Friday, August 04, 2017

The rent is too damn high

What are the reasons that the rent is too damn high? Well, there are a few reasons but one of them is....
Regulators wary that Airbnb is eroding affordable housing availability have a new piece of evidence in their arsenal: A new study finds that spikes in Airbnb listings were strongly linked to rent increases in some of the largest US metro areas.

The new independent study, which has not yet been peer reviewed, is the first to analyze the impact of Airbnb listings by ZIP code in 100 of the largest metro areas. Using rental and home price data from Zillow, the researchers found that for every 10 percent growth in Airbnb listings, a ZIP code’s average rent increased by 0.4 percent.

Authors Kyle Barron, a research assistant in economics at MIT; Edward Kung, an assistant professor of economics at UCLA; and Davide Proserpio, an assistant professor of business at USC, analyzed data from 2012 and 2016 to consider a causal relationship between Airbnb growth and housing prices. They caution that the study’s findings are still preliminary.

Previous research in cities with tight rental markets has found a link between Airbnb growth and increased housing costs. A study released last year by Keren Horn and Mark Merante found that Airbnb had a direct impact on increased housing prices in Boston.
In particular, it's a problem in places where landlords are allowed to own multiple Airbnb properties in which nobody actually lives.
ZIP codes where the majority of landlords are owner-occupiers—those who rent out an extra room or rent for short periods while they are away—experienced minimal increases in housing costs. But ZIP codes with more absentee landlords—those who do not live in the homes they rent out—were especially influenced by increased Airbnb listings.

Huntington Beach, California, for example, has a high owner-occupancy rate of 51 percent. Between 2012 and 2016, Huntington Beach experienced 48 percent growth in Airbnb listings, but rent prices grew only 2.7 percent a year.

Hollywood, on the other hand, has a notably low owner-occupancy rate of only 5 percent. In turn, the number of Airbnb listings grew by an average of 50 percent per year, and rent prices grew about 6.4 percent.
Buy, you know, the 2018 city budget anticipates an additional $2 million in sales taxes from legal short term rentals, so don't expect current policy to change much just because you can't afford your rent.

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