Business

How Airbnb hurts Boise’s affordable housing: ‘It has driven up the rental prices’

What makes a good Airbnb?

Mark Dale, owner of A2Z Property Management, gives advice. (Hint: Location, location, location.)
Up Next
Mark Dale, owner of A2Z Property Management, gives advice. (Hint: Location, location, location.)

When Brittany O’Meara first moved into a one-bedroom townhouse on the Bench with her boyfriend, her neighboring units were filled with renters. Then, slowly, she started to notice that as neighbors moved out, her landlord wasn’t finding more tenants. Instead, one by one, he converted the townhouses into short-term lodging through Airbnb.

In the last two years, nearly half of the 12 townhouses have become Airbnbs, she said. “We’re in constant fear that our landlord will turn our unit into an Airbnb,” she said.

O’Meara, a 34-year-old graduate student at Boise State, has a month-to-month lease, making her situation even more precarious than renters on long-term leases. If her landlord ends her lease, she worries she won’t find another apartment on the Bench for the same price of $800 a month.

“All these affordable units are being converted into Airbnb, but what about the people living in Boise who need a place to live?” she asked.

As Boise and its suburbs have grown, so has the number of Airbnbs. Since 2016, the number of short-term rentals in Boise has increased from 336 to 1,183, according to data from AirDNA, a short-term rental analytics company.

At the same time, Boise renters are scrambling to find housing. The rental vacancy rate in the city dipped to 2% in 2018, compared with 8% in 2009.

The shortage of housing is driving up the cost of rent. In 2018, the cost of a one-bedroom apartment in Boise rose 14%, according to Apartmentguide.com. Those who can’t pay are forced out of their homes.

Lori Dicaire, a local renters advocate, says Airbnb has reduced the number of affordable units in the city.

With an average of about 1,000 listings in Boise last year, Airbnb accounts for just a sliver of Boise’s 40,000-unit rental market. Of Airbnb’s listings, only 41 percent are available full time.

But with the vacancy rate at record lows, that sliver can make a difference — especially in desirable neighborhoods. Two of five Boise listings are in zip code 83702, which includes Downtown and the North End.

Five years ago, Mark Dale started managing Airbnbs through his business, A2Z Property Management. With 10 Airbnbs under his belt, he acknowledges that demand for short-term rentals has pushed some residents out of their homes.

“It has driven up the long-term rental prices,” Dale said. “People are having to move further out of Downtown.”

Money to be made

With the right location and look, a rental can make far more money for its owner on Airbnb. That has tempted property owners to get out of the long-term market.

Consider a small Downtown basement studio with miniature appliances to match. As a long-term rental that Dale managed, it fetched $400 a month. When its latest tenant moved out, Dale decided to list the studio at 5th and Hays streets on Airbnb for about $40 a night. It now brings in $1,100 a month.

“I have more expenses on it, but it’s occupied all the time,” Dale said.

But with so many landlords tempted, the market has become so saturated with short-term rentals that Airbnb hosts say their revenue is decreasing. Some property managers said they have had to cut prices to compete.

Dale now figures he can make more off some properties as long-term rentals again. In the last year, he has taken two properties off of Airbnb and advertised them to local renters.

“The market for long-term rentals is so stinkin’ hot,” he said.

Some cities and states have started to regulate their vacation rental markets in an effort to curb the growth in rent costs. Cities like New York and Portland, Oregon, have “one host, one home” policies that allow hosts to only list one home on the site. Thousands of hosts in San Francisco quit Airbnb after the city said it would fine companies up to $1,000 a day for listing home-shares not registered with the city.

A Massachusetts law set to take effect in July would require short-term rentals to register and pay a 5% tax to the state and create an affordable housing fund that would draw money from a tax on property owners with two or more short-term rentals.

In Idaho, the Legislature has limited what local governments can do. With the backing of Airbnb lobbyists, the Legislature in 2017 passed a law that prohibits any local ordinances banning short-term rentals. The law also requires vacation rentals to collect and remit state and local taxes.

With few regulations and little oversight, Airbnbs have flourished in Boise. In 2018, Airbnb hosts in Ada County welcomed 73,200 guests and earned $8.2 million, according to data from the company.

Local hosts say Airbnb provides them additional income and can help pay off mortgages.

But more and more, the Airbnb market has become less about mom-and-pop owners and more about real estate investors who see the rental properties as a lucrative asset.

Vacasa, a rental management company based in Portland with an office in Boise, manages three of the five top-grossing Airbnb properties in the city, according to AirDNA.

Real estate investors have taken advantage of city funds meant to be used as incentives to build housing Downtown to instead convert units into short-term rentals.

Los Angeles developer LocalConstruct received $159,000 from Boise to build the Fowler, 505 W Broad St., a complex that promised to include 159 units. LocalConstruct used part of that money to build 30 vacation rental units, which account for 18 percent of all units in the building, BoiseDev reported. (The developer donated $30,000 to local charities after City Council member Elaine Clegg said the incentive payments should not have gone to short-term rentals.)

As the market heats up, outside investors are looking to locals for advice on how to get into Airbnb-ing in Boise. Aaron Catt, a Realtor and property manager, runs 15 Airbnbs around Boise for owners who don’t want to be involved in day-to-day operations. But he’s also become a consultant to investors looking to buy homes in Boise to list on Airbnb. Catt said he gets two to five inquiries each week for just that.

Like Dale, he has seen revenues fall in the last year as the inventory of Airbnb rentals has increased — but said that properties in the right location still can deliver impressive profits.

“You had better have a super-dynamic plan to operate as an Airbnb or you would make less money than a long-term rental,” he said.

Should Boise act?

Catt is less concerned about the effect of Airbnbs on rent costs in the long-term rental market. He and Dale say the platform benefits the community.

“We’re contributing to the growth of our economy by providing what is already underserved: a nightly bed,” Catt said.

Plus, short-term rentals are often kept in better shape than long-term rentals, he added. “Airbnb serves as an opportunity for local people and out-of-state investors to put their money in really great neighborhoods to keep properties in shape,” he said.

In a statement, an Airbnb spokeswoman said, “Short-term rentals are an economic lifeline for families in the Treasure Valley and a growing part of the economy.”

Still, activists like Dicaire and O’Meara are pushing for the city to act.

Dicaire wants the city to establish a task force to analyze the impacts of short-term rentals on neighborhoods and rental prices. She’s calling for the city to regulate Airbnb the way it has ride-sharing scooter companies like Bird and Lime.

“Before a single scooter hit the streets, the City Council hammered out a 15-page ordinance that regulated every aspect,” she said in a phone interview. “The city has yet to create one single rule around Airbnb.”

Boise doesn’t track Airbnbs in the city, said Mayor David Bieter’s spokesman, Mike Journee.

“It wasn’t on our radar until this housing affordability conversation started blooming,” he said in a phone interview. But he noted that short-term rentals have helped some homeowners and renters make ends meet as housing costs rise.

Neither Meridian nor Nampa collect data on short-term rentals, either.

The state vacation-rental law allows local governments to regulate Airbnbs for reasons of health, safety and general welfare, including to protect the integrity of residential neighborhoods. Idaho’s resort cities, who are also feeling vacation home-induced housing drains, have taken steps to regulate the industry. Driggs, in Teton County, began asking Airbnb hosts to register as businesses, with a $50 initial registration fee and a $25 annual license renewal. That has allowed the city to keep data on Airbnb.

“We have models now — so we can’t just say that we can’t do anything,” Dicaire said.

Anne Stites Hausrath, a board member of the North End Neighborhood Association and former Boise City Council member, said the community needs real data on Airbnb.

“If investors are buying houses and putting them on Airbnb, this decreases the available housing stock,” she wrote in an email to the Statesman. “It creates holes in the neighborhood fabric. Homeowners and renters have a stake in the neighborhood; short time visitors do not.”

O’Meara, the Bench townhouse tenant, has become more careful to lock her doors before she goes to bed at night and shut her windows when she leaves for the day. She can’t rely on neighbors to look out for her anymore.

“Before, we knew our neighbors,” she said. “Now we have no relationship or sense of community with the people we live next to.”

Kate reports on West Ada and Canyon County for the Idaho Statesman. She previously worked for the Louisville Courier-Journal, the Center for Investigative Reporting and the Providence Business News. She has been published in The Atlantic and BuzzFeed News. Kate graduated from Brown University with a degree in urban studies.If you like seeing stories like this, please consider supporting our work with a digital subscription to the Idaho Statesman.

  Comments