Tomorrow, the LA City Council's land use committee will consider a motion to regulate short-term rental properties in Los Angeles, like the kind rented out through Airbnb or VRBO, which aren't generally legal, but have been allowed to multiply over the last several years anyway. A report earlier this year from the Los Angeles Alliance For a New Economy showed just how wildly short-term rental landlords have distorted the housing market, taking perfectly good apartments off the regular market so they can be rented out at huge mark-ups on sites like Airbnb (which has the majority share of the short-term market), and driving everyone's rents up in the process. (Just one part of the conditions that have made renting so unaffordable in LA that a person earning the median income now has to pay half their pay toward housing.) A new LAANE white paper out today analyzing Airbnb listings and the listings of its many competitors shows the situation is getting even worse, and it's spreading.
Airbnb says it gives homeowners the chance to make a little money renting out spare rooms, but LAANE has found it's professional landlords raking in most of the haul in Los Angeles. (Airbnb takes between a six and 12 percent cut from renters and a three percent cut from landlords.) In March, using data from October 2014, LAANE found that six percent of landlords on Airbnb were leasing companies, renting out more than one full units on the platform, but that those six percent were bringing in 35 percent of the Airbnb revenue in LA. Another 42 percent of landlords were renting out a single full unit, for another 54 percent of the revenue. Leaving the 52 percent of people just renting out extra space to earn just 11 percent of all the Airbnb money in the region.
After the report was released, Airbnb kicked a few high-profile leasing companies off the site, but as the new LAANE report says, "the number of leasing companies on Airbnb actually grew from six to nine percent of all listing agents and from 35 to 37 percent of all revenue between October 2014" and their latest analysis in July 2015. And, same as the last report, LAANE still found leasing companies posing as regular people on the site while advertising a slew of units.
Meanwhile, the number of people renting out a spare room has "declined sharply," from 52 percent to just 36 percent (they're earning more though—16 percent of revenue). And that's while the overall number of listings has skyrocketed: across 19 websites, the number of listings has doubled from previous estimates, to 23,268 units. Airbnb accounts for a full 65 percent of those rentals, with the rest spread across sites big and small, from Expedia to Way to Stay. The number of Airbnb listings alone has jumped by nearly third, up to 15,031 listings across LA.
LAANE's March study found rents rising much faster in Airbnb's most popular LA neighborhoods than in others, but a University of British Columbia professor actually quantified the effect in San Francisco, finding that "the company removed sufficient housing stock from the San Francisco housing market to add between $19 and $76 to the average monthly rent." Applying the median of that increase to Los Angeles's rental market, LAANE estimates that "the $64.1 million in revenue generated by commercial Airbnb lessors this year has cost Los Angeles renters more than $464 million."
They also estimate that short-term rentals are taking 11 units off the LA rental market every day, for a number that adds up to 63 percent of all the new housing built in the city between 2010 and 2014. (That new housing is supposed to be helping drive rents down.) In popular Airbnb neighborhoods like West Hollywood, Silver Lake, and Echo Park, the number of short-term rental units is double or even four times the number of new housing units built. In Venice, Airbnb's most popular neighborhood in Los Angeles, there are now seven times as many short-term rentals as there are new housing units.
LAANE's older report found that just 10 neighborhoods in Los Angeles accounted for nearly three-quarters of Airbnb's revenue in the area (and that rents were shooting up in those areas); the new white paper now shows that the rash is spreading from those 'hoods into surrounding areas. While the top 10 remains the same, the most growth is happening in neighboring neighborhoods:
It appears growth is occurring in areas not yet saturated with short-term listings. As shown in Table 2, the only top 10 neighborhoods to see above average growth were Mid-Wilshire (9th) and Los Feliz (10th), where commercial units increased by 78 percent and 60 percent, respectively. Other neighborhoods experiencing major growth in commercial STRs include Beverly Grove (+61 percent), Mar Vista (+59 percent), and Studio City (+48 percent). These neighborhoods also happen to be adjacent to the top three Airbnb neighborhoods, Venice, Santa Monica, and Hollywood.
Three of the top 10 neighborhoods actually have fewer short-term rentals than on last check—West Hollywood and Santa Monica have both passed new regulations on theirs, while neighbors in the Hollywood Hills have pressured cops and officials to deal with the Airbnbs in their neighborhood.
Now the city of Los Angeles will give it a go. The motion up for discussion tomorrow asks the City Planning Department to draft an ordinance that would make short-term rentals legal so long as the landlord actually lives there—meaning you could rent out a room in your house or the whole house, if you're going away for a shoot—but specifically forbids a landlord from renting out a place that isn't her primary residence or that falls under the Rent Stabilization Ordinance, "forbidding speculators from creating a syndicate of short-term rental properties, and prohibiting the loss of valuable rental housing stock."
· Short-Term Rentals and L.A.'s Lost Housing [LAANE]
· The Nine Neighborhoods That Make All the Airbnb Money in LA [Curbed LA]
· Meet LA's Most Prolific Airbnb Host, With 78 Units For Rent [Curbed LA]
· Here's How Much Short-Term Rentals are Warping the Market in Top LA Neighborhoods [Curbed LA]
· Los Angeles Considering Ban on Professional Airbnb Landlords [Curbed LA]