How are Short-Term Rentals Impacting Housing Markets?
Submitted by Melanie Swailes on behalf of the Development and Transportation Committee
It is almost impossible not to look through my planning and development lens when travelling. This summer I spent several weeks house sitting on Vancouver Island, plus travelling along the Sunshine Coast and through BC. These areas share Calgary’s growing pains, especially in terms of housing availability and affordability.
A frequent topic was Short-Term Rentals (STRs) such as Airbnb—by far the largest—and their impact on local housing markets. In Calgary, this is defined as “the business of providing temporary accommodation for compensation, in a dwelling unit or portion of a dwelling unit for periods of up to 30 consecutive days.” (calgary.ca).
In Gibsons, a small town of about 4,700 that some of you may know from the old CBC series The Beachcombers, I spoke to a hotel owner and asked if Airbnb had impacted their business. She replied that the hotel was still busy, but Airbnb had “ruined it” for staff and residents looking for accommodations. Statistics Canada shows about 570 rental units in the town, and a quick search of Airbnb turned up 189 places available in the Gibsons area. This means that almost one third of rental housing is not available to people looking to live and work in the community.
Airbnb was founded in 2008 and was initially marketed as a “home-sharing” platform, allowing people to rent out a spare room(s) in their own home, either when away or during a peak season (such as Stampede or the Grey Cup). Quickly, many property owners decided to just rent out units on a short-term basis year-round, effectively removing these units from the pool of long-term rental homes. That began to raise concerns as it became widespread and suddenly cities or towns realized that there were dwindling options available for would-be residents.
It’s not hard to see the appeal of Airbnb. For travellers, staying for days or weeks in one location, they likely want a kitchen and maybe laundry facilities. STRs used to be a much cheaper option than hotels, although lately cleaning and other add-on fees have raised the rates. Airbnb units may be in neighbourhoods where there are few hotels, they may provide a more “local” experience, and as originally designed, the host was likely present to offer local insights. Property owners like STRs because they can collect more by renting out a unit on a daily basis than they can from longer leases.
On the flip side, there have been criticisms of STRs, including some well-publicized incidents of non-compliance with local bylaws, misleading representation, hidden cameras, and so on. Businesses in communities like Banff and Jasper have found it difficult to attract staff because there is no housing, yet tourists can select from hundreds of STR units, as reported by Ricochet: “Jasper, Alberta has hundreds of Airbnbs, but not a single place to live.”
A Canadian Mortgage and Housing Corporation (CMHC) study, entitled “The Impact of Short-term Rentals on Canadian Housing,” found that “approximately 31,000 homes have been taken off the long-term market in Canada thanks to STRs. This number is comparable to all vacant and available rental housing in some locations” (The Impact of Short-term Rentals on Canadian Housing).
Three key findings were:
1. Short-term rentals have been a major cause of housing financialization in Canada, providing revenue outside of traditional rentals.
2. The majority of short-term rentals are owned by large-scale commercial operators, and not by private individuals.
3. The financial incentives of short-term rentals place pressure on housing, leading to long-term rentals being converted into short-term ones.
In Calgary, City Council approved changes to the Business License Bylaw to require a business license and regulations for short term rental (STR) hosts in Calgary that will come into effect on January 1, 2024. Details are available at https://www.calgary.ca/for-business/licences/short-term-rentals.html.
STRs are not the only cause of housing shortages or affordability challenges, but it seems apparent that they play a significant role. Many cities are trying to come up with solutions, for example, by limiting STRs to 90 days per year or levying additional taxes. Like many aspects of city planning, there are no easy solutions, but the first step is to at least gather accurate information and data. The CMHC study in particular does a good job of investigating the existing situation so it’s worth taking a look at the study.
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