Airbnb and short-term rental models have flipped the hospitality industry on its head. Since the launch of the Airbnb platform back in 2008, more than 5 million “hosts” have hopped on the bandwagon, helping the company rake in a jaw-dropping $2.7 billion to date.
And while most assume these are mom-and-pop operations — a rented out garage apartment down the street, your neighbor’s granny flat out back, or an open vacation home in the off-season — stats show that more and more pros are joining the game and leveraging this multi-billion dollar industry.
But in some communities, short-term rentals are exacerbating efforts to ensure housing is affordable for the folks who live locally — especially in regions where affordable homes for rent or purchase by actual long-term residents are already in short supply (for the most extreme examples, think New York City and San Francisco, but perhaps you’re seeing this in your own community as well).
Leaders in these communities say that’s because homes, that could be available for rent or sale to local residents, are instead being bought by investors and listed on short-term rental company websites (think, for example, Airbnb, VRBO, FlipKey, or HomeAway).
In fact, rental rates for long-term residents appear to be rising faster in neighborhoods where short-term rentals are most prevalent. And this trend is anticipated to grow, as more investors begin specifically seeking to buy homes they can rent out short-term. The cold hard fact is that an investor can make more money renting properties out by the day than by the month or year. This business model has grown so large that it’s now an industry influencer; Vacation home sales have jumped by over 50% in the past few years alone, in part due to the short-term rental phenomenon. And, since its founding in 2008, Airbnb, for example, has grown to over 2 million listings in 34,000 cities, and 190 countries!
This trend is now raising yet another concern. Critics are calling short- term rentals rogue hotels, because, unlike hotels, short-term rentals have virtually no oversight or accountability, potentially creating a public safety issue.
And, in some instances, folks who own or occupy homes nextdoor to short term rentals are not happy. They resent the constant strangers, noise, and other nuisances associated with living next door to a short-term renters who may not abide by the same common courtesies they apply in their own permanent residences.
As a result, short-term rentals have become a political hot potato in communities across the nation. Many fear that individual homeowner rights will be lost in the effort to prevent investors from buying up homes in an already tight inventory market. For example, in New Orleans’ French Quarter, where short-term rentals under 60 days are already prohibited, the law is seldom enforced, as property owners in New Orleans (and other cities) have been taking in lodgers long before the internet made it a global business.
To achieve their maximum potential and profits, short-term rentals also require a lot of time and effort to manage. If you have questions that you would like to ask our Los Gatos property managers and property consultants, please contact us at (408) 353-2126.