As we emphasized in our recent report on airbnb, the business model is gaining traction around the world, but some people don’t think that’s exactly positive in terms of creating affordable housing. Critics who say that these unique renting models are creating a tight rental market due to the encouragement of short-term renting especially emphasize this.
While airbnb boasts that a person can discover unique accommodations in 190 countries, sometimes that doesn’t translate well for the community that’s forced to change with the new market because of businesses like airbnb.
Can a normal marketplace and airbnb co-exist? The community of San Francisco is saying it can’t. While San Francisco has found a lot of success in renting to visitors using the platform, as we reported in our last piece on New York City, the business model is shrinking the market and converting neighborhoods. Due to this growing problem, those in San Francisco are taking legal action.
In a piece than ran on NPR, Ted Gullicksen who is involved in the San Francisco Tenants Union points out that units are added to cater to those who exclusively want to rent out to tourists using sites like airbnb.
“The underlying problem in San Francisco is the conversion of rent-controlled apartments to other uses, be they condo or tourist, which is taking sorely needed rent-controlled units off the market.”
This only adds to the problems that San Francisco is experiencing in terms of the market place. As of right now, the city has a 3 percent vacancy rate which is said to be the lowest in the nation. So with that the median rents rise to compensate. Currently some residents are forced to rent for a whopping $3,300 per month.
Additionally, NPR points out recently that residents were evacuated from a three-unit apartment building so tenants could rent out rooms on a short-term basis for those using similar models.
According to Paragon Real Estate Group the “underlying dynamics” are very clear cut.
“Significant growth in population, employment and affluence (generally speaking, to historic highs), coupled with an inadequate supply of housing and low interest rates continue to put upward pressure on apartment rents and real estate values.”
As we stated in an earlier report, San Francisco isn’t the only market that’s being influenced by this business model. According to the New York State Attorney General’s Office, two-thirds of the rented spaces are in violation of the law. Landlords are now causing an underground market that’s extremely hard to regulate.
This presents an interesting problem for officials. It’s only a matter of time before new laws are set in place for landlords and airbnb enthusiasts.
[Image via Bing]