Agenda Packet 9-23-19 Work Session

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$57 (starting from around $3,000; this is New York City after all). Airbnb disputed the numbers and did its own (unavailable) study which found rent increases of only $6 per month. The article admits to complications arising from gaps in data and in the end characterizes its findings as “a back-of-the- envelope approximation.” An advocacy organization, Los Angeles Alliance for a New Economy (LAANE) released a study in March 2015 that is urgent in tone, tying Airbnb to higher rents and thousands of units being taken off the market. They find that neighborhoods with “Airbnb market density” (stopping short of a specific figure) have average rents 20% higher than the citywide average. A figure (p.19) comparing median rent between Airbnb top neighborhoods and citywide median rent over a two-year period shows the former climbing by 16%, the latter by 12%. Predictably, the top Airbnb areas are the most touristy (p.29), and here the incentives are felt most keenly. As an example they mention an apartment complex (p. 16) in Venice Beach listed by Coldwell Banker for sale, contrasting the $200,000 potential annual income expected by renting the units (and they are rent-controlled) versus a possible $477,000 per year assuming a total conversion to Airbnb units—a worst-case scenario in their opinion. Sheppard and Udall of Williams College rely entirely on modeling and speculation to conclude that “doubling of the total number of Airbnb properties within 300 meters of a house is associated with an increase in property value of 6% to 9% (depending on model specification)” (p.41) and that having Airbnb properties “nearby” increases a house’s price by from 3.5% to 65% (p.42). The fact that these conclusions are reached by theory alone—and are the only two readable sentences in the paper—hasn’t stopped them from being cited by other authors. In a complicated paper, David Wachsmuth and Alexander Weisler of McGill University argue that by creating a “rent gap,” the presence of Airbnb leads to gentrification, at least in New York City. They cite another study which contends that “the 20 neighborhoods most popular on Airbnb have lost 105 of their rental units,” lowering the availability for residents. This more limited point has been noted in other sources as well as their contention about gentrification, viewed as negative. A report focusing on Oakland found that neighborhoods in that city with the highest Airbnb density have less rental vacancies. They present a pair of tables (p.12) which, while the visual match isn’t perfect, show a correlation between Airbnb reviews for entire home listings and rent price increases in the city’s Bushrod neighborhood. Nevertheless they make a leap from Oakland having a housing crisis to SRTs being responsible, painting a picture of “neighborhoods under siege” (p.10) while noting early on that the area was experiencing a growing demand for housing even without STR companies to “burst onto the scene.” It’s logical that an inelastic housing supply with an increasing housing demand will result in shortages and higher selling prices and rents, even without the impetus of STRs. Currently there are anecdotal reports of investors buying properties in Eugene intending them for use as STRs, raising the specter of shrinking the housing for residents. This author knows one person whose tenancy was terminated after his landlord opted to use his building exclusively for STRs; another resided at an upmarket complex downtown whose tenants have received strong suggestions from the owners that they should “make use” of their apartments as STRs when they vacationed. The degree of price increase posited by Barron, Kung and Proserpio may be less alarming than that in other studies as they have taken a very high resolution view, though even after all other factors are figured in, Airbnb still explains part of the increase in rent. There is no necessary connection between an September 23, 2019, Work Session – Item 3