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

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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.


Urgently needed: Timely, more detailed standardized data on US evictions

Graffiti asking for rent forgiveness is seen on a wall on La Brea Ave amid the Covid-19 pandemic in Los Angeles, California. (Valerie Macon/AFP via Getty Images)

Last week the Eviction Lab, a team of eviction and housing policy researchers at Princeton University, released a new dashboard that provides timely, city-level US eviction data for use in monitoring eviction spikes and other trends as Covid restrictions ease. 

In 2018, Eviction Lab released the first national database of evictions in the US. The nationwide data are granular, going down to the level of a few city blocks in some places, but lagged by several years, so their use is more geared toward understanding the scope of the problem across the US, rather than making timely decisions to help city residents now. 

Eviction Lab’s new Eviction Tracking System, however, provides weekly updates on evictions by city and compares them to baseline data from past years. The researchers hope that the timeliness of this new data will allow for quicker action in the event that the US begins to see a wave of evictions once Covid eviction moratoriums are phased out.

But, due to a lack of standardization in eviction filings across the US, the Eviction Tracking System is currently available for only 11 cities, leaving many more places facing a high risk of eviction spikes out of the loop.

Each city included in the Eviction Tracking System shows rolling weekly and monthly eviction filing counts. A percent change is calculated by comparing current eviction filings to baseline eviction filings for a quick look at whether a city might be experiencing an uptick.

Timely US eviction data for a handful of cities is now available from the Eviction Lab. (Courtesy Eviction Lab)

The tracking system also provides a more detailed report on each city’s Covid eviction moratorium efforts and more granular geographic and demographic information on the city’s evictions.

Click to the above image to see a city-level eviction map, in this case for Pittsburgh. (Courtesy Eviction Lab)

As part of their Covid Resource, the Eviction Lab together with Columbia Law School professor Emily Benfer also compiled a scorecard for each US state that ranks Covid-related tenant protection measures. A total of 15 of the 50 US states plus Washington DC received a score of zero because those states provided little if any protections.

CityMetric talked with Peter Hepburn, an assistant professor at Rutgers who just finished a two-year postdoc at the Eviction Lab, and Jeff Reichman, principal at the data science research firm January Advisors, about the struggles involved in collecting and analysing eviction data across the US.

Perhaps the most notable hurdle both researchers addressed is that there’s no standardized reporting of evictions across jurisdictions. Most evictions are reported to county-level governments, however what “reporting” means differs among and even within each county. 

In Texas, evictions go through the Justice of the Peace Courts. In Virginia they’re processed by General District Courts. Judges in Milwaukee are sealing more eviction case documents that come through their courtroom. In Austin, Pittsburgh and Richmond, eviction addresses aren’t available online but ZIP codes are. In Denver you have to pay about $7 to access a single eviction filing. In Alabama*, it’s $10 per eviction filing. 

Once the filings are acquired, the next barrier is normalizing them. While some jurisdictions share reporting systems, many have different fields and formats. Some are digital, but many are images of text or handwritten documents that require optical character recognition programs and natural language processors in order to translate them into data. That, or the filings would have to be processed by hand. 

“There's not enough interns in the world to do that work,” says Hepburn.

Aggregating data from all of these sources and normalizing them requires knowledge of the nuances in each jurisdiction. “It would be nice if, for every region, we were looking for the exact same things,” says Reichman. “Instead, depending on the vendor that they use, and depending on how the data is made available, it's a puzzle for each one.”

In December of 2019, US Senators Michael Bennet of Colorado and Rob Portman of Ohio introduced a bill that would set up state and local grants aimed at reducing low-income evictions. Included in the bill is a measure to enhance data collection. Hepburn is hopeful that the bill could one day mean an easier job for those trying to analyse eviction data.

That said, Hepburn and Reichman caution against the public release of granular eviction data. 

“In a lot of cases, what this gets used for is for tenant screening services,” says Hepburn. “There are companies that go and collect these data and make them available to landlords to try to check and see if their potential tenants have been previously evicted, or even just filed against for eviction, without any sort of judgement.”

According to research by Eviction Lab principal Matthew Desmond and Tracey Shollenberger, who is now vice president of science at Harvard’s Center for Policing Equity, residents who have been evicted or even just filed against for eviction often have a much harder time finding equal-quality housing in the future. That coupled with evidence that evictions affect minority populations at disproportionate rates can lead to widening racial and economic gaps in neighborhoods.

While opening up raw data on evictions to the public would not be the best option, making timely, granular data available to researchers and government officials can improve the system’s ability to respond to potential eviction crises.

Data on current and historical evictions can help city officials spot trends in who is getting evicted and who is doing the evicting. It can help inform new housing policy and reform old housing policies that may put more vulnerable citizens at undue risk.

Hepburn says that the Eviction Lab is currently working, in part with the ACLU, on research that shows the extent to which Black renters are disproportionately affected by the eviction crisis.

More broadly, says Hepburn, better data can help provide some oversight for a system which is largely unregulated.

“It's the Wild West, right? There's no right to representation. Defendants have no right to counsel. They're on their own here,” says Hepburn. “I mean, this is people losing their homes, and they're being processed in bulk very quickly by the system that has very little oversight, and that we know very little about.”

A 2018 report by the Philadelphia Mayor’s Taskforce on Eviction Prevention and Response found that of Philadelphia’s 22,500 eviction cases in 2016, tenants had legal representation in only 9% of them.

Included in Hepburn’s eviction data wishlist is an additional ask, something that is rarely included in any of the filings that the Eviction Lab and January Advisors have been poring over for years. He wants to know the relationship between money owed and monthly rent.

“At the individual level, if you were found to owe $1,500, was that on an apartment that's $1,500 a month? Or was it an apartment that's $500 a month? Because that makes a big difference in the story you're telling about the nature of the crisis, right? If you're letting somebody get three months behind that's different than evicting them immediately once they fall behind,” Hepburn says.

Now that the Eviction Tracking System has been out for a week, Hepburn says one of the next steps is to start reaching out to state and local governments to see if they can garner interest in the project. While he’s not ready to name any names just yet, he says that they’re already involved in talks with some interested parties.

*Correction: This story initially misidentified a jurisdiction that charges $10 to access an eviction filing. It is the state of Alabama, not the city of Atlanta. Also, at the time of publication, Peter Hepburn was an assistant professor at Rutgers, not an associate professor.

Alexandra Kanik is a data reporter at CityMetric.