Short-term rentals in the post-pandemic future

Short term rentals are both a plague on the housing stock and a way for homeowners to capitalize on their investment and earn extra money to cover high housing costs. But, you look at short term rentals anyway, they are going through a drastic change in 2021.

Nationally, from May 2020 to May 2021, the number of Airbnb ads declined in 95% of the subways surveyed in a recent LendingTree study.

Here in California, from May 2020 to May 2021, the number of short-term rental listings decreased by:

  • 40% in Oakland;
  • 25% in San Diego;
  • 21% in Los Angeles;
  • 21% in Santa Cruz; and
  • 17% in San Francisco.

However, among these short-term rentals that are still active, the average the duration of the stay; duration of stay significantly increased. For example, in Los Angeles in May 2020, the average length of stay was only 11 days, compared to 17 days a year later in May 2021.

The reason? As travel has changed during the current pandemic, the typical short-term renter has changed. Instead of a family on vacation, today’s short-term rental is more likely to be occupied by a family in between moves or someone on a longer trip that requires some quarantine.

Additionally, some short-term rental owners have increased their minimum length of stay requirements in an effort to recoup lost costs during the tough months of 2020.

As the short-term rental market continues to change, how will the decrease in the number of short-term rentals affect the housing market at large?

The problem of short-term rentals

Unlike hotels, which are designed for the purpose of short-term guests, short-term rentals take homes that would otherwise be occupied by a long-term tenant or owner and effectively remove them from the apartment inventory. In a state already experiencing a severe housing shortage, short-term rentals are still depleting the few housing units already in place.

Neighborhoods with a high density of experience in short-term rental:

  • reduced supply;
  • higher rents; and
  • gentrification, or the eviction of long-term, low-income residents, according to the Urban Institute.

In an effort to combat the negative impacts of short-term rentals, most local governments in California have adopted strict regulations. For example, Los Angeles requires short-term rental owners to obtain a permit and include the registration number on all advertisements. Most of these permits allow owners to offer their short-term rentals for no more than 120 days per year, thus eliminating full-time Airbnbs. In addition, residential neighborhoods in LA subject to the strictest zoning bylaws do not allow short term rentals at all.

With the tightening of short-term rental rules statewide, the pandemic has been the last straw for many homeowners. In addition to reduced profits and increased regulations, some short-term rental owners have taken advantage of historic increases in home prices over the past year, simply choosing to sell.

Associated article:

California’s short-term rental bans, reviewed

Short-term rentals have had their time

While the short-term rental game has been a creative way for some homebuyers to purchase second homes and invest in the housing market, the decline in short-term rental listings is a problem. good thing for real estate in California.

For every short-term rental ad eliminated in the past year, a much needed new unit has become available for a long-term tenant or owner-occupier.

Granted, some homeowners may regret missing out on the opportunity to make money with a short term rental. But the point is, homeowners looking to invest and make money by renting out their home can do the same with a long-term tenant. Even as short-term rental regulations tighten, regulations for secondary secondary housing construction (ADU) are loosening. These little ones granny units or casitas are great for homeowners who want to earn extra money by renting out part of their property (to long-term tenants).

Real estate professionals can get involved by informing buyers of their limitations on short term rentals and suggesting different opportunities where appropriate. Familiarize yourself with your local short-term rental laws and trends, as well as other ways homeowners can invest in their property.

Comments are closed.