Agenda Packet 9-23-19 Work Session

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Short term rentals Issues and possible solutions Eugene Public Library Adult Services One of many phenomena enabled and expanded by the Internet is the platform for short-term rentals (STRs), by which those living in a house, apartment or other domicile rent that space for short periods to (usually) vacationers, often coinciding with their own vacations but increasingly done as a full-time business. Companies have sprung up online as middlemen who ease the transactions for host and customer, earning a profit themselves. As with other parts of the “sharing economy,” cities have struggled with properly licensing and taxing this activity, while managing or alleviating its effects. Some have so far done nothing, some have possibly tried to do too much. Among STR platform companies Airbnb is the dominant player, around whom most of the research and controversy pivots. Many studies cover STRs as a whole while inevitably centering on Airbnb, others specifically focus on that company. In what follows the industry and the particular company are usually interchangeable. STRs and the housing market Do STRs, and in particular Airbnb, cause home prices and rental rates to go up? The kernel of the issue is the incentive of financial rewards. A homeowner can earn more from renting his property for various short terms than one long term. A comprehensive paper by Barron, Kung and Proserpio analyzed Airbnb listings in the United States from 2012 to 2016, matched with house prices and rental rates from Zillow. They found that “a 1% increase in Airbnb listings leads to a 0.018% increase in rents and a 0.026% increase in house prices.” And there is a general increase in the supply of short-term rental units, and a corresponding decrease in long-term rental units. They are careful to account for all factors at work, and nuances such as the variance between and within zip codes (the more affluent, and less owner-occupied, homes are more likely to become STRs, though another paper finds STRs more prevalent in slightly lower-income areas). They put forward a mild recommendation of trying to limit the favoring of short-term over long-term rentals via an occupancy tax on those who rent their entire home for an extended period, and of requiring proof of owner occupancy to avoid this tax. A study by Merante and Horn puts it in terms only a statistician could love: “…a one standard deviation increase in Airbnb density (in a census tract) is correlated with a 5.9% decrease in the number of rental units offered for rent.” One twist they found is that almost half of the Airbnb-listed units in Boston are by those with more than one simultaneous listing, frequently the case in larger cities and a source of ire for the more opinionated authors. Ariel Stulberg’s 2015 study in The Real Deal focusing on New York City mentions a study by NYU’s Furman Center that removing a figure that hovers around 1% of the housing stock results in median rent rising by 1.2 to 2.3 percent. TRD’s own analysis found that in different clusters of NYC neighborhoods, if Airbnb listings became regular rentals, the median rent would drop by $37 to $69, $39 to $67 and $30 to ATTACHMENT A September 23, 2019, Work Session – Item 3