Airbnb rentals are reverting to long-term housing. That may not change the affordability crisis

Drew Angerer/Getty Images

Annie Brissette has had one hell of a time finding a new apartment in Montreal.

Every day over the past five weeks, she’s scoured online classifieds sites and Facebook groups for apartment rentals, looking for the elusive one-bedroom under $1,000 that's ready to receive her and all her stuff. Time and time again, she saw apartments that were advertised as fully furnished – an anomaly in Montreal, where apartments often don't even come with their own appliances. 

“I think there’s a huge proliferation of Airbnb apartments on the market, because it’s unbelievable the number of fully furnished apartments that aren’t available empty,” Brissette says. Many of the apartments she’s seeing are furnished down to the decor. “You feel like you’re at someone else’s house, but you know you’re really at an Airbnb.”

The province of Quebec banned Airbnb and other short-term rental services during the Covid-19 state-of-emergency. That, plus the collapse of summer tourism, is pushing hosts onto other platforms. Some are illegally operating short-term rentals, but many are flipping their homes back onto the long-term market while cutting Airbnb out as the middle man.


This trend is growing legs across North America as the short-term rental market bottoms out during the pandemic. Despite temporary bans on Airbnb-type rentals in Ontario, Florida, Pennsylvania, Georgia, Delaware, Maine and Vermont, potential renters have been able to find listings for suspiciously clean, well-appointed, fully furnished apartments with flexible leases and high rents via non-Airbnb rental sites in cities like Toronto, Philadelphia, Atlanta and Vermont’s ski towns.

"We are seeing a lot of inventory," says John Pasalis, a Toronto housing market analyst and president of Realosophy Realty. "[Since the start of the pandemic] a lot of sellers didn’t put their units on the market, but a lot of renters did. We saw strong listing growth, particularly in the downtown core." The oversupply there, he continues, has led to a 5% price drop on downtown rentals.

Demand has gone down in Airbnb’s most profitable cities

But before anyone celebrates the drop, consider the pre-pandemic rental affordability crisis. The influx of moderate- to high-cost Airbnb units on the long-term rental market may be giving top-tier renters more options, but it’s having negative effects on lower-income earners. 

Researchers have shown that the presence of Airbnb-type housing has increased overall asking prices in some cities, while reducing the amount of affordable housing available. It also makes competition fiercer for lower-cost housing, to the extent that some people may feel compelled to overbid on rent to secure housing. If the units returning to the long-term market cost more than what renters can reasonably pay, but they’re the only options available, more people may find themselves financially overextended.

“I mean, a 5% decline... You know, when one-bedroom condos were renting for over 2,000 bucks a month, that’s $100. You know what I mean? Sure, that’s good, but $1,900 is still very expensive,” Pasalis says. 

The bigger picture

For the past couple of decades, affordable rental housing in the U.S. had been in slow decline. Then, sometime around 2012, it fell off a cliff.

Alex Hermann, research analyst at Harvard University’s Joint Center for Housing Studies, measures the fall of low-cost housing in the U.S. “From 2014 to 2018, the number of units renting for under $600 declined by about a half a million units per year on average. That’s about 2.7 million units in total,” he says. At the same time, units going for more than $1,000 a month increased by just under 5 million over that same period.

The percentages are even starker. In 2000, housing under $600 represented 36% of the rental supply. It was 30% in 2014, and 23% in 2018. Hermann says this is creating a chasm between supply and demand for low-rent homes, which is widening at a pace greater than the wages of low-income Americans.

The timing of the accelerated decline is curious. It happened on the heels of the 2008 crash and the Great Recession, which cast 10 million homeowners into foreclosure. Shareholder-backed institutional investors bought up a large portion of those foreclosed homes, which professionalised the landlord class and made it increasingly profit-driven. Airbnb’s first massive wave of growth happening between 2011 and 2014 was not uncoincidental. As much as short-term rentals enabled at-risk homeowners to afford their homes, they also incentivised speculators to hoard and flip housing.

Preventing a deepening crisis post-pandemic

Today, as Covid-19 triggers the highest levels of unemployment in 100 years and millions of American tenants are at risk of defaulting on their rent, the state of rental housing is approaching another dangerous precipice.

Presently, mom-and-pop landlords own more than half of the rental stock under $750 per month. If their tenants default, those building owners may not be able to stay solvent. That makes them susceptible to speculative buyers, says Maya Brennan, senior policy program manager at The Urban Institute. “We're in the very early stage, really, of being able to prevent that problem of rental units going offline or being acquired by investors whose only motive is to maximise profits, and not maintain a healthy housing market in a region,” she says.

The best emergency measure to prevent that from happening is making sure everyone can pay their rent, especially if they owe a small landlord. The next step, Brennan says, is to create strong programs that give existing tenants, or the public sector, the right of first opportunity to buy insolvent properties, in order to maintain affordable housing. If neither of these things happens, the crisis will get worse, she says. “And that’s not something we can bear.”

As for Airbnb hosts’ flip to the long-term rental market, it’s not yet clear whether it will have any kind of positive impact on affordable housing. It could create more supply and drive down prices. Cities and states could use the pandemic as a time to introduce tighter controls, which could redivert housing back to long-term tenants. Or we could just relive the past 10 years all over again. 

Back in Montreal, after five weeks of searching, Brissette has just found a one-bedroom in the city’s Little Italy area. Rent is steep at $1,600 a month, which is double what anyone would have paid just a few years ago.

“I’m lucky to have found it – and lucky to be able to afford it,” she says.

Tracey Lindeman is a freelance writer based in Ottawa.

 
 
 
 

Coming soon: CityMetric will relaunch as City Monitor, a new publication dedicated to the future of cities

Coming soon!

Later this month, CityMetric will be relaunching with an entirely new look and identity, as well as an expanded editorial mission. We’ll become City Monitor, a name that reflects both a ramping up of our ambitions as well as our membership in a network of like-minded publications coming soon from New Statesman Media Group. We can’t wait to share the new website with you, but in the meantime, here’s what CityMetric readers should know about what to expect from this exciting transition.  

Regular CityMetric readers may have already noticed a few changes around here since the spring. CityMetric’s beloved founding editor, Jonn Elledge, has moved on to some new adventures, and a new team has formed to take the site into the future. It’s led by yours truly – I’m Sommer Mathis, the editor-in-chief of City Monitor. Hello!

My background includes having served as the founding editor of CityLab, editor-in-chief of Atlas Obscura, and editor-in-chief of DCist, a local news publication in the District of Columbia. I’ve been reporting on and writing about cities in one way or another for the past 15 years. To me, there is no more important story in the world right now than how cities are changing and adapting to an increasingly challenging global landscape. The majority of the world’s population lives in cities, and if we’re ever going to be able to tackle the most pressing issues currently facing our planet – the climate emergency, rising inequality, the Covid-19 pandemic ­­­– cities are going to have to lead the way.

That’s why City Monitor is going to be a global publication dedicated to the future of cities everywhere – not just in the UK (nor for that matter just in the US, where I live). Our mission will be to help our readers, many of whom are in leadership positions around the globe, navigate how cities are changing and discover what’s next in the world of urban policy. We’ll do that through original reporting, expert opinion and most crucially, a data-driven approach that emphasises evidence and rigorous analysis. We want to arm local decision-makers and those they work in concert with – whether that’s elected officials, bureaucratic leaders, policy advocates, neighbourhood activists, academics and researchers, entrepreneurs, or plain-old engaged citizens – with real insights and potential answers to tough problems. Subjects we’ll cover include transportation, infrastructure, housing, urban design, public safety, the environment, the economy, and much more.

The City Monitor team is made up of some of the most experienced urban policy journalists in the world. Our managing editor is Adam Sneed, also a CityLab alum where he served as a senior associate editor. Before that he was a technology reporter at Politico. Allison Arieff is City Monitor’s senior editor. She was previously editorial director of the urban planning and policy think tank SPUR, as well as a contributing columnist for The New York Times. Staff writer Jake Blumgart most recently covered development, housing, and politics for WHYY, the local public radio station in Philadelphia. And our data reporter is Alexandra Kanik, whose previous roles include data reporting for Louisville Public Media in Kentucky and PublicSource in Pittsburgh, Pennsylvania.

Our team will continue to grow in the coming weeks, and we’ll also be collaborating closely with our editorial colleagues across New Statesman Media Group. In fact, we’re launching a whole network of new publications this fall, covering topics such as the clean energy transition, foreign direct investment, technology, banks and more. Many of these sectors will frequently overlap with our cities coverage, and a key part of our plan is make the most of the expertise that all of these newsrooms combined will bring to bear on our journalism.

City Monitor will go live later this month. In the meantime, please visit citymonitor.ai to sign up for our forthcoming email newsletter.


As for CityMetric, some of its archives have already been moved over to the new website, and the rest will follow not long after. If you’re looking for a favourite piece from CityMetric’s past, for a time you’ll still be able to find it here, but before long the whole archive will move over to City Monitor.

On behalf of the City Monitor team, I’m thrilled to invite you to come along for the ride at our forthcoming digs. You can already follow City Monitor on LinkedIn, and on Twitter, sign up or keep following our existing account, which will switch over to our new name shortly. If you’re interested in learning more about the potential for a commercial partnership with City Monitor, please get in touch with our director of partnerships, Joe Maughan.

I want to thank and congratulate Jonn Elledge on a brilliant run. Everything we do from here on out will be building on the legacy of his work, and the community that he built here at CityMetric. Cheers, Jonn!

In the meantime, stay tuned, and thank you from all of us for being a loyal CityMetric reader. We couldn’t have done any of this without you.

Sommer Mathis is editor-in-chief of City Monitor.