The practice of short-term property rental has been growing for several years. This fast and cheap alternative to hotels has changed the traditional way people live and vacation. But it also changes the real estate sector.
Agents and Airbnb
Real estate professionals across the country have found adding short-term rentals to their business profiles to be a good business move. “Cape Town is outside the economy here,” Blake Decker, realtor and chair of the Cape Cod and Islands Association of Realtors’ Vacation Rental Committee, told Boston Agent Magazine. “Everyone rents their second home or vacation home for a week in the summer, or whatever.” Decker primarily works along Cape Cod and oversees several vacation rental properties. He said working in the short-term rental space, especially for a busy area like Cape Cod, has been very rewarding for him. “It’s much more predictable from a revenue point of view, especially in Cape Town. We have a very specific high season, so you can really plan around that,” he said. “It’s harder to find work here in the traditional real estate world.”
But in Boston, it is increasingly difficult for real estate professionals to access short-term rentals. Boston’s new short-term rental ordinance was signed into law earlier this year. Not only do properties have to be registered with the city, but the new ordinance also doesn’t allow individuals to make short-term rentals in properties they don’t live in. That prevents outside investors from pulling out of Boston’s residential stock, the city believes. is at the root of the housing affordability crisis. “With the new rental tax and regulations that have come into effect, it will be harder for people to do a part-time short-term rental business,” Decker said. “There is a lot more compliance. There will be a lot more oversight at the local level. He later explained that many industry professionals who used Airbnb and VRBO to earn extra income could no longer do so. “They mostly do sales, but they handle a handful of rentals for landlords because it’s not heavy work,” he said. “It’s going to be harder to do.”
After being held up in court for the better part of a year, Airbnb and VRBO had to abandon thousands of their properties after being ordered to comply with the order. Decker said landlords are also demanding more of property managers like him. “People can do it themselves,” he said. “Anyone can put [their property] online and book… that’s not the hardest part. The ability to serve these customers when they are here and answer questions is the differentiator. Being present and communicating with the customer is what sets you apart. “Do it or don’t do it,” Decker said. “It will be more difficult to have one foot in, one foot out.”
“Realtors had been handling short-term rentals for decades before Airbnb came along,” Ryan Castle, CEO of the Cape Cod & Islands Association of Realtors, told Boston Agent Magazine. “Airbnb is such a small player. They don’t have a lot of market share. Specifically on Cape Cod, HomeAway is more competitive, but “the majority of vacation rentals are still represented by real estate brokers, not on websites. “.
The issue of affordability
Online hospitality marketplaces like HomeAway, VRBO and – the most popular – Airbnb, have changed the hospitality market, but housing affordability advocates and economists have also argued the ethics of growing business practice.
Short-term rentals mean fewer homes are available for regular leases and put pressure on the housing market. The low inventory market drives up costs, which can cause tenants to displace. Much like Boston, several cities – including San Francisco, Washington, DC and New York – have introduced legislation to address this concern.
The City of Seattle has enacted legislation to regulate short-term rentals. He was one of the first to create stricter limits for marketplaces like Airbnb. During a recent media call for the National League of Cities summit in San Antonio, former mayor and member of the city council Tim Burgess noted that the ordinance passed by the city in 2017 caps the number of short-term rental units for a property. “You can be a primary residence, plus one more,” he said. “If you live out of town, as an outside investor, you can only have one.” According to Burgess, short-term rentals have a place in the hospitality market, but a legislator’s job is to make sure it’s balanced and fairly regulated.
Because of these perceptions, the industry is fighting back with data. “Holiday rentals are a very important part of the accommodation mix. They’re not going away, and yes, they’re creating challenges for local communities, and so we’re really here to say we hear your concerns and want to help address them with real and effective regulatory solutions,” Amanada Pedigo, vice president of government and corporate affairs for Expedia, owner of short-term rental site VRBO, said on the media call.
Expedia has partnered with Oxford Economics to examine the role short-term rentals play in housing affordability. Their recent study found that vacations and short-term rentals are not the main contributors to the affordable housing challenges facing the United States. “We find that the main drivers on the rental side and the owner side are really just economic growth,” Oxford Economics researcher Alice Gambarin told Boston Agent magazine. According to Gambarin, economic growth contributes to rising housing prices and rents. She also referred to improving labor market conditions. “Unemployment has dropped dramatically recently, which has also had a major impact on house prices and rents.”
Pedigo highlighted the idea that Expedia is working to address public concerns, even though their data shows their industry isn’t necessarily to blame for the accessibility crisis. “Despite the results,” she said, “Expedia wants to work collaboratively with local communities to find fair and effective regulation of the short-term rental market.”
Airbnb also said it supports common sense home-sharing regulations. They claim to have established over 500 regulatory relationships with jurisdictions around the world. “Through this partnership, we’ve found ways forward for short-term rentals,” Randall said, “addressing local concerns while protecting residents who depend on home sharing for supplemental income, as well as small businesses that benefit from visitors”.
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