Monday, March 16, 2015

The Nine Neighborhoods That Make All the Airbnb Money in LA 

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Residents in trendy neighborhoods like Venice and Silver Lake have been complaining about Airbnbs for years now—they say the company makes it too easy for landlords to illegally turn their rental units into hotel rooms, driving up rents and making residential neighborhoods into tourist zones (which is completely outlawed by Los Angeles zoning codes and the codes of most adjacent cities). Airbnb has always refused to release any exact information on its units, but now a study from the Los Angeles Alliance for a New Economy has dug up the facts and it's more dramatic than anyone could have guessed: just nine LA neighborhoods account for 73 percent of the money Airbnb makes in the region. And rent in those neighborhoods is growing much faster than in other places.
LAANE's work usually focuses on labor issues, and they set out studying Airbnb to find its effects on hotel workers in Los Angeles. While they did find some evidence that the company puts pressure on decent-paying hotel worker jobs (replacing a fraction with low-paying domestic worker jobs), they found it has a much larger effect on a much larger group: renters, who make up more than half of LA's population. Their report explains: "AirBnB has created a platform that allows landlords to pit tourist dollars against renter dollars. Landlords can potentially earn significantly more money by converting traditional rental stock into AirBnB units, as many appear to have done."
Airbnb started as a booking site for homeowners or even renters to rent out rooms to generate a little extra cash, and that's one argument the company makes to justify its law-flaunting. (Airbnb takes three percent commission from each of its hosts and between six and 12 percent commission from guests.) LAANE's report found 8,400 hosts in LA with 11,401 units; about 90 percent of those were whole units, and in many cases, lessors had multiple whole units up for rent. That 7,316 rental units they say are now off the incredibly tight LA rental market.
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And the places Airbnb is most lucrative are, naturally, the places where the market is tightest—vacancy rates in the most lucrative neighborhoods average 3.5 percent.
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Rents in these desirable neighborhoods are already high, but are driven even higher by the Airbnb pressure; LAANE found median rents in those neighborhoods are on average 20 percent higher than the city's median.
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Venice has been hit particularly hard—12.5 percent of all units there are now Airbnb rentals, which translates to 360 units per square mile in the tiny 'hood. If they're not being forced out by the crazy rents, they're forced to live next to de facto hotels. In one historic building, The Waldorf, the owner has been changing units over to Airbnbs as soon as they become vacant and residents "have felt increasingly unwelcome in their homes [and] believe their landlord is no longer performing basic maintenance on their apartment because they are not as profitable as the tourist-serving units." (The report compares this no-oversight conversion to a proposed hotel on Abbot Kinney, which has been in a city review process for more than three years.)
Rents across the region are wildly unaffordable already—the metro has the biggest disconnect in the US between rents and wages, and a shocking number of residentspay more than 50 percent of their income toward rent. When Airbnb prices more high-earning residents out of these nine already-expensive neighborhoods, it ripples across all of Los Angeles.
Airbnb has a very successful lobbying operation based on—no joke—cult recruiting techniques, and the Venice arm has already defeated attempts just to study the matterin Los Angeles. But they can't stay so secretive and so unregulated forever: Malibu hasused subpoenas to get information on Airbnbers in the city; West Hollywood isconsidering banning the practice (even though it's already illegal); and Los Angeles is just now starting to get its act together to consider regulations.
· AIRBNB, RISING RENT, AND THE HOUSING CRISIS IN LOS ANGELES [LAANE]
· Airbnb-Affiliated Lobbying Group Defeats Venice's Attempt To Regulate Vacation Rentals In Los Angeles [Curbed LA]
· 21 Signs That 2014 Was the Year of LA's Rental Apocalypse [Curbed LA]
COMMENTS (36 EXTANT)

I Love LA!
Airbnd is a greedy company. The must die.
Money is the root of all evil.
Of course rent is rising in those neighborhoods, for the EXACT same reason they have the most Airbnb rentals, because that's where people want to be!
Blaming a website for high rents is silly. Rent in LA was high before there was even an internet.
Fact is, if you want lower rents you have to build A LOT more apartments, or you need to make Los Angeles an unattractive place to live.
@I_Love_LA:
Do you think if Airbnb closed business today rents would go down? I've lived in LA before there was Airbnb, heck, before there was really much internet..... and rent has always gone up and up.
I do not understand. If a large apartment building is renting out rooms via Airbnb, and there are multiple complaints, why can the city not send out an inspector and site the property owner since this is ALREADY illegal? The city inspects apartment bldgs on a regular basis and also cites owners for violations on a regular basis.
Airbnb is a leech. It is an example of what evil goings ons can take place when technology is not kept in check by morality.
Airbnb must die.
Money is the root of all evil.
Shut it down! Nobody should be able to visit LA for less than $180/night. Get out, poors! Let the big hotel chains handle this.
renting a home is very expensive in los angeles , even worse on the westside of L.A. ... I suggest buy a home, I deal in real estate in the area and can help anyone interested in buying or selling property go tohttps://ambercelayarealestate.wordpress.com/ or email ambercelayarealestate@gmail.com .....stop paying these extreme rent bills!!!
Here's a link to the classified employment section, might be time to put all your pent up frustrations to good use-
SPAMMER. And a real estate agent too. Wow. Just wow.
these airbnb rentals aren't the cause the "housing shortage", rent control, prop 13 and anti-development sentiments are.
@Ghetto Urchin: While that's true, it's also true that removing any supply from the rental market will increase prices even further than they otherwise would. You can't remove 12% of supply (as in Venice) and assume prices won't be affected.
I am an Airbnb host and rent out a room in my home. Many of my guests would have not come to LA had my rental not been available since I charge way less than even a crappy motel. Since they are staying in my home, I vet them, and all of them have been highly respectful and responsible. I also rent out my entire home when my family is on vacation. We typically have other families renting our home, and they appreciate the availability of a kitchen and separate bedrooms, something a hotel can't provide.
However, I cannot say the same for another rental in my neighborhood that is clearly run on a purely commercial model. The "owner" (or renter who is subletting) does not live there, and a stream of guests come in and out, treating the unit like a hotel. Guests can book through an automatic booking option, meaning there is no vetting process to control for guest quality.
I think we should learn from SF and restrict Airbnb to owner-occupied units. It will help to filter out disrespectful and shady transients while boosting the local economy. We are using our Airbnb income to pay off our massive school loans. Our guests eat at local non-touristy restaurants. They are frequently repeat guests, too (like out-of-towners visiting LA relatives). Surely, there is a balanced way to approach this.
Nothing against you but AirBnB is an Evil company. You know a company is up to no good when the first thing they do is develop a strong and extensive lobbying network.
Again, MONEY IS THE ROOT OF ALL EVIL.
I wish Airbnb nothing but the worse luck.
Good riddance.
@spanishmoss: THIS.
I like the idea of limiting this to owner occupied units.
Airbnb or rent control? I'll take the former every time.
The LA Weekly had a story last week on how Airbnb is squeezing an already very tight rental market in L.A.: http://www.laweekly.com/news/airbnb-is-making-things-worse-for-la-renters-report-says-5421764
There must be at least 1 million housing units in these areas on the map, to think 7,316 units will make a difference is very ignorant. You would barley make a dent in LA's housing issues and many rent shared rooms or extra rooms they would not use anyway. All about nothing, 7,316 units won't help when we need closer to 30K-40K new units a year, every year not just 1 shot.
Airbnb is a vulture on the community. Their business model and dealings smell of rotten fish.
We need to litigate and obliviate them,.
I Love LA! Don't let the tech vultures take from this great city.
I regularly see apartments for rent around MacArthur Park for less than a thousand dollars. Guess what, Echo Park and(especially) Mt. Washington, weren't very desirable areas either 10 years ago...
The truth is there are no more undesirable areas in LA...you can even live in Compton or South LA if you want. The police and technology has basically obliterated gang culture. It's so easy to catch people now, very hard to hide. Look at the Mission district in San Francisco. I came from Detroit and would laugh at people in San Fran. because they didn't want to go there because of the...(oh my God) aggressive homeless people. Find a place that's in your budget(yes you can) and go live there and quit complaining!
Indeed. Get yourself a piece of the LA Pie before it's all sliced diced and eaten up. Stop complaining and start gettin. Drive the Airbnb venture out of LA and take control of your life.
Soon a cardboard box on Skid Row will be of value if you don't hurry up.
As Brian in Ktown stated, and is obvious to anyone that's not wearing blinders, rents are high in those neighborhoods, and the Airbnb popularity are for one and the same reason. They're very popular neighborhoods, and that's where everyone wants to be.
Anyone advocating for more affordable housing ought to be advocating for much more liberal zoning. Ironically it is usually the same people who cry that there is no affordable housing that also fight so hard against any development. Quite sad.
I'm am a fan of what Airbnb does, though not so much the company itself. I think being able to rent out rooms and apartments in neighborhoods is a much better way to travel, and cities that don't allow it will pay the price in terms of less visitors and tourist dollars.
it is outrageous that people of all income levels can't have their own nice apartments in the nicest most desirable neighborhoods in LA. so unfair. lets organize and march! I'm trying to make it as an actor and working at starbucks part time and I had to get a roommate which really gets me mad. she's such a pig. i guess i could rent out the other bedroom on airbnb and not have a roommate anymore. hmmmm.
@Ghetto Urchin: There is no housing shortage, just go to any of these new buildings or ParkLaBrea and you'll find plenty of units available. The shortage is AFFORDABLE housing. Normal renters can afford $1,200 for a 1 bedroom, not $2,400!
There are plenty of places for $1200/mo south of the 10, east of the 405. Everyone can't live in Santa Monica--it's only three square miles. Rent control has been a disaster. For one thing, it applies only to properties built prior to 1978 primarily owned by mom 'n pop owners. It hasn't been effective in controlling rents at all and has actually encouraged tear down these more affordable apartments only to replaced by new developments that are not subject to rent control. It has spawned a whole highly paid bureaucracy. If you have a minute google the salaries of the bureaucrats who work for LAHD whose primary job is to administer rent control. Blaming Airbnb for high rents in LA is just laughable.
@lahope: Not to mention the curb blight and shotty work done to rent controlled units around the city. They are 90% brown or peach stucco with aging roofs and deplorable landscaping if any at all. Rent control creates an unwanted relationship of bitterness between tenants and landlords for life or until they get paid to leave (in most cases). You get what you pay for, especially rental units remember that.
What's crazy to me, are the people who rent out their rental on AirBnB... I've heard of a few people who rent two apartments, and use one to live in, and the other for income. How does your landlord not find out and evict you?
I agree with others, this should be restricted to owner occupied housing only like they do in SF. You have to be crazy if you can't see how that 12% figure in Venice is a big factor in the bloated rents (clearly not the only factor, but c'mon?)
I would think the no growth old white hater NIMBY's would be going after AirBnB and the people who make money off this site. Everything the Boomers hate (traffic, high prices, good restaurants...) to see in their communities is magnified by users of this service.
A Landlord who owns a property in Santa Monica where a long time tenant is paying $994/mo two blocks from the beach is acting irrational if they don't try to force the tenant out. The prices for apartment complex's are starting to reflect this as a reality as we just saw in SM where an old building sold for $6.2MM.
@zb: no. 12% of airbnb's revenues are generated in venice. airbnb rentals are NOT 12% of the housing stock. look at thart above... there are around 23,000 housing units in venice.
dig a little deeper, a third of the rentals are simply a spare or shared room. considering the overwhelming majority of people rent their homes when they're out of town or whatever, the impact on prices is virtually zero.
lets go with a worst case scenario of 10% of all airbnb rentals being professional landlords with year round operations. that would take 80 housing units offline, out of a total of 23,000 or so.
in other words, insignificant.
@armchair boogie: assuming 10% of airbnb participants are professionals, approximately 80 units were taken offline in venice. or one third of one percent of the total stock. that's not going to have a material impact on prices.
of course, that non-story doesn't generate clicks and ad revenues. it's much easier to create illogical, sensationalist bullshit after smoking a couple bowls and hope nobody catches you.
aaahh, the life of a blogger.
First of all, AirBnB is not the reason for the affordable housing crisis in LA. There are hundreds of listing sites just like Airbnb that are portals for homeowners to list their properties as either short term rentals or vacation rentals. Secondly, restricting to homeowner occupied properties would restrict investors. Do we really want the real estate market to be attractive to owner occupied properties only? I think not. Thirdly, big developers are only building projects that are going to be lucrative and maximize their investment. This is one factor contributing to the lack of affordable housing and city councils everywhere should focus their energy on demanding affordable housing, not shutting down the guy who rents an extra bedroom. Spanishmoss talks about those who take advantage and are renters subletting on short term - and she's totally correct. It is up to the subletters landlord to address this issue - there are existing CA real estate laws that prohibit subletting. I manage 5 short-term condo's downtown. In the standard market the least expensive would be $1850 and the most expensive would be $4600/month. Can someone tell me how these five units could be labeled affordable? Can someone really argue that 5 condo's in DT out of approximately 8000 residential units are depleting affordable housing? Or for that matter, as stated in the article, 240 DT units out of 8000 residential properties represents 3% of residential units,which means, 97% are standard market rentals. Yes, 3% is killing the affordable housing market! What a joke! 99% of the guest who come thru my units are those that are contract workers, relocating, business travelers and USC affiliated. The business traveler can utilize the many hotels in DT. They can rent a 158sq.ft. room at the Ritz Carlton for a minimum of $350/night and tack on parking ($40/day), taxes and all the other fees hotels charge. What about the contract worker who's coming to LA for 3 months? Do we really want to force people to spend $350/night because there are no condo's or apts that do 3 month rentals? And what about the corporate housing that has been in existence way before Airbnb was even an idea? Where is all the screaming about buildings that have historically taken a small number of units and lease them as corporate housing, like Oakwood? How many long-term renters in these buildings have complained or written articles about how awful it is to have different people leasing the unit next door? There are only two valid factors that are influencing this argument; the bad host - the renter who sublets and operates with no consideration for the property and neighbors as well as the actual homeowner who operates with no consideration and those host who aren't paying the TOT. That's it! The regulations should address the bad operator, the TOT and large apartment building owners that are converting hundreds of apts to short-term rentals, i.e., Geoff Palmer (Medici, Orsini, Piero).
Egads.
Way to go, Curbed, for intentionally mis-stating the statistics on Airbnb rentals in Venice. Your comrades over at LAANE couldn't ask for better yellow journalism.
The beautiful upside of AirBnb, is that enough rent-controlled tenants feel entitled enough to use it, providing hard evidence for their subsequent eviction.

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