Photo by OuiShare on Flickr.
At-large councilmember Vincent Orange is proposing two bills to limit the Airbnb short-term rental service in DC. Proponents say that taking housing out of the long-term rental pool will raise prices. However, Orange himself pooh-poohed this kind of argument the last time he was involved in a debate over housing supply. Which take is right?
Lydia DePillis reported on the two bills, one proposed by Unite Here Local 25, the hotel workers’ union, and the other from large hotels.
The union bill would make it illegal to rent a unit on Airbnb except for renting out a room inside one’s own house, in a single-family (detached or row) house, with a special permit, and after notifying all nearby neighbors and the local Advisory Neighborhood Commission.
The industry bill would allow owners to rent out a totally independent unit like a legal basement apartment and not necessarily live at the property, but each person could only own a maximum of five Airbnb units and only one in any single building.
A Unite Here consultant analyzed Airbnb listings and found 66% of DC’s 3,500 Airbnb units were for separate units, which the union’s bill would outlaw. 40% of units were from owners who owned more than one (which also would be illegal under their bill). One owner had 79 units, DePillis reported.
Addendum: Since there was some confusion, it’s also good to understand that Airbnb already faces some regulation in DC; in particular, it collects the same tax that hotels pay, which was one of the biggest complaints of an uneven playing field in the past.
Does Airbnb affect housing supply and prices?
Whatever you think of these specific provisions (and it seems there is a decent argument for some of them and not others), there’s also a fascinating discussion about whether Airbnb raises the cost of long-term rental apartments in DC.
The general theory of housing supply holds that if the demand for apartments and houses exceeds the supply, the prices will rise and only the more affluent people will be able to afford them. When a proposal arises to restrict supply, like limitations on row houses enacted in June (often somewhat misleadingly called “pop-up regulations”), it raises a concern that the cut in potential supply will further exacerbate housing unaffordability.
Unite Here leader John Boardman told DePillis, “Are we going to allow Airbnb to subtract large numbers of housing units from an already waning housing stock? Are we going to allow that extraction to drive rents already higher than they are now?”
Councilmember Orange hasn’t sympathized with the supply argument in the past. Earlier this year, he advocated for a blanket moratorium on making row houses have three or more units (a proposal which didn’t pass).
There isn’t unanimity on this issue among activists pushing for more housing supply as a way to keep rents from rising. In San Francisco, where a housing crunch is extremely acute right now, voters will consider a ballot initiative this year, Measure F, to limit Airbnb. While the pro-more-housing Renters PAC voted to oppose Measure F, PAC leader Sonja Trauss does think Airbnb pushes up prices. In a phone conversation, she said that while she has some specific qualms with F, Airbnb does remove units from the long-term rental market.
In DC, DePillis noted that Airbnb listings only represent at most 1.1% of housing units at the moment. A percentage point or two can certainly make a difference on the margins. On the other hand, “this won’t affect many units” has also been an argument some have made against worrying about supply in other zoning cases.
The best solution to a “waning housing stock” is to grow the housing stock rather than keep it out of the hands of visitors, people who also should be able to find a place to stay. (Letting visitors enjoy neighborhoods beyond just downtown, where most hotels are, also boosts the economy and people’s enjoyment of our wonderful city and region.)
This post has been updated with more information on Sonja Trauss’s views on Measure F in San Francisco following a phone conversation.