Airbnb is driving down the price of hotel stays and driving up the cost of rent in the greater Los Angeles area. That’s the not-too-shocking conclusion of a series of recent studies by the Los Angeles Times, the Alliance for a New Economy and the real estate conglomerate CBRE Group.
A Rise in Homesharing
It’s no surprise that homesharing sites like Airbnb are putting the squeeze on hotels. Another study conducted by the Los Angeles Times found that the number of Airbnb listings in the greater Los Angeles area increased by 42 percent in the first five months of 2015. The increase was even more pronounced in highly desirable districts like Hollywood, Venice and Downtown L.A. Just nine neighborhoods are responsible for most of the money that Airbnb makes in Los Angeles. Venice, Downtown, Miracle Mile, Hollywood, Hollywood Hills, Echo Park, Silver Lake, Mar Vista and Los Feliz account for 73 percent of all of Airbnb’s revenue in the City of Angels.
Airbnb refuses to release any exact information about its units, but an investigation by the Los Angeles Alliance for a New Economy found that Venice, Hollywood, Mid-Wilshire and Santa Monica now have between 750 and 1,110 Airbnb listings each, and those numbers keep growing. Rents in those neighborhoods are already quite high, but they are increasing at a faster pace than the city average.
The median year-over-year rent increase in Los Angeles as a whole was 12 percent in 2014. In neighborhoods with substantial numbers of Airbnb listings was 16 percent, something which the Alliance, rightly or wrongly, chalks up to the homesharing site.
Venice is a particularly extreme case. Now a whopping 12.5 percent of all units in the tiny neighborhood are Airbnb rentals, or 360 units for every square mile.
What It Means for Renters
The Alliance’s report is pretty blunt, calling Airbnb a platform that allows landlords to pit tourists against renters. Renters make up more than half of L.A.’s population, and many spend more than half of their income on rent. According to the Alliance report, Airbnb has removed about 7,300 units off the tight rental market. While rents are rising fast in areas with lots of Airbnb listings, the cost of hotel stays is going down in those same neighborhoods. According to a report by CBRE, hotel rates in areas that have lots of Airbnb listings like Santa Monica, Hollywood and Marina Del Rey are rising more slowly than in other areas in the city with fewer listings like near the Los Angeles International Airport.
That may not last long, however. Santa Monica just passed some very strict regulations on Airbnb. The council voted to ban anyone from renting out full units for less than 30 days and to allow homesharing only if the occupant registers with the city and pays taxes on the unit. Santa Monica is the first to take action, but the fact is that short-term rentals are already illegal in most parts of Los Angeles.
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(all data current as of 5/29/2017)
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