After Years of Hoarding Housing Supply, Airbnb Hosts Are Panicking Due To Covid-19

This could shake out the short term rental market in major cities, hurt Airbnb profiteers, and perhaps increase longer term housing supply. JL


Ben Cohen reports in Vice:

Until two weeks ago, Airbnb was a gentrification juggernaut. A study published last year found Airbnb removed 31,000 homes from the Canadian rental market and that hosts made $1.8 billion in 2018—a 40% jump from the previous year. Multiple-listing hosts generated half of all Airbnb revenue in 2017. Those hosts can't fill a single unit now. “If (hosts) convert to long-term, they’re going to one-year leases. Even if the coronavirus lasts two or three more months, with these new commitments, they won’t be able to quickly get back into short-term rentals.”
Twenty-one Iceboat Terrace isn’t a hotel—but it might as well be. Standing just a short jog away from the CN Tower, the postcard aesthetic the building purveys has seen many of its 920 condos co-opted into Airbnb units. But what was once basically a bustling mega-hostel for young, party-bound tourists has become a monument to coronavirus-induced isolation in recent days. The few long-term residents who remain are stuck in a ghost skyscraper, and the Airbnb barons who took over many of the condos across its 43 storeys have been left destitute.

James O’Dowda has lived in Iceboat Terrace for nearly three years. He says the weeks there used to operate in two phases: calm Monday-Wednesdays, when short-term rentals such as Airbnbs lay dormant, and stormy Thursday-Sundays, when they would fill up with partygoers.

“It’s something that’s constantly talked about in our building’s Facebook group,” said resident Erin Orr. “It gets frustrating. There’ll be a lot of drunk people, broken bottles outside, garbage all over the building.”

The Iceboat Terrace building isn’t unique. It’s just one sore in the rash of “ghost hotels” around the world. But by virtue of its size and location—the heart of the most prolific Airbnb neighbourhood in Toronto—it’s a good case study.

O’Dowda said the room across from him, which used to be perpetually booked weekend renters, is “super quiet now,” which is bittersweet.

“I think it shows that things are far from normal right now—not only in the world but in the city with how they rent out units,” he said. “So many people need a place to live, but these places that run Airbnbs are stealing units from people that need them.”

Until two weeks ago, Airbnb was a gentrification juggernaut, devouring homes and watching profits snowball. A McGill study published last year found that Airbnb likely removed 31,000 homes from the Canadian rental market and that hosts here made $1.8 billion in 2018—a 40 percent jump from the previous year. Many of those same hosts can't fill a single unit now; the coronavirus flushed them out.

According to Inside Airbnb, a project that scrapes data from the Airbnb website, 64 percent of the over 23,500 Airbnb listings in Toronto were for entire homes or apartments on March 16. That means they’re likely operating in violation of local bylaws—short-term rentals here are only permitted in the host’s principal residence. In the Toronto Waterfront area, where O’Dowda and Orr live, that number jumps to nearly 90 per cent. Worse, 42 percent of Toronto hosts and 52 percent of Waterfront hosts have multiple listings.

“When we talk about impact on housing, the hosts we’re concerned about are the ones who are renting multiple houses or apartments,” said Murray Cox, the activist and programmer behind Inside Airbnb. “They’re the ones taking housing off the market, displacing residents looking for long-term housing, and raising the cost of housing.”

Airbnb says having multiple listings doesn't necessarily imply wrongdoing and has disputed the reliability of third-party data scraping.

Cox, who started looking at Airbnb while studying gentrification in Brooklyn, where he lives, knows there's only so much the publicly available information he has access to can confirm. There are situations where having multiple listings could be done legally, such as having different rooms for rent in the same house, but Inside Airbnb still maintains hosts with multiple listings are “more likely to be running a business” and less likely to be living in their listed properties.

Whether they're doing it by the book or not, these multiple-listing hosts were making a killing. According to the McGill study, they generated almost half of all Airbnb revenue in 2017.

A trip through Facebook groups for Airbnb hosts, such as Airbnb Cashflow Secrets—Financial Freedom Without Owning Real Estate, reveals mounting insecurity among members since the coronavirus pandemic started. What must have once come off as a low-risk, low-labour money-maker just melted away, leaving many hosts saddled with rents and mortgages they can no longer afford. Hosts are getting no short-term bookings and no long-term inquiries, they tell me. And they’re angry—at Airbnb.

“This is my main source of income,” said a Waterfront-area host named Jay, who would not give his last name. “I rely on it quite a bit. But all my reservations were cancelled with full refunds without any say from me.”

Jay said he’s since had to reduce his rates to “lower than motel prices” to stay competitive. He's also started requiring at least a 10-night commitment from guests and is billing his unit as "perfect for self-quarantine."

Cashflow Secret users say the smart thing to do right now is to pivot to what one member called “the dark side”—long-term rentals to residents, a problem for the market considering users of this particular Facebook group are renting the apartments they are putting up on Airbnb to make a profit.

“I’m noticing many Airbnb hosts around me are starting to put up their condos for long-term listings,” said Waterfront-area host Amy, who also did not provide her last name. “But because everybody’s doing it at the same time, it’s almost impossible to actually make it happen.”ou can see the waves of new rental listings arrive in real-time. As urbanist Robert Ruggiero pointed out on Twitter Saturday, 140 new furnished units were listed in Toronto on REALTOR last week alone, a jump in roughly 110 percent from the previous week.

Cox says this shift could have lasting impact.

“If people are converting their short-term rentals to long-term, they’re probably going to find one-year leases,” he said. “Even if the coronavirus only lasts two or three more months, with these new commitments, they won’t be able to quickly get back into short-term rentals—nor do I think they should.”

Cox says that governments are ultimately responsible for allowing this to happen.

“My opinion is that it’s immoral. But you could argue that if the law allows you to do it, then under this capitalist system, it’s just a business opportunity. It’s really up to the government to set up rules so that it’s not a question of ethics anymore.”

This is unfortunately easier said than done. Airbnb is exceedingly difficult to regulate. The app protects hosts by scrambling their locations and hiding their full names. Airbnb is also not afraid to litigate against local governments, having already sued San Francisco, Santa Monica, and New York over legislation that would disrupt its business.Even if more information was available, listings on their own don’t necessarily constitute bylaw violations. The City of Toronto’s solution is to set up a registration system, which aims to force all short-term renters to apply for licences by the end of spring—a move that comes after years of appeals for regulation from experts.

“Airbnb has a significant impact on the vacancy rates in several regions of Toronto, which has contributed to higher prices for rental units, negatively impacting housing affordability,” concluded a 2016 paper by Tyler Horton, now a senior policy measurement and analysis specialist for the Canadian Mortgage and Housing Corporation.

Four years and a global pandemic later, that impact may finally start being mitigated. As for being regulated, Airbnb said in a statement to VICE it’s meeting regularly with the City of Toronto to discuss its "cooperation on the new rules,” as their implementation looms. Until licensing is required, Torontois only investigating illegal Airbnb units if a complaint is filed about them. Residents can contact 311 to register a complaint.

For all of us caught in the sea of coronavirus anxiety, perhaps the one thing we can allow ourselves to relish right now is Airbnb’s capsize. On a distant shore could be a healthier housing market for residents, and fewer apartments for well-to-do tourists.