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The Equity Factor

How Airbnb Factors Into Seattle Displacement Concerns

"People are seeing Seattle as a place where it's really easy to make money on real estate."

Airbnb ad on Seattle light rail (Photo by Judy Blanco)

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If you take light rail through downtown Seattle these days, it’s hard not to notice the glut of Airbnb ads. There are huge posters on station platforms featuring smiling Airbnb hosts with lines such as, “Our spare room financed our dream business.” The ads highlight Airbnb’s central message: that it is a service for people to generate some extra income by renting out their guest bedroom or no-longer-used kid’s room or whole house while they’re away.

And while the majority of Seattle hosts fall into that category, some low-income housing advocates and elected officials are concerned about a growing trend of commercial investors buying up housing stock to list it on short-term rental platforms. They say losing long-term rentals to the short-term market will exacerbate the city’s existing problem with rising rents and displacement.

Taking a cue from cities such as San Francisco, Philadelphia and New York, which have attempted to regulate Airbnb, Seattle City Councilor Tim Burgess recently introduced legislation to limit commercial investment in short-term rentals.

“As we face Seattle’s housing crisis, the proposed regulations will protect our housing stock for long-term residents, while allowing individuals and families to benefit from short-term rentals in their own home,” he tells me via email.

The regulations would limit the number of days hosts could list their property on rental platforms. Hosts listing their primary residence would be allowed to rent out all or part of their home for a total of 90 days each year without further regulation. They’d need to go through the process of obtaining a short-term rental operator’s license for anything more. (Airbnb says the average listing must be rented 157 nights per year to be more profitable than a long-term rental.) Those renting a non-primary residence would be capped at 90 days of rentals annually. Platforms such as Airbnb would also need a regulatory license from the city.

According to Burgess’ office, the legislation makes exceptions for hosts renting out a basement mother-in-law or backyard cottage at their primary residence (or vice versa for people living in their mother-in-law or cottage and renting their whole house) because they recognize it’s a way some people are ensuring they can afford their mortgage. Similarly, a 30- or 60-day rental doesn’t count against a host’s 90-day limit because the city wants to keep that niche rental length available for people transitioning into or out of long-term housing.

Airbnb is the largest rental platform in Seattle by a large margin. As of April there were over 4,100 units listed on Airbnb compared to 800 on VRBO and 700 on HomeAway. According to a report released by Airbnb, over 80 percent of Seattle hosts are listing their primary residences and 72 percent of hosts listing an entire unit are primary residents.

That may be the case, says Howard Greenwich, but that doesn’t mean there aren’t a growing number of units being listed by non-resident hosts. Greenwich is senior policy adviser with Puget Sound Sage, a community advocacy organization in Seattle. Greenwich produced a report tracking and analyzing the numbers and types of Airbnb units and hosts in Seattle from September 2015 through April 2016.

According to the Sage report, Seattle’s Airbnb website showed 2,873 hosts listing 4,170 units of short-term rentals as of April. Of those, 67 percent were whole units, 30 percent were private rooms and 3 percent were shared rooms. Just 12 percent of hosts list more than one unit, but that group of hosts accounts for 36 percent of all whole-unit listings (the type of listing that could potentially be a long-term rental). Those multiunit hosts represented the most growth for Seattle’s Airbnb between September and April. The number of listings from hosts with three to five units increased 72 percent and hosts with six or more units increased 54 percent versus single-unit hosts’ 23 percent listing growth. There are six hosts with over 30 units listed.

(Credit: Puget Sound Sage)

“The growth in these units shows that these are not just people converting extra space in their house but people making investments in real estate,” says Greenwich. “Any kind of property investment speculation in Seattle is going to contribute to the displacement problem. Our concern with Airbnb, as it grows at such a rapid pace, is it is going to become a significant contributor.”

According to Greenwich, if Airbnb growth continues apace, Seattle will gain between 943 and 1,652 whole-unit listings over the next three years.

Of course there’s no guarantee the regulations will result in all whole-unit listings converting to long-term rentals. For example someone who lives elsewhere and owns a second home in Seattle still theoretically needs it some of the time and isn’t going to rent that home to long-term renters.

Still, rental housing is a valuable commodity — Burgess’ office says building 300 new units would cost over $70 million — so even if regulation can’t get every unit back on the long-term market, Greenwich says he supports the legislation.

“What’s good about Burgess’ proposal is it pretty carefully targets that group of units that could be long-term. We’re talking fewer than 200 hosts that are going to be affected by this ordinance.”

Greenwich says his main concern is the degree to which the regulations require the platforms to hand over data, which has proven to be a challenge in San Francisco and New York.

Relative to New York’s 34,000-plus and Los Angeles’ nearly 21,000 Airbnb listings, Seattle’s short-term rental market is small. But Greenwich says the city needs to act now in order to prevent its rapid growth from hurting the city’s low-income communities and communities of color most at risk of being displaced.

“The importance of regulation is mostly forward-looking to prevent what we’ve seen in the long-term rental market. People are seeing Seattle as a place where it’s really easy to make money on real estate,” he explains.

He continues, “I am sympathetic to the hosts’ concerns about this regulation. But the contrast is the real harm displacement is doing to low-income households, communities of color, refugees. Airbnb’s the real beneficiary and the folks who need to be at the center of concern are the folks at risk of being displaced.”

The City Council Affordable Housing, Neighborhoods and Finance Committee will discuss the proposed regulations on July 20.

The Equity Factor is made possible with the support of the Surdna Foundation.

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Josh Cohen is Crosscut’s city reporter covering Seattle government, politics and the issues that shape life in the city.

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Tags: affordable housingreal estateseattleairbnb

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