By V. Adams

Airbnb, a star of the ‘sharing economy,’ was established in 2008 after their American founders rented out an airbed in their spare room to bring in some extra cash. More than two million listings later, this home-sharing digital platform now does business in 190 plus countries and 34,000 cities.

In December 2015, of the more than 300 Airbnb listings for Greater Victoria, 120 were for short term rental properties in James Bay. A scant three months later, 141 James Bay short term rentals are listed on Airbnb. The avgrage nightly fee charged in James Bay is $147 per unit, compared to an avgrage of $124 in Greater Victoria. It is interesting to note that there are less than 220 apartment rental units vacant annually for long-term tenants who wish to live in James Bay.

Approximately 70 per cent of the James Bay Airbnb listings are for “entire home/condo units”, whereas the rest consist of rooms in private homes.  This is a higher ratio of entire home/condo units than Montreal (60.6% – avg. $94/night), Toronto (63.6% – avg. $128/night), and Vancouver (67.2% – avg. $127/night). And, Victoria’s proportion of “entire homes/condo” listings also exceeds the ratio of other west coast U.S. cities such as Seattle, Portland, San Francisco, Los Angeles, and San Diego.

Approximately 24 per cent of Victoria’s condo market is comprised of rental units (2,906, according to CMHC Fall 2015 statistics). The premium-priced units available for short-term rent in James Bay represent approximately three per cent of the city’s total condo market rental pool. It would appear that in our neighbourhood and in Greater Victoria, there are at least there several hundred Airbnb “hosts” who do not occupy their units but do use them primarily as short-term commercial investment vehicles.

This would suggest that the Airbnb model is not geared mainly to homeowners wanting to reduce their monthly mortgage payments by renting out an extra room on an occasional basis. Instead, it attracts absentee landlords who want to maximize their profit from their real estate investments.  (Source: http://victoria.citified.ca/news/victoria-condo-fetches-astonishing-resa...)

Not surprisingly, there is a growing trend among these Airbnb “hosts” to use property management firms to provide key exchange, suite maintenance, laundry and other concierge services to “guests”.

Victoria is home to 58 hotels with more 10,000 rooms. James Bay accounts for 10 per cent of the total room capacity for the city. As many residents know, our gentrified enclavg, within walking distance of downtown attractions, now appeals to many Snowbird and American tourists seeking high-quality, self-catered suites and amenities, or a less costly alternative to traditional hotels.

Unlike licensed hotels and bed-and-breakfasts, Airbnb “hosts”, (many of whom are strata title condo owners), pay neither a business license nor hotel tax to operate as a short-term lodging establishment. 

 

The Long-Term Effects of Embracing the Short-Term Home-Sharing Economy

As long-term tenants know, the City’s rental housing vacancy rate is 0.6 per cent and approaching zero here in James Bay. The neighborhood is also experiencing demolition of older rental stock, resulting in a net loss of 13 apartment units between 2014 and 2015. As older commercial and residential properties are replaced with new multi-storey condos, the avgrage price paid per unit now is in excess of $460,000.

What we are witnessing is housing used as an investment tool rather than as a place to live and build a community. With the recent purchase of six older multi-storey apartment blocks by a multi-billion dollar private real estate investment corporation, almost 600 tenants are now facing either a 30-40 per cent rent increase after modest renovations are completed, or the prospect of having to move.

A new long-term tenant can expect to pay $1,375 a month for a renovated one bedroom suite on the main floor of an apartment block in James Bay. Should the tenant wish to rent a 1 BR furnished condo, he can expect to pay $2,000 a month. That same James Bay condo owner could forego renting the same furnished condo suite to a tenant and offer it to a tourist for $3,400-$4,900 a month).

Hotel and B&B owners are concerned about the potential loss of revenue to competing Airbnb “hosts” and other online short-term vacation rentals that pay no local fees or taxes while the neighbourhood is experiencing the ongoing displacement of renters, taxpayers and workers, likely exacerbated by the arrival of the new “sharing economy”.

In the meantime, the city is promoting the benefit of homeownership, enticing the development community to build in Victoria which offers a high pre-sale market. Since 2013, it has also been working with the Victoria Chamber of Commerce, Tourism Victoria and Airbnb to develop an ‘innovative policy around home sharing’ and to harness the economic and social benefits associated with this activity.

In contrast, Quebec has become the first Canadian province to regulate short term rentals. Their legislation will require Airbnb and other home-stay users to pay the provincial hospitality tax. And, in Tofino, city council recently passed a motion unanimously mandating that all short-term accommodation rental properties must be licensed. In the absence of regulation, serious repercussions can occur, such as street protests which havg taken place in Barcelona, Spain concerning Airbnb and critical housing shortages.

Questions:

What is being done to assist the 60 per cent of Victoria households facing a severe shortage of long-term rental accommodations, ’renovictions’, significant rent hikes, and who now must compete with tourists to put a roof over their heads?