How the Airbnb ban led to lower rental prices in Canada's major cities
But the pandemic and the subsequent ban on short-term rentals has led to such a sharp decline in the number of Airbnb bookings in major urban centres that those furnished units have migrated to the long-term rental market, according to data obtained by the Post from various condo rental sites and a real estate analytics company.
“The 2020 numbers are for the first 12 days of June. The 2019 numbers are for the entire month of June 2019. So, as you can see, there has been an explosion of listings (on the long-term rental market) in the first 12 days this year compared to the full month of last year,”
Data from AirDNA, an analytics company focused on the short-term rental market, also showed a clear decline in the number of available listings on Airbnb and VRBO sites in Toronto, Vancouver and Montreal, according to numbers provided to the Financial Post.
In Vancouver, there were 4,328 listings for entire units on Airbnb in January 2020, and just 3,651 by April 2020, an 18.5 per cent decrease. In the same period a year ago, the number of listings was essentially unchanged.
The same trends bore out in Toronto and Montreal, with declines of roughly 20 and 22 per cent, respectively — again, a pattern that was unique only to this year.
Shaun Hildebrand, president of Urbanation Inc., points out that Airbnb listings might have declined in conjunction with an increase in available units on the long-term rental market, but that does not necessarily imply correlation.
“The data indicate that there has been a very large percentage year-over-year increase in new listings of long-term furnished units — 62 per cent, to be precise — but, in absolute terms, an additional 213 new listings compared to last May is not very dramatic given the thousands of units that were estimated to have been operating as short-term rentals,” he said.
“It’s hard to gauge Airbnb conversion without knowing how many of these units would have otherwise been long-term rental units,” he said. “The question that needs to be answered is how many, out of the number of Airbnbs that are secondary residences, would the owner have otherwise offered as a long-term rental? That, we don’t know.”
But Fairbnb has long argued that the rapid rise in the number of short-term rentals on sites such as Airbnb and Vrbo have eaten away at the long-term rental market, creating a supply shortage and pushing up rents.
An extensive report published by David Wachsmuth, a professor in urban studies at McGill University, last June found that the popularity of listing on Airbnb effectively removed 31,000 units from Canada’s long-term rental market.
The report also found that nearly 30 per cent of Airbnb’s revenue in Montreal came from just one per cent of hosts, suggesting investors might be buying multiple properties with the sole intention of listing them on short-term rental sites, instead of the long-term rental market.
Fairbnb Canada spokesperson Thorben Wieditz said his calculations indicate there are currently 8,000 Airbnb units in Toronto operating in contravention of city bylaws that banned short-term rentals because of the pandemic (that ban was lifted in Ontario on June 4).
“In April, we still saw a significant number of listings being booked,” Wieditz said. “There were almost 7,000 homes being booked in Toronto and most of those 7,000 units were not being used as principal residences, so they were dedicated to short-term rentals only.”
Airbnb has said it is providing free housing to frontline workers during the COVID-19 crisis, specifically members of the Service Employees International Union, but Wieditz is skeptical that all bookings made during the pandemic months can be attributed to this initiative.
The unintentional impact the ban on short-term rentals has had on the long-term rental market is also showing up in rent prices.
“Before the pandemic, a one-bedroom condo in the downtown would probably not go for less than $2,200 per month, but now you’re seeing them being advertised for about $1,800,” he said. “It is a correction that was much needed, and we’re seeing a return to a more balanced market.”
Beyond short-term rentals, the other factor that might keep rent prices in Toronto at lower-than-expected levels is the flood of brand new units that are set to enter the market in 2020.
“Heading into 2020, our predictions were that upwards of 29,000 new condos were coming onto the market,” Urbanation’s Hildebrand said. “Of course, that was slowed down by the pandemic, but this is the biggest addition in new condo units since 2014.”
He points out that most of those units will end up on the rental market if rents do not significantly decline, simply because most new condos are pre-sold to investors.
“The big picture of this pandemic is that for urban renters, things are looking up. Supply is coming in, conventional demand is declining because immigration levels are falling,” Hildebrand said. “Obviously, with job losses, there is less appetite to go out and rent a new condo, but I think you’re going to see this trend play out for a few months, and things will pick up in 2021.”