Airbnb is playing a larger role in rental shortages and high housing prices than the company admits, according to a new report.
The study by McGill University School of Urban Planning has found that approximately 14,000 entire homes have been converted for full-time Airbnb usage, out of 81,000 active Airbnb listings across the three cities. That’s 14,000 units which could otherwise serve as long-term units in cities where rental property is scarce.
The report found that many of the properties being rented are owned or operated by larger property managers that have multiple properties.
The big concern here, of course, is that Vancouver and Toronto are suffering from a chronic shortage in rental properties.
According to CMHC data, Toronto’s rental vacancy rate at the end of 2016 was 1.3%. In Vancouver the market is even tighter at 0.7%. With nearly 100% of the city’s rental units constantly filled, even a few thousand extra units on the market would open things up significantly. Rental shortages are less of a problem in Montreal, where the vacancy rate hovers at about 4%.
Airbnb rentals in Vancouver, Toronto, and Montreal made $430 million in 2016, with just the top 1% of hosts accounting for $51.7 million (12%) of the earnings. These wealthy hosts manage multiple listings on Airbnb, bringing a professional, commercialized business model to the service which advertises itself as being for homeowners who want to make use of their extra space to help pay off their mortgage.
It’s clear to see how much more lucrative short-term rentals can be compared to traditional property management. The number of hosts with multiple listings continues to increase every year, as does the number of whole home listings.
“Every home that is converted to full-time Airbnb use is subtracted from the pool of actual potential long-term rental housing units in a city,” said McGill professor David Wachsmuth in an interview with the Toronto Star. “These listings are growing around 25% more rapidly than other categories of listings.”
This is exactly why some cities, including Toronto are considering regulating short-term rentals to prevent hosts from using secondary properties as Airbnbs. The proposal for regulation will go before city council later this year. Vancouver is also taking steps to regulate short term rentals before the end of 2017.
This isn’t the first time a study has found evidence that a small percentage of Airbnb hosts are raking in the lion’s share of the profits. A study last fall determined that 13% of Toronto’s Airbnb hosts earned 46% of the revenue generated in the city. These Airbnb superhosts are earning hundreds of thousands of dollars every year, while the casual host pulled in an average of $5,310 between May 2016 and June 2017, the study says.
These findings were taken from a draft version of the report, while the full report will be available to the public next week.