Los Angeles Times reports that the huge increase in the number of landlords and homeowners offering short-term rentals through websites like Airbnb is making Los Angeles housing crisis worse.
Airbnb, according to CBS Los Angeles, is a private service company that allows property owners to rent out their units or homes for short-term stays. Los Angeles Times notes that through this scheme, a unit-owner can earn more by renting it out to tourists for a few days at a time than renting it to a local for 12 months. Because of this, many landlords are listing their properties for short-term rentals and taking them off the long-term list for their fellow Angelenos to use.
A study which focused on the effects of these short-term rentals on Los Angeles was released on Wednesday. The study, from a labor-backed advocacy group, Los Angeles Alliance for a New Economy (LAANE), showed that more than 7,000 houses and apartments were taken off metro LA's rental market and transferred to the short-term rental listings, as reported by Los Angeles Times.
Roy Samaan, LAANE analyst says,"We boil it down to a pretty simple question of supply and demand," reports SCPR. He further says, "When units are not available for rent, the supply of rental units is less and that means prices will have to respond."
The impact of these short-term rentals on housing will also worsen Los Angeles housing crisis, especially that according to a housing inventory, the Los Angeles has the highest percentage of renters in all U.S. cities, CBS LA notes.
By taking rentable units off the market, it limits the supply and pushes housing rents in the city, even those places which tourists do not usually stay, Oregon Live states.
LAANE claims there are 8,400 hosts in Los Angeles but more than 11,410 units listed for rent, reports SCPR. It means that many hosts do not just share their primary rooms. They offer several listings. LAANE even found out that 89 percent of Airbnb's earnings come from whole apartment buildings and rentals put up by professional management companies.
Airbnb on its defense, says they are just helping Angelenos earn for themselves. The rental income they get are also paid to the mortgages of their homes, as reported by Los Angeles Times. SCPR reports, Airbnb even came out of their own study that 8 out of 10 people who offer short-term rentals on their site, "in fact, share their home."
"Airbnb has had a negligible effect on rental pricing", states Thomas Davidoff, a professor at University of British Columbia tasked by Airbnb to do a study. Davidoff claims that those renting out their primary properties "increased rental prices in Los Angeles by only just a third of one percent for over the past five years". It translates to have increased rent by at most $6 a month according to Davidoff, as reported by SCPR.
Furthermore, Airbnb claims that the service contributed $312 million to the local economy from their hosts and guests, and supported 26,000 jobs in the city.
To address this issue, Los Angeles Council member Mike Bonin said the city is talking to Airbnb to create regulations on its service. This includes collecting occupancy taxes from the hosts that will be passed to the city, notes SCPR.