By James Dainard
Seattle’s low supply of real estate inventory is nothing new to us 111 2016, but an additional roadblock has been brought to light. For those of you who aren’t familiar with Airbnb, they provide an outlet for hosts and travelers to connect and “book unique accommodations anywhere in the world.” According to the company’s website, travelers can search for entire homes or apartments, private rooms, or shared rooms to temporarily reside in. Gaining popularity, many homeowners are using Airbnb while they’re away, in order to create cash flow in their absence. Unfortunately for the housing market, an additional 1000 units are being used as Airbnb rentals by people who do not reside in them.
Putting this into perspective, 2,817 whole houses or apartments were listed on Airbnb for Seattle in April 2016. That same month, 1,353 private or shared rooms were also available for booking. Out of the total Seattle Airbnb rentals, 36% of these units (1,003 total homes or apartments) were unoccupied and listed by hosts who did not live in them. You read that correctly, 1,003 units have been taken off the market to temporarily house vacationers rather than Seattle renters. \Vhy? Simply because it is more profitable for these hosts to house short-term tenants.
According to the Seattle Times, some people have turned Airbnb rentals into a full-time job, managing 16% of the total Seattle listings. The outcome? There are buildings and apartment complexes that are essentially being turned into hotels. In order to combat this trend, Seattle Councilmember Tim Burgess and Mayor Ed Murray have proposed new regulations limiting short-term rentals to 90 nights within a year. However, if it is your primary residence that you are trying to rent out, only then will you be allowed to exceed the 90 day proposed rule.
“We must protect our existing rental housing supply at a time when it is becoming harder for residents to find an affordable home in Seattle,’ said Mayor Ed Murray. ‘This proposal ensures that apartments and houses are not being used exclusively as short-term rentals, while still providing a means for homeowners to earn some extra money by occasionally renting out their property.”
Despite the good intentions of these proposed regulations, people still spoke out against them. Those opposed shared stories of sick relatives who only needed their houses for half of the year, and thus could not be converted into long-term rentals. Others had downsized their homes, but were still using their previous residences as Airbnb rentals to payoff their new mortgage.
On the other hand, supporters of these regulations pointed out how consistently unoccupied homes would affect their neighborhoods and vote participation for local elections.
Although a decision regarding the proposed regulations won’t be made until August, it is clear that some sort of limitation or compromise needs to be implemented. From September 2015 to April 2016, whole Airbnb units listed in Seattle increased by 31%, totaling 665 units. Nearly half of the units listed during this time period were hosted by people who were renting out multiple properties.
“The scale of short-term rental housing in Seattle to date has not been that big of a problem,’ [Henry Greenwich, a senior policy adviser at the housing-advocacy group Puget Sound Sage] said. ‘It’s really the growth we’ve seen in the last year, and what we’re projecting going forward. Once you get up over 1,000 units, it begins to affect the market – that’s where it’s at now, and it’s going to get bigger.
About the author…
James Dainard is one of the founding partners of Intrust Funding, LLC. He has been buying and selling real estate in King, Snohomish and Pierce Counties for the past seven years. James has built a reputation in Washington for providing investors with multiple exit strategies and supplying them with easy and fast lending sources. He enjoys staying fit, spoiling his dogs, and traveling to exotic locations with his wife Clair.
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