where I live, the idea to drive out the "techies" couldn't be more boneheaded. Where are those agitators now? Careful what you wish for.
I don't know how to convince people to lean less into the aesthetics of a political position. If you feel like you are saying something that boils down to, "the right people get all the things, and the wrong people got nothing," it's an easy position to take when charts are going up, when interest rates are low, and when you happen to be part of the group of "right people."
My local area simply put in the restriction that only one property can be listed on AirBnB by one person, and that the property must be the person’s primary tax residence, and so now the local market has nearly entirely dried up even though that was allegedly the original purpose of AirBnB.
You cannot know whether this is true for all tourist/nomad hotspots (by being a hotspot they're actually suffering), e.g. Portugal/Colombia/Vietnam.
However... I still support whatever the people in those cities decide... so if they decide "no tourism" then they should be heard...
That said, the defense of this thread is entertaining. I don't know how anyone can honestly say that airbnb doesn't impact housing supply. Its the equivalent to saying that the earth is flat.
Exactly! It contributes to rising rent costs...
Now, FWIW, I prefer the adapt-or-die mentality, so I'm not anti-tourism, but if a majority of people in a certain place decide "no tourism", then hey more power to the people, they should decide whether they will accept tourism or not, not the tax-dollar-receivers...
Airbnb landlords do though. As do business owners catering to tourism.
> are not really entitled to cheap accommodations
Are locals "entitled" to this either? If accommodation is too expensive, it'll simply reduce tourism, and tourism money..
Last I checked, locals have the right to vote, and tourists do not.
Sad thing (for the people against tourism, which might be the majority in certain places...)is that those don't vote... (1 person 1 vote) but they do lobby/bribes...
Again, I'm just saying listen to what the majority want... you know... good old school democracy...
Almost everyone is a tourist at some point.
There's no real reason to not to bring in reasonable regulations that limit the worst sort of Airbnb uses.
Are you against all tourism or travel?
Housing, like money, is often fungible. It's not something we should expect to strictly classify away into wildly different categories in every case, even if this is pretty convenient from a governance perspective.
But in actual reality, very specifically, airbnb has destroyed the character of entire neighborhoods, pushed up prices locally (if not regionally), all the while having completely acceptable alternatives for the majority of its use (ie. tourism).
So, yes, there is a spectrum in how housing is deployed, but there is also a very clear negative impact of airbnb, very specifically, in that frictionless, low risk model of renting out housing. I think that needs to be addressed, not from first principles wrt what is the nature of housing etc. etc., but very pragmatically, the gig-economy airbnb, how to channel that correctly.
If a small inventory can break supply even worse that’s an under supply issue not just demand or Airbnb.
Markets will prioritize around profitable transactions.
If Airbnb was not allowed, or severely restricted in residential neighborhoods it would reduce options for holding onto a house that could be sold for single family housing.
Landlords take advantage of loose enforcement of Airbnb permitting. I have seen a landlord create a fake living space to get a permit they should not have had first hand. There is a site that uses data to indicate these bad actors working on a much greater scale than this.
https://www.wired.com/story/6-months-after-new-york-banned-a...
The disruption is needed on the supply side to build more.
Airbnb created massive new demand for housing for people that don't live there. Those people can afford to pay more than locals. That takes away large amounts of supply from locals.
Therefore AirBnb's effect is devastating.
AirBnb should be completely banned everywhere in the world immediately.
That is debatable, does the existence of Airbnb increase the number of tourists visiting a city? If Airbnb's reduced cost of overnight lodging causes more tourists to visit a city, then yes Airbnb increased demand.
There are a few other possibilities:
1. Tourism demand was growing, and hotels failed to keep up. 2. Airbnb shifted traffic away from hotels and to Airbnb hosts. 3. Airbnb induced demand from people who otherwise wouldn't travel using traditional hotel accommodations.
IMHO Airbnb demonstrated that there was an unfulfilled market for certain types of overnight accommodations (ones with a kitchen and laundry service) that existing hotels were failing to fulfill.
The fact is, at the same $ I'll choose an Airbnb over a hotel for anything more than 1 or 2 nights due to laundry services alone. Basically the entire time I've travelled as an adult has been while Airbnb has existed and as such I've had laundry on site, no way do I want to manage the logistics of a 2 week vacation using just hotels in various cities[1]. If I'm hitting up a bunch of different cities I'll maybe have a hotel for a couple nights in-between Airbnbs where I can do laundry.
> AirBnb should be completely banned everywhere in the world immediately.
If hotels offered better services and didn't try to charge me $5 per pair of socks I want washed, Airbnb would lose a lot of business.
[1] Even more so traveling with kids, as an adult I can reasonably bring 3 or 4 sets of clothes and lots of changes of underclothes, but kids need laundry done a lot, it is not unreasonable for a toddler to cover 2 sets of clothes in filth in a single day!
I think it's possible to formally model this, but if there are no caps on rent and no attractive alternative investments, it is always the efficient and rational move for a firm with excess capital to buy real estate because they can simply raise the rates until they get the return they want. People will require houses and you can see that in historically high multi-job holding statistics. People will work themselves to death to have a roof over their head.
In my life, larger scale single unit residential REITs are a new phenomenon, and the concentration of wealth that has happened this century has made single unit housing and rental and investable alternative asset class.
This is a really bad situation, it has too many parallels to feudal systems, or more recently, company towns in early 20th century America. This is a tragedy of commons dynamic that requires external intervention.
I'm worried you don't have a good handle on the number of houses and the excess lumber, copper, concrete, and steel for new properties and infra supporting them. That is just ignoring geographical scarcity, and the fact that not all geographies support building up. Just "building more housing" is usually not as easy as it is to sloganeer and blame nimbys.
For me it is a bit weird that 1. House must be fire-safe, asbestos-free, require eco heating system, etc etc. At the same time, nobody can afford to build a house (I think you need to be un top 5% in my country), and rent is really expensive
2. Same with doctors. You often not even get prescription easily, no medical advice, no own/custom medical devices etc etc, qt the same time a lot of people can't afford doctors.
I guess I am with libertarians on these issues. Imo, it is better to warn people and give them choice. Just plainly denying access to housing and medicine to poor people is plain evil.
It is not just about "supply and demand". We are talking about different markets. When you profit more from real estate by renting it to tourists vs renting it to long terms residents you are gonna throw residents out and get into the tourist business. In this, supply is largely irrelevant due to the huge difference in margins. Unless the tourist business becomes oversaturated you always profit more from tourists. And outsupplying the tourist demand is extremely hard.
In a country level, it is even worse as it makes a country totally dependent on tourists as an external flow of money, it usually ends up with most services been owned by big capital (local or foreign) in the expense of local businesses and it halts most forms and potentialities of actual development for other industries. Tourism can be some easy money at best, it is very often harmful for any other forms of activities and business in the long run.
Like tourists bring in "bad" consumer practices, such as buying stuff/food at "tourist traps" thus actually driving up prices, instead of them going to whenever the "locals" are used to go and still contribute to the local economy.
Best example I can think of paying overpriced shitty food at some tourist trap restaurant because you don't know better because you're a tourist, meanwhile locals go to their "known" places that aren't anything remotely similar to a "trap" you know?
People are much more willing to pay higher amounts (per unit time) for short-term housing, and this demand is primarily driven by tourism, which is influenced by things like culture, natural beauty, renown, etc. -- those things of course have an impact on long-term housing demand too, but long-term demand is primarily driven by the availability of jobs and potential career income, long-term stability, cost of living, etc.
The factors overlap, but they are not the same.
What AirBnB does is merge the two markets: any long-term housing can become short-term housing; owners of housing can make much more by leasing short-term rather than long-term. With this merger, the cost of long-term housing begins to approach the cost of short-term housing. This is great for short-term-housing seekers (ask anyone who had to book a hotel in NYC before AirBnB!) and not so great for long-term-housing seekers.
In theory, the problem is addressable with "enough housing" -- but now, instead of building enough housing to satisfy the needs of long-term residents, you also need to build enough housing to satisfy the needs of short-term housing seekers, who are much less price-sensitive (since they're only visiting for a short amount of time), and where theoretical demand is much higher (since the market for "tourism in Vancouver", e.g., is essentially global).
That is a lot more housing.
And that is a problem. And that is why people blame AirBnB.
But it isn't strictly speaking AirBnB's fault -- these two markets have been separated largely artificially through transaction costs and legislation. Like with local news, technology is a disruptor, but the solution can't really be "ban technology" because that cat is already out of the bag. But "build more housing" is easier said than done given the amount of new housing that would be required to satisfy demand.
I've stayed in multiple hotels and Airbnb units in NYC, and every single time, the Airbnb option was terrible in comparison to my hotel bookings. This is for places of comparable prices as well.
The only benefit of Airbnb, is that the units were slightly larger on average than proper hotels.. but they were usually so run-down, that I didn't want to spend any more time than the bare minimum in them anyway.
I don't think it's surprising that a huge professionally run corporation can offer a better service/product than a small real estate investor.
In 2008 it was close to impossible to find a hotel in useful parts of Manhattan for under $500/night (in 2008 dollars!). That pricing seems outrageous now.
"Canada's population increased by more than 1.2 million in 2023"
https://www.nbc.ca/content/dam/bnc/taux-analyses/analyse-eco...
Meanwhile YoY housing starts are down.
I appreciate that we have a tool like capitalizable markets, but the lack of alternatives is a red flag - every problem is a nail. An underappreciated aspect this is the legal machinery that undergirds the capitalization of housing, and as such is codified. Things that are codified are subject to change.
So even if what you say is correct – I don't know enough about the situation in Canada to judge that – then that doesn't really matter because it's pretty clear short-term rentals such as AirBnB add a lot of extra pressure, with all sorts of effects as described in the article.
codun't agree more. just got a month long apartment in kuala lumpur. its only $800 and its luxury compared to what I can get for that price anywhere else. it didn't make sense till I realized that they have no issues building housing. there's plenty of it. and its one of the reasons this city is so aweome
how do you build enough housing when the government of a country with a population of 30 million is bringing in 500K immigrants every year?
The fact they aren't is the supply problem.
Outside of government policies and potential to tank housing prices, is there some reason you can't build 500K+ houses a year?
Canada already seems to have an impressive rate, something like 220-250k housing starts/year. The entire US is only 1300K-1500K/year for comparison.
Is it insurmountable to just 2.5-3x that rate?
I guess the main issue is that housing lags demand. And immigration rate could also 2x on a whim by policymakers.
I'd be very surprised there are "220-250K housing starts per year" really. A lot of that might be development in the planning stage that is tied up in red tape whether it be in the investment stage, or navigating bureaucracy. I'd be very surprised if there were 100K houses per year actually being built.
edit: Does "housing starts" here refer to bedrooms? E.g. a 3 bedroom house counts as 3 housing starts? If so, the 600K goal (required to keep up with population growth) is much more reasonable, though still far off.
That's a self-correcting problem: either tourists pay higher prices to keep attracting workers or the higher prices scare off tourists and fewer workers are needed.
Sure, but I can definitely blame Airbnb for enabling owners to skirt local regulations.
AirBNB is an unlicensed hotel.
Are you saying there's so much unoccupied land on Montreal Island that you could just build all of those AirBNBs?
If you multiply this articles stated extend by 100x, then you have an idea of theproblem this is causing in the US.
Many communitiees that are in vacation friendly locations are eliminating the ability to rent housing.
You could build more residences, they would also be converted to AirBNB.
As expected here on HN, a bunch of vulture capital appologizism...
There are about 250 units of short term rentals in a city of thousands and thousands of housing units. Neighborhood are going up with more units than the entire short term rental market.
To say short term rentals are driving cost is insane when there is clearly a wholesale shortage.
That being said, I understand the legitimate frustration with what are commercial entities moving into residential areas.
About 20-30% of buyers in today's market are all-cash investors. [1]
[1] https://www.corelogic.com/intelligence/us-home-investor-shar...
"Don't blame Airbnb when you refuse to build enough housing, the markets going to figure out how to market."
AirBnB reduces the already limited supply of available housing. [Y]
AirBnB makes a bad situation worse. We should ignore this because the bad situation exists? WTF.
Problem X is exacerbated by Problem Y. Therefore, according to HN commenter, "Problem Y is not the problem. The problem is Problem X."
Who is persuaded by such nonsensical reasoning.
1. According the study, Problem Y is a legitimate problem. HN commenter provides no evidence to counter/invalidate the findings.
2. Assuming Problem X exists and AirBnB knows it exists, then AirBnB is consciously making a bad situation worse. For profit.
https://cjur.uwinnipeg.ca/index.php/cjur/article/download/27...
"Through removing housing that would otherwise be available on the long-term rental market Airbnb is reducing housing supply and, in turn, housing affordability."
In other words, converting long-term rentals into short-term rentals using AirBnB reduces the effective supply of available housing. This may in turn cause long-term housing prices to increase.
The study suggests the effects of AirBnB are not felt evenly across Canada. For example, some areas are adversely affected while others are not.
"Five years ago, short-term rentals in cities - both in Canada and abroad - were almost universally illegal with the exception of licenced bed and breakfasts. STRs were illegal either through bans on commercial uses in residential areas, through fire codes and regulations on lodgings, or through explicit bans on rentals below a certain threshold of nights. Despite operating in a legal grey area at best, STRs facilitated by platforms such as Airbnb have proliferated."
The focus clearly needs to be put on adding substantial supply, and in Canada at least, reigning in the demand from new immigration.
What is more common in a healthy housing market with lots of vacancy is that prices continue to go up, but below inflation.
And yes, I agree the house problem is a supply-vs-demand issue. And this is not addressing the core problem. But in a place with extremely low rent vacancy [2], having units removed from the market for STR isn't helping.
[1]: https://vancouver.ca/home-property-development/empty-homes-t... [2]: https://www.cbc.ca/news/business/rent-prices-rose-in-2023-1....
The idea that full-time airbnbs could ever complete with the brutal efficiency of the hotel industry is crazy, but again, the only reason why AirBnB exists is to capture the some of the real estate value created by the artificial real estate shortage.
This won’t solve the problem because AirBnB is a fundamentally different lodging stock that meets different market demands. A traditional hotel cannot reasonably accommodate a group of friends / a few families that want to stay together, cook together, eat, and recreate in the same living space.
The most a hotel can usually offer is a sad suite with an efficiency kitchen. More often it’s connected rooms with Grandma and Grandpa three floors away and another Aunt and Uncle in the other tower of the hotel.
When someone is looking to move to an area, they're looking to move to the area, not a specific municipality. If the municipality that banned AirBnB were isolated enough from other communities that did allow AirBnB you would likely see rents decrease as supply would meaningfully increase when the AirBnBs are banned. But in practice, the number of AirBnBs in the municipality that bans them relative to the number of houses in the same rental market area is small.
Typically there would be less than 3-4 residential long term rental units available in the whole town. And there were over 350+ AirBNB units in the town - mostly empty in the off seasons. Almost all condos, apartments, or laneway houses.
Many people unable to find housing... Families living in trailers, RV's, etc. Lots of single people living out of their cars. People with decent incomes.
There are a lot of causes for the housing crisis in Canada, but, AirBNB definitely plays a big role in the rental market.
Or about 4.6%? Right? Sounds reasonably OK for a resort town.
The town also has a massive NIMBY problem.
Have you seen the rental prices in Vancouver, or CRD region?
Or about 10,000% more vacant AirBnB units than long-term rental units. Sounds unreasonable for any town.
The remoteness and limited market of smaller towns can drive up the costs of creating new things.
In these cases of the lack of it's remarkably easier to simply buy a SFH and rent it out on Airbnb and I think that's how we get to these outcomes where there's seemingly tourist demand, but no one is creating anything new except trading around old SFHs.
Building housing to meet demand will reduce rents.
They did it in Austin already. https://www.kvue.com/article/money/economy/boomtown-2040/aus...
It's doable, but for some reason Liberal areas in the US just cannot figure it out. Particularly California.
That only works when you have essentially unlimited uninhabited land on your borders.
That's pretty much everywhere in the US other than the coastal cities.
>> ever larger, car-centric sprawl
Car-centric sprawl means people can buy a single family house for a little over the cost of construction. There are good aspects to it.
Only because the cities subsidize the suburbs and rural areas.
If you made the suburbs and rural areas pay for their own road construction and maintenance, for example, those houses would be vastly more expensive.
We pay a decent amount of Federal tax which should be going into infrastructure like roads.
The maintenance is paid by states which should come from state property and income taxes.
I don't always agree with their proposed solutions, but their data tends to be pretty irrefutable. Suburbs are weak to negative tax revenue areas and absorb money from the cities which are strong tax generating entities--especially when the infrastructure maintenance costs come due 20-30 years after construction.
There was also an article (probably in the LA Times) about two towns close together out on I-5. One of them threw in with the city systems and one of them didn't want to get annexed and stayed apart. The one that remained independent was shocked at how expensive maintaining their infrastructure was--to the point that they did things like leaving roads as gravel because they couldn't afford blacktop. Unfortunately, I can't cough that article up anymore with how bad Google has become.
When tourists can afford more than locals, the "efficient" market solution is to ensure the tourist market is fully supplied, even if the local market is not.
I mean, the "digital nomad" market is pretty big and sure it will include a lot of "whales", thus "beating out" the local market...
Not sure how that includes Montreal but for example it might not include Geneva for example I think...? _thinking_emoji_
That's a problem. No one is saying it isn't.
The role of Airbnb cannot be ignored; it is negatively affecting housing availability as landlords can make much more profits on short-term rentals than long-term ones.
On the building side, we've made it much more difficult to build low/mid rise apartments buildings.
General accessibility requirements alone make it impractical to build anything less than 5 floors with a large land footprint (~20 units per floor). You pretty much need an elevator and other accessibility systems, which makes construction and maintenance of low to mid rises prohibitive. Older constructions are filled with grandfathered clauses allowing them to skip over accessibility requirements.
This is why you only see requests to build ~20+ floor buildings, which people disagree to be added in their neighbourhood.
ex: https://www.ontario.ca/page/accessibility-ontarios-building-...
> Barrier-free floor access is also required for residential and office buildings over:
> 3 storeys high
> 600 square metres in building area
It can be ignored if it's insignificant - I haven't seen any evidence to show that banning short-term rentals significantly improves housing prices.
Some places have limited buildable land and Airbnb was taking over a lot of long term rentals.
Example of how this affects larger towns: https://montreal.ctvnews.ca/montreal-tenant-receives-evictio...
I live in a resort town where we implemented strict rental licenses as otherwise the whole town would be on Airbnb, with nowhere for locals to live. There's no more land to build on within 50km. We're seeing a lot of housing be torn down and rebuilt as 4 unit townhomes on the same land.
The town is now attempting to balance between vacation homes and long term rentals, with fines for unlicensed Airbnbs.
What's the solution? Owning your own home (and public housing).
What's needed for that? Drastically cheaper housing.
What's needed for that? Economies of scale. (Higher density, mass-production of components with as much prefab as possible. A few standard floorplans with some customizability.)
My mother has a laundry working with Airbnbs in the center of Rome providing them with fresh towels and sheets everyday, before she mostly catered at locals.
While this is good for us, Airbnb absolutely ruined the center of Rome.
Locals are being forced out further and further away, neighborhoods, markets, bars, everything I grew up and that existed till a decade ago is at a rapid pace transforming our city in a tourist theme park.
Some cities have it much worse, but I can't but say that locals and traditional way of living and communities are being torn apart by mass tourism.
This isn't a housing problem per se as if Rome has not enough houses for locals, you can still move further away and find a place, and I'm not even complaining about the much higher prices.
But it feels like Airbnb is devouring any bigger city out of its locals, eroding lifestyles and transforming cities in theme parks.
Some places have it much worse than Rome, thinking of Lisbon or even worse Venice e.g. but I swear I travel a lot and it's harder and harder to see anything local or authentic in most of the places I go unless I head for very distant neighborhoods.
Thing is people want to have friends and SOs over you know... which is not possible in "traditional" hotels...
Legit concern and I've seen it happen...
If you’re going to do something like that - make it a non resident tax for property and give residents a rate of 25% of the non resident property tax. Then the foreign income directly benefits the people and the local communities
Allow single family homes to be built.
Do not allow anyone to immigrate to the country, refugee or otherwise unless they can demonstrate an ability to pay for their own housing for 3 years upfront plus a lump sum immigration tax of $75,000 indexed to inflation to allow them access to social benefits Do not allow them to come into Toronto first, for the first 3 years move them to the north in Canada as that is where we need the population growth.
Build build build, whatever people want, wherever they want.
The “whatever people want, where very they want” part is where there is massive disagreement and everything gets bogged down. It takes leadership and our politicians are too busy talking about ArriveCAN or some other waste of air to show any form of leadership.
- A slowdown in new housing construction, which has created a supply shortage and increased land values. This is due to a combination of low manpower, developers’ lobbying, and bad regulations.
- A lack of affordable rental housing, which has forced many low-income households to spend more than 30% (even 50%) of their income on rent or become homeless. Moreover, all elected parties, regardless of their political side, will make laws in favor of the owners, because they are the majority of the voters.
- Financialization, which means that housing is seen as an investment rather than just a place to shelter. This has resulted in a lot of investors who buy and raise rent prices. And up until recently, you did not even have to be Canadian or even living in Canada to buy properties, which is insane. I remember on several occasions I had to call the landlords who were outside of Canada and could not even speak English. Most Canadian land is owned by the crown, which limits the availability and affordability of land for housing development.
- A mismatch between the types of housing available and the needs of the population. Most houses built assume single-family households with the hefty price tag that comes with it. And barely any new houses built are small units for young, singles, seniors, etc. who do not need a big house. They end up living with housemates perpetually
It’s basic logic: explosive population growth to few major cities with supply that has no hope of keeping up.
Are the tourists really opting for the AirBNBs over hotels though?
I think it's mostly digital nomads (whatever you like to think of them they're different from just "normal tourists") occupying AirBNBs...? (With like monthly rentals and such)
Hotels would be the obvious answer, but as far as I know, hotels didn't suffer a massive drop in the number of occupants to match the increase in the number of short term rentals. So, what caused the increase demand in housing for short stays?
This is true especially for tourists (in combo with low cost flights) but it opens up opportunities also for workers that didn't have the same flexibly of movement and/or couldn't make the cost of a stay fit into what they get for their services.
https://www.theatlantic.com/technology/archive/2019/03/what-...
Like, a lot of people would rightfully feel super violated by this.
But compared to all other kinds of surveillance that an actual vast majority of all of us is subject to every single day, this one bothers me a lot less.
Ok Mr AirBnB home owner, you got to see my willy in 720p grainy illegible video from a weird angle from the bedroom ceiling for a couple minutes. Cool for you I guess.
And meanwhile the much worse forms of surveillance that happens to all of us goes largely unnoticed, and when it gets brought up everyone is like “I ain’t got nothing to hide so I’m not bothered”.
In the absence of any regulation that would seek to create a more even playing field between hotels and airbnb, Airbnb has a remarkable advantage, and so accordingly investors and would be hoteliers have pivoted to making Airbnbs instead, at the expense of regular people who are just looking for a place to live.
Government needs to clamp down on Airbnb and even the playing field for sure, but they should not ignore the obvious issue here that for some reason people were extremely reluctant to create hotels. There's probably some need for regulatory reform to make creating hotels a thriving viable business.
...you can receive visits and treat that place as your "own"...
That's a really big advantage for digital nomads...
...they can receive friends they made at this new city, or sex workers... (regardless of how you feel about that it's a reality)...
But 1-week tourists are still probably staying at hostels or hotels...
So maybe allow visits at hotels and then you kill off a lot of the AirBNB market...?
Also please don't share if you think it will be burn out by tourists... (any reader please read my other 10 comments on this thread I'm not intrinsically anti-tourist).
But yeah, the really wealthy foreigners just buy up mansions and keep them empty.
I don't believe the Empty Homes Tax or foreign buyer ban work very well. It's just too easy to fake and there is very little enforcement. Same for the AirBNB license requirements - barely enforced.
So N houses can only be owned or sponsored by only 1 "SSN" holder...
So even if you have for example 20 Chinese foreigners, they would have to be sponsored by at least N "SSN Holders".
If a "SSN Holder" buys up an 'unnatural' amount of land/houses, look into it... then maybe check who is he sponsoring (other Canadians or just 20 Chinese buyers?) and then decide from there. By "Chinese" I mean "Chinese without the equivalent of Canada's SSN" btw, no exclusion obviously should be performed against "Chinese"-descendant Canadian citizens.
For any readers... this system is already implemented in the USA for bank accounts, and it works, so it could realistically be implemented in Canada but for property... even easier still I think...
But something like that would never be implemented by our current government.
They'd likely call you racist or xenophobic just for suggesting it. For most Canadians, the next election can't come soon enough. Hopefully the likely to win opposition will make some changes.
BTW Canada's SSN equivalent would be the SIN (Social Insurance Number).
A limit like that is entirely unworkable against large corporate interests. All it would do is prevent local, small-time landlords from expanding.
A lot of people would argue about "local, small-time landlords"'s capacity to expand you know...
As I said in other threads, maybe limit capacity to N-properties for each Canadian citizen, maybe 5 I don't know.
If you're a Canadian citizen you would have to go through one, even if just a lawyer that lawyer could only "sponsor" up to N non-Canadians to buy properties in Canada (or N properties for just 1 non-Canadian, whatever that lawyer or notary prefers...).
There were multiple studies from McGill and UBC on that subject, and I cite those numbers from memory. I read them back then and it's striking how low those numbers are.
One study with the online PDF https://cjur.uwinnipeg.ca/index.php/cjur/article/view/274/13...
page 123.
There were totally 73K active AirBNB listings in Toronto, Vancouver, Montreal areas combined between May 1, 2017 and April 30, 2018.
Dived that on total number of houses and apartments and you are in the sub percentage category.
Those are pre pandemic numbers, Airbnb has declined since then because of variety of factors like COVID, additional taxes and outright bans is most condo buildings.
Is it right to assume that lack of supply is the main factor? If so, what should US/CA be doing to address this? What are they currently doing now that makes the problem worse?
Looking for a better source than the article above which feels a bit fluffy.
Maybe the hotel industry needs disruption?
Every hotel I've been to was incredibly wasteful.
There are plenty of places to stay for $40 a night already considering the motel market.
The realer issue is builders who are choosing not to build to keep prices high (profit per unit is more efficient)
Housing supply can be fixed pretty quick but not by vendors who want to keep and maintain their margins
Property investors like articles like this because they shift the blame. How about instead a regulation over how many houses/apartments a person can own? How about a maximum of one? Or I bet even two would slow it down.
Even though he's a hard worker, he has a normal 9-5 job and his income is pretty standard for a salaried worker. Knowing him, I'm sure he didn't come up with the idea himself, so I bet this is a relatively common thing to do for mid to high income baby-boomers.
I could be totally off base here, but I can see that if most people have the leverage to own 10 houses in Canada through some financial instruments with the banks this could lead to a housing bubble.
...and mostly siding with the "common" people but actually proposing sustainable (economically, not talking ecologically in here at all) solutions...
...but your comment just made me think of...
...what if the government focuses on making housing cheaper...
...repeal all or most zoning laws etc...
...that's one solution, with its dis-advantages of courses but...
...if that's what people want...
...if that's what Canadiants want...
...subject it to maybe one national vote or not...
...if people decide "ok let's do away with zoning laws" then that's their prerogative right...?
If you only can own one house, how companies who build and sell them can operate? If we make an exception for them, suddenly all companies become builders who build one house in 5 years
Etc etc
Require "ultimate beneficiary" disclosure (easy for the government to do), require this ultimate beneficiary to have the equivalent of a SSN.
Or, for foreigners (if you still want to allow that...), have a "vouching" system where 1 Canada national (holder of whatever the SSN equivalent is) to sponsor up to N non-Canadians, cap N.
The sponsor can be a Canadian lawyer or notary signing on behalf of "Chinese person #18940" but they would still be capped at N.
Not sure if this works or not, but there's also a distinctive refusal of average Joe go live in the country you know, so that also drives up the demand for real state near cities as opposed to the vast available land area Canada (or the US) occupies.
All of this could be applied in the US as well, they already do it with bank accounts for what it's worth, look it up...
https://financialpost.com/real-estate/montreal-rent-cheaper-...
Rent control makes renting less attractive and Airbnb more attractive.
Allow higher rents will encourage more building and therefore more supply.
Whether you think that's "good" or "bad" it is what happens...
Now, if you think that's "bad" then you should ask your government to ban AirBNB /ON TOP/ of rent controls else the whole thing just doesn't make sense...
...I'm not being pro-AirBNB or anti-AirBNB but I'm pro-logic and pro-democracy (whatever 51% want in a given city is what the government should follow...)...