The real estate market in Southern California (Socal) is undergoing a significant transformation due to the rise of Airbnb and other short-term rental platforms. These platforms allow homeowners to rent out their properties to travelers, generating extra income and creating more options for visitors. However, they also have an impact on the supply and demand of housing, the affordability and availability of rentals, and the character and culture of neighborhoods. In this blog post, we will explore how Airbnb is changing Socal’s real estate market, and what it means for buyers, sellers, renters, and hosts.
The Airbnb Effect on Home Prices and Sales
One of the main effects of Airbnb on Socal’s real estate market is that it increases the value and attractiveness of properties that are suitable for short-term rentals. According to a study by the University of California, Los Angeles (UCLA), Airbnb listings in Los Angeles County increased by 59% from 2014 to 2016, and the median price of homes sold in areas with high Airbnb activity rose by 4.6% more than in areas with low Airbnb activity. This suggests that Airbnb creates a premium for homes that can generate rental income, and that buyers are willing to pay more for such properties.
Another effect of Airbnb on Socal’s real estate market is that it reduces the inventory of homes for sale, as some homeowners choose to keep their properties as short-term rentals rather than sell them. This creates a scarcity of housing supply, which drives up the prices and competition for buyers. According to a report by Zillow, the number of homes for sale in Los Angeles, San Diego, and Riverside counties decreased by 27%, 24%, and 22%, respectively, from 2019 to 2020. While there are other factors that contribute to the low inventory, such as the COVID-19 pandemic and the low interest rates, Airbnb is also a factor that discourages some homeowners from selling their properties.
The Airbnb Effect on Rental Markets and Affordability
Another effect of Airbnb on Socal’s real estate market is that it affects the rental markets and the affordability of housing for long-term residents. As more homeowners convert their properties into short-term rentals, there are fewer units available for long-term renters, which increases the demand and the rents for the remaining units. According to a study by the Economic Policy Institute (EPI), Airbnb listings in Los Angeles reduced the number of rental units by 7,316 and increased the average rent by $464 per year from 2012 to 2016. This implies that Airbnb reduces the affordability and accessibility of housing for long-term renters, especially for low-income and minority households.
Another effect of Airbnb on Socal’s real estate market is that it creates a mismatch between the supply and demand of rental units, as some units are vacant for part of the year while others are overcrowded. According to a report by the Los Angeles Alliance for a New Economy (LAANE), Airbnb hosts in Los Angeles rented out their units for an average of 83 nights per year in 2015, which means that they were vacant for 282 nights per year. This means that there are thousands of units that are not used for most of the year, while there are thousands of people who are homeless or living in overcrowded conditions. This creates a waste of housing resources and a social inequity.
The Airbnb Effect on Neighborhoods and Communities
Another effect of Airbnb on Socal’s real estate market is that it changes the neighborhoods and communities where it operates. As more travelers use Airbnb to stay in residential areas, they bring more tourism, commerce, and diversity to the local economy. However, they also bring more noise, traffic, parking, and safety issues to the residents. According to a survey by the Los Angeles Times, 52% of respondents who live near Airbnb rentals said that they have experienced problems with noise, parking, or trash from Airbnb guests, and 34% said that they have felt less safe in their neighborhood because of Airbnb. This indicates that Airbnb creates a trade-off between the benefits and costs of tourism for the residents.
Another effect of Airbnb on Socal’s real estate market is that it alters the character and culture of the neighborhoods where it operates. As more homeowners rent out their properties to short-term guests, they lose the connection and interaction with their long-term neighbors, and the sense of community and belonging that comes with it. According to a study by the University of Southern California (USC), Airbnb hosts in Los Angeles are more likely to be white, affluent, and educated than the average resident, and they tend to rent out properties in neighborhoods that are more diverse, less affluent, and less educated than their own. This suggests that Airbnb creates a gentrification and displacement process that erodes the social and cultural fabric of the neighborhoods.
Airbnb is a disruptive and innovative platform that offers many benefits and opportunities for travelers, homeowners, and the local economy. However, it also has many impacts and challenges for the real estate market, the rental market, and the neighborhoods in Socal. As Airbnb continues to grow and expand, it is important to balance the interests and needs of all the stakeholders involved, and to regulate and monitor its activities to ensure that it contributes to the sustainable and equitable development of Socal.