Articles like this are supremely annoying. The devastating effect is caused by the fact that they aren’t building enough housing.
The problem is not the demand for housing, it’s the supply.
Don’t blame Airbnb when you refuse to build enough housing, the markets going to figure out how to market.
The problem is when your government is in the business of guaranteeing house prices go up a ton - and everyone is leveraged housing - that turns housing into a speculative meme stock and not something for people to live in - which turns out to supremely suck for anyone that doesn't own a house and doesn't want to rent progressively shittier apartments for the rest of their lives.
Canada is building plenty of housing. It's the entire economy besides oil and gas.
Sure, you might be under-building slightly in B.C. and Toronto (mostly due to your gov's immigration policy specifically to prop up your housing bubble) - but that doesn't explain why prices have been going ape-shit literally everywhere in Canada for 30 years...
If Canada is building plenty of housing, why the multi-decade crisis? Governments that wish to keep housing prices rising do so almost exclusively by limiting building housing.
I've read a lot by economists on this over the years and they all agree lack of new housing is the problem in the Canadian home market so if you've got an alternative take I'd love to hear it.
Immigration policies to keep wages low and prop up the housing market. Canada's population grew by a record 1 million in 2022 alone [0]. To give people an idea how much that is, Montreal's total population is 1.7 million.
Immigration went up by a lot in 2022 it's true, but Vancouver's housing situation was already at crisis levels before 2015, before increased immigration, and before this federal government even.
What we've seen in the last few years is that the existing crisis that started in Vancouver has spread to the entire of the country, and it's no surprise because housing policy in the rest of the country is not really any different than Vancouver.
An example of the future is already here, just not evenly distributed I guess.
The problems of systemically not creating enough housing hit Vancouver first, but it was inevitable that they'd hit everywhere else eventually.
Oh, it is definitely by design whatever the factors are.
It's a circular problem too. People buy an expensive house somewhere and it becomes a substantial part of their net worth. Home values decreasing would impoverish them. Home values increasing would enrich them. Homeowners vote a lot more than renters, especially in local elections. So you quickly end up with local governments full of people (most of whom are also local homeowners) incentivized to keep property values high.
The problem must be taken out of the hands of local governments, but even at the national level, there's never going to be political will to slash home values.
I don't think these rates are new housing. You're looking at the real estate market as a whole. There's no way 25% of China's GDP is new housing, or Canada high teens. As real estate as a whole climbs as a percent of GDP you expect to see more NIMBYism because it means people have even more of their wealth tied into their homes, and more reason to not want competition. Which, economists seem to agree, is exactly what has happened in Canada.
Canada is only a country of 38 million and they are expected to take in 1 million migrants this year, all of whom don't bring a home with them. They took in half that last year. Their population is growing much faster than ours, but new housing starts are only around a quarter million per year.
I don't assume they are correct just because they are in wide agreement which is why I'm asking what you know that I (or they) don't. The total percent of GDP from the real estate market doesn't indicate much other than that houses are unsustainably expensive.
In Ontario where I live its municipal housing that's the problem. In Kitchner/Waterloo where I live local government is hung up on affordable housing in projects like apartment building construction. Ironically because of all the stalling and inaction no housing is afordable for anyone much less the so called poor and disadvantaged they think they are fighting for.
The affordable housing that politicians in K-W have focused on is neither sustainable nor sufficient. They are looking at inclusionary zoning which leads to 6-8 “affordable” units in a 300-400 unit development (I.e. drop in the bucket when thousands of units are needed), or they fund non-profits to do very small scale affordable retrofits and somehow manage to spend around $800k-1m per affordable unit brought to market (I.e. not sustainable and also not at a scale to make a dent). The Ontario government needs to create a housing group that does purely affordable developments at large scale, similar to BC.
Put simply: Housing restriction is largely at the municipal level, whereas immigration is at the federal level.
There are few if any common values or objectives that unite into coherent leadership across levels of government. Everyone for themselves, and the results are quite often ludicrous and to the severe negative for citizens.
Soviet block style housing away from urban centers is the only option for affordable housing, and stop taking over 50% of everyone’s property tax payments to pay for the socialist housing projects
Canada is adding less housing stock than new residents (births plus immigrants minus deaths) every year, and the housing stock was already inadequate for the population 5 years ago.
I love that Canada is known as a welcoming country to people from diverse backgrounds, but the fact that the government treats housing and immigration policies separately is absolutely unhinged.
It seems less than ideal, or maybe even illogical, but calling it "absolutlely unhinged" feels a bit dramatic. I'm not from Canada - how does Canada currently relate housing and immigration policy, and how would you propose they change it?
As I understand it, the government sets targets / limits for immigration, and sets goals for housing. While the latter may be somewhat informed by the former, these two goals are not mathematically linked, and if housing construction falls short of the goal, that's just treated as an "oh well, we'll try again next year" scenario. I agree that "unhinged" is dramatic, but I would say this is not very coordinated or effective.
A more direct method would be to apply hard caps to the following year's immigration numbers based on the previous year's actual measured housing completions. I think this would much more powerfully align pro-immigration interest groups with pro-housing-construction interest groups, resulting in much more home construction, whereas presently there is substantial conflict between the two (especially landowners who benefit from rising demand for scarce housing).
I don't think the federal government does that at all but please someone correct me. Immigration is a federal issue that gets decided mostly on the federal level. Housing is not a (direct) federal responsibility, again correct me if I'm wrong. The government can give incentives but it can't dictate how much housing needs to be build by the provinces/territories, municipalities, etc.
There's a lot of jurisdictional overlap when it comes to housing, but Canada certainly does have a federal Minister of Housing, Infrastructure and Communities, the office of which is currently occupied by Sean Fraser (who was formerly the immigration minister). But even if housing were entirely out of the federal government's hands, that wouldn't be an obstacle to them mathematically linking immigration targets to measured housing builds; they can link it to any variable they want to, even the weather on Mars.
I'm not sure they would need to be accounted for. I think opposition to AirBNBs is a product of severe housing scarcity* and in a scenario where housing is abundant and rents are low, people would be much more welcoming of AirBNBs.
* (Or in some places like Kyoto and Venice, it's due to over-tourism complaints, but I don't think anywhere in Canada is struggling with that problem.)
Tourism is a major industry in Montreal, probably as much as venice and Kyoto with year long festivals and the fact that it is an Island is also an issue.
If opposition to AirBNB in Montreal is mainly coming from locals being upset about the excess of tourists rather than the deficiency of rental vacancies, then I stand corrected.
Currently, housing availability is not a factor in immigration policy. Canada allowed over 1.2 million new residents last year. There were approximately 200k new houses built in that same time frame. Interpret this as you will.
Yes, it is hard to overstate: the current admin has given zero thought to anything other than "bring more people in".
Housing supply, healthcare, broad service capacity, everything that is meaningfully impacted by adding more residents, has mostly been ignored for years.
Housing supply in particular was already in bad shape 10 years ago, so we are seeing the compounding effects of that in 2024 as immigration skyrockets.
Imagine adding 1.2 millon people to a country with only 39 million already, in just one year! I think it's pretty clear there are many wrong/bad ways to pull that off, and we chose most of them.
How many vacancies are there? How many of the new residents are joining an existing household, and how many are family groups that will share a house?
The numbers you've cited don't sound completely out of line. The counterpoint is that housing prices have increased so dramatically.
I don't see it mentioned, but I assume wealthy people without price sensitivity around the world are purchasing extra properties in Canada as climate refuges in a relatively stable democracy, and using AirBNB to generate income from them while they are not needed.
> I don't see it mentioned, but I assume wealthy people without price sensitivity around the world are purchasing extra properties in Canada as climate refuges in a relatively stable democracy, and using AirBNB to generate income from them while they are not needed.
Yes, this has been happening exactly. Although some foreign investors are also just speculating without running an Airbnb. Recent taxation introduced on unoccupied housing has combatted this somewhat, but it's still a problem. But it's also worth noting that this only accounts for a small portion of the housing stock, probably dwarfed by Canadian nationals or corporations buying multiple properties and using them to run Airbnbs, or real estate companies buying property and keeping it unoccupied while it's on market.
I do think the "foreign investor" complaint is exaggerated as a root cause of our systemic housing issues (likely because people find it easier to point the finger abroad), though it is still a contributing factor.
Canada is bringing in 1.3% worth of its population in immigrants every year. IIRC the births and deaths are nearly even, so without immigration the population increase would be something like 0.02% per year. The federal government is likely incentivized to create high immigration targets by big industries (because more workers creates a race to the bottom for wages, and most people are not making a living wage in Canada), as well as the federal pension program which will be paying out record amounts to new retirees as the last of the boomers are retiring now.
If you can't increase the housing stock by 1.3% every year (I suspect it's more like 0.2%-0.5% growth per year, but can't find numbers), but you choose to increase the population by 1.3% every year, you can see how this would contribute to a soaring cost of housing and consequently the record numbers of homelessness in Canada (which includes tens of thousands if not hundreds of thousands of people now living in their vehicles).
BC is moving in the right direction with recent policies which make it much more difficult to run an Airbnb, which will return some of the housing stock to the long-term housing supply when the changes come into effect, but the municipal governments of most of its largest cities (including Vancouver, whose metro area has 50% of BC's population) have made it difficult to build housing in general, as well as restrictive of high-density housing.
If you're not from Canada, you honestly can't fathom how bad things have gotten for people living here.
I agree with you its' gotten bad here but I think immigration is a bit of a red herring. It's not the immigration numbers that are the problem per se, it's that the people immigrating are net consumers rather than providers of skills that are in shortage and I think that in itself is a relatively small problem compared to the nuts and bolts of how housing is actually built in Canada and the primary cause of this problem is the government's regulation of that process. We aren't setting new highs from the building boom of the 1970's when our population was 60% of what it is now when we should probably be producing housing at double the rate of the 1970's boom, given our much larger population and immigration and a large part of why is the large cost of dealing with the government on each new build. The time it takes to go from buying land to getting it rezoned for higher density and the building process is often very long, permitting is expensive and time consuming beyond the rezoning aspect, every spot where a trade touches anything outside the lot has a government cartel on it charging double or triple what the trades working on the residence charge, inspections are arbitrary and archaic, making it very hard to bring in modern building practices at scale, etc. We need to go in and bulldoze all those barriers and get housing in production if we expect this problem to solve itself. BC is moving in the right direction on one thing though, they jsut proposed automatic upzoning of all land within 800 meters of a major transit stop. That would relieve a decent chunk of the first part of the problem.
> If you're not from Canada, you honestly can't fathom how bad things have gotten for people living here.
100%. People outside of Canada really don't realize how bad it has gotten here.
Yes, housing costs are up all over the world - but Canada's housing crisis is off the charts. Hell, even many Canadians that are comfortably housed don't even realize how bad it has gotten.
Immigration is a federal responsibility. Housing is a free-market responsibility with limits imposed at the municipal level (where it is strictly restricted to anywhere but my backyard).
Which city, and how long has that been the case? There's likely quite a bit of backed up demand. Typically when supply doesn't meet demand, the price goes up, the supply responds, and only after that does the price level off (or come down).
You're ignoring the fact that most of the new supply being purchased by investors means they have more power to increase rents, re-leverage their existing real-estate and buy up more. Continuously increasing real-estate prices and rents until the bubble bursts.
If everything worked based on the most basic econ101 principles, we wouldn't have any bubbles in the first place.
> Nearly 7% of the entire Canadian work force is building new houses.
Source? No really. This is shocking to me. 3% of Canadians work in construction and I suspect the majority of them are not working on housing. Do you mean 7% of the workforce participates in housing development and maintenance tangentially? Like, including lawyers, lobbyists, politicians, the portion of construction workers who aren't building roads and film sets, other craftsmen, people doing renovations, plumbers, hvac, insurance, inspection, etc.
Canada also has a lot of red tape around new builds that draws out the development process significantly, a lot of which necessitates all the other labor going into building too little housing for the population growth.
50% of the workforce could be involved in construction, but if the product being built is slowly-approved with intensive white collar labor permitting single family spec development, not many new units will come out at the other end. A measure like workforce input needs to consider productivity.
I hope not to come across as condescending, but in normal usage a demand issue is one in which there's not enough demand (think: the global financial crisis in 2008/9). When there is too much demand and not enough supply as clearly seems the case here, irrespective of why that's true, that's a supply issue.
What does that mean? Sorry for being dense, but are the two not related?
Furthermore, what solutions are there? People advocate building to allow for natural supply<->demand relationships to curb the absurd home price increases.
Isn't more supply simply one of the biggest factors to lowering the prices? Of course, purchasing homes via speculation is also a huge issue - but that affects supply too, no? So does AirBnB, Renters, etcetc. All things which reduce supply of owner avail homes, driving up the price of homes and furthering the cycle.
My understanding of all this is absurdly minimal, though. I just own a home (in the US), and that's about it. So please correct me if i'm wrong. Thoughts?
Ah, so is this tied to your previous comment? Ie you're saying ~"not a supply issue, it's a demand issue" and you mean that there is an artificial demand causing the supply to be insufficient. That the supply would be otherwise sufficient, if not for the external sources of demand.
I'm not familiar with the immigration issue in Canada, i'll have to peek at that. Appreciate your clarity
Seems that would mean its a supply issue? I mean sure, Airbnb does suck as in a lot of areas they skirt under the normal hotel rules/taxation but wouldn't building more help this problem?
There’s no such thing as a demand issue. Canada should consider importing immigrants who can work in construction in addition to the billions of dirty Chinese money. Problem solved.
If your government creates artificial demand - that's a demand problem.
The demand isn't real. It's synthesized from unsustainable government policies.
Set interest rates to -100% - see what happens to housing demand.
Is that a supply problem? Should Canada build 800 trillion houses to fill the appetite for free government money that will eventually implode? Or is it a demand problem because your government is dumb?
I don’t understand. This theory implies that a significant percentage of Canadian houses are empty due to speculation. Is there any evidence for that theory?
Also just on a very fundamental level - outside of luxury housing, why wouldn’t investors rent out the houses they’re sitting on? Sure it’s nice to own an appreciating asset but isn’t it also nice to rent it for 10% of its value yearly?
Most investors aren't keeping their properties empty. The empty places are generally owned wealthy people as a second/third home, or as means for foreigners to offshore their wealth. And this accounts for a tiny fraction of the housing supply compared to domestic/corporate real estate investors.
The demand is absolutely real. People are actually buying these properties. The prices are subsidized by government policy. Instead of fixing the supply side of the equation, Canada has decided to give away money so cheaply that normal people can afford the obscene prices for real estate. Interestingly, increasing the number of people that can afford a house without changing the supply makes prices go up. Who knew?!
What? The market price of labor always 'demands' that it be lower... literally import millions of 3rd world immigrants into any first-world country and you will see housing shortages, infrastructure shortages, wage decreases/stagnation, and increased corporate profits.
The point is supply does not match demand. Immigration is unlikely to ever be low enough to counter the housing demand at this point - every single corporate/lobbying group in Canada is pushing for more immigration, and every single relevant political party is very clearly signaling that they will always bow to these demands.
And I agree that a lot of our economy and workforce is already dedicated to building housing - increasing this is not a realistic solution.
The only realistic way to improve the supply/demand is to disincentivize the investors from gobbling up the majority of our new housing supply.
We are not building plenty of housing. We started the most houses we have since 1973 in 2021, but we aren't setting any records (Canada's population in 1973 was ~23 million vs ~40 million today). (for reference: https://www.statista.com/statistics/198040/total-number-of-c...) We probably need to double or triple our output for a decade to bring housing per capita back into line with a balanced market.
What we are doing is massively overpaying for land and massively overpaying for government ineptitude on each of those units, which is why housing is such a large part of the GDP when it is embarrassing on an actual production basis.
> when your government is in the business of guaranteeing house prices go up
This is why people blame airbnb and PE. It makes them uncomfortable to blame the government, and by extension their parents, for creating this situation. It's much easier to blame a faceless other.
Canada is building plenty of homes; but homes are not housing, per se. "Housing" is usually used in these policy conversations as an abbreviation for "affordable housing" — and Canada is very much not building that. At least not in the large numbers needed.
The majority of Canadian property developers — at least, the majority of the ones who can afford to buy up lots for redevelopment in this market — seem to have an overt, almost monomaniacal focus on developing only top-of-market properties. Municipalities have to essentially force them at gunpoint to take any consideration for creating any housing stock to sell to the rest of the market.
• When you look at any new condo development in a Canadian city (without government affordable-housing involvement), there end up being no bachelor, 1bd, or even 2bd units in the development; it's all 3bd+. Picture a condo tower where every floor is the penthouse. Many Canadian property developers only build this type of condo building.
• Likewise, when you look at any new SFH development in a Canadian city (without government affordable-housing involvement), there end up being no small-lot developments; instead, contiguous previously reasonably-sized lots are almost always bought up and merged, to create space to plop down a McMansion. Again, many Canadian property developers only build McMansions.
Letting these kinds of developers loose on a city, results in a sort of "second-wave gentrification", where neighbourhoods previously affordable to the middle class, get rebuilt to be only affordable by the upper class (for whom this is mostly not their primary residence, but rather a rental property/airbnb, investment property, vacation home, property to lend to friends/family visiting them, etc.)
Classical "first wave" gentrification pushes the working class out of the city — creating a situation where the service economy of the city becomes driven by those commuting from outside the city, and low-margin service-economy businesses struggle to retain talent. (Which in turn forces the city to look into the creation/expansion of high-speed regional transit — because suddenly all the service-worker commuters are clogging the highways to get to work from the cheap exurbs.)
"Second wave" gentrification, in the places it happens, pushes the professional class outside the city as well. Now, even people like doctors, corporate managers, etc. struggle to afford to live near their place of work.
Unlike the service workers being pushed out — which is mostly a "silent" problem observable only to the service workers themselves, those trying to hire them, and city infrastructure planners — the professional class being pushed out is a problem observable by the public. The professional class often includes small-business owners, who previously operated some retail/office/clinic/etc in the city, out of street-fronted commercial rental space close to where they live. Having had their living space pushed out of the city, rather than commuting, these business owners will often choose to simply move their business, so that they can continue to live close to work. This "empties out" the city of amenities, as anything run by this class relocates to the cheaper exurbs.
Big corporate offices do remain in the city, as big corporate executives — the ones who decide where to put their office — are exactly the kind of upper-class who can still afford to live in the city. So you now get "suits" commuting into the city. And big chain businesses still manage to exist in the city to cater to these workers' needs (though even some of these do start to shutter their unaffordable urban-core locations.) But all the independent restaurants and other nice after-work things that made these bigcorp workers want to take a job in that city, are gone. So these workers start heading straight home after work. And that causes the revenue of even chain businesses within the city begins to crumble. The city becomes "sleepy." Things start closing at 10PM or earlier, because the revenue past that hour isn't worth staffing a graveyard shift. The city stops being known for its "vibrant nightlife."
(See also: Manhattan, one of the earliest victims of property-development-driven second-wave gentrification ~40 years ago. All the amenities shifted to the other boroughs of NYC, and now there's nothing for locals "in" Manhattan any more — save for a few family businesses that have fully owned their properties for decades, and who could be overnight millionaires by selling, but keep holding off.)
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Mind you, I do understand why the housing developers have this focus. As profit-driven companies, property developers aim to increase margins; and if you're in a market where there is high demand from the every "level" of the market, then you're going to gravitate toward building for the top-of-market bidders, as the accepted cost-plus-percentage pricing model of for real estate translates into higher absolute profits when building more expensive properties. As well, there's less bureaucratic overhead (both in terms of labor dealing with bureaucracy, and in terms of government fees) involved in building + selling fewer, larger lots, vs. more, smaller lots. And there's the fact that the most in-demand lots, if you luck into developing one, can be fought over by buyers, resulting in bids skyrocketing, and you the developer pocketing most of that first-sale surplus.
But these factors are exactly why governments in Canada, at all levels, must step in (and lately, increasingly are stepping in) to regulate property development. Developers aren't gonna just stop obeying market forces on their own. Governments either have to tweak the market forces themselves (e.g. by blocking foreign purchase of investment properties for speculation, as has been done in BC), or require the building of at least some lots/units designed to be affordable as part of larger developments.
Of course, a property developer that wasn't driven by a profit motive, would be able to just build entirely affordable housing. No level of Canadian government has gone so far as to propose setting one of these up as a Crown corporation... just yet. But that might be where things end up. Because, as you say, the only other lever the government has — decreasing the value of existing housing — isn't one any government is ever going to pull.
Some decades ago, anticipating India's enormous demographic growth, WTO funded urban development prototypes, like mixed-use low-rise neighborhoods, to serve as empowering models for the coming century of massive societal infrastructure creation. IIRC, they mostly still exist, and mostly worked out well... and were never copied. Developers much preferred to use land for high-end suburbs.
New development always targets the relatively high end. This is the same as middle to low income people buying used cars instead of new. As construction ages its value drops down until it becomes affordable.
> When you look at any new condo development in a Canadian city (without government affordable-housing involvement), there end up being no bachelor, 1bd, or even 2bd units in the development; it's all 3bd+. Picture a condo tower where every floor is the penthouse. Many Canadian property developers only build this type of condo building.
And the landlords. If the financial and risk incentives to do short term housing did not outweigh standard rentals landlords would not Airbnb.
If Airbnb was not allowed, or severely restricted in residential neighborhoods it would reduce options for holding onto a house that could be sold for single family housing.
Landlords take advantage of loose enforcement of Airbnb permitting. I have seen a landlord create a fake living space to get a permit they should not have had first hand. There is a site that uses data to indicate these bad actors working on a much greater scale than this.
It depends. I have used it for short term lease between long term lease in the same area before. No other landlord lets you rent for a month they all want you locked in for a year. Its more expensive for sure but its a lot cheaper than breaking a year lease to rent someplace for a month.
but tourist could use a hotel, no? landlords are using actual houses to service tourists, whereas a new hotel would do just fine as well and not take 100s of units out the rental market. If housing affordability is a function of supply/demand, then lowering demand - e.g. by not allowing tourists to stay in houses that could be rented out - should certainly help just as well as increasing supply.
Depending on what you're doing, a hotel can be a poor fit for your needs. I've spent weeks in hotels at once, and for me it got absolutely miserable quickly. A studio apartment instead was much, much better.
fair enough. but that seems more like a furnished unit business type rental thing than for tourism. i don't think this is the bulk of airbnb usage (maybe it is). plus, hotels are starting to accommodate that more too, extended stay hotels, they have very commodious rooms.
It's my experience that housing exists on a spectrum, rather than being strictly for business or tourism or long-term living. Any space that could rent furnished apartments by the week to business travelers could also be renting unfurnished by the year to residents. I've seen hotels turned into apartments and the reverse.
Housing, like money, is often fungible. It's not something we should expect to strictly classify away into wildly different categories in every case, even if this is pretty convenient from a governance perspective.
I am a 100% in agreement with that statement, and I speak from experience, seeing how I used and have rented out an apartment in the past.
But in actual reality, very specifically, airbnb has destroyed the character of entire neighborhoods, pushed up prices locally (if not regionally), all the while having completely acceptable alternatives for the majority of its use (ie. tourism).
So, yes, there is a spectrum in how housing is deployed, but there is also a very clear negative impact of airbnb, very specifically, in that frictionless, low risk model of renting out housing. I think that needs to be addressed, not from first principles wrt what is the nature of housing etc. etc., but very pragmatically, the gig-economy airbnb, how to channel that correctly.
First, a hotel might well be more efficient (in terms of area used per tourist) than apartments. Second, by converting housing from long-term rentals to short-term rentals, supply curves are shifted, resulting in decreased prices for tourists and increased for local renters, thus a welfare transfer (consumer surplus) from locals to tourists.
This suggests appeal to visitors as one of the root problems alongside housing supply. Building apartments in place of a demolished popular monument or paved-over natural wonder would solve both problems.
The problem is that most new housing in Canada is being bought up by investors, and the government refuses to do anything to disincentivize this, and continues to prop up the bubble any way it can. That might be because the majority of the federal government MPs are real estate investors themselves...
Most investors don't keep their housing vacant, and getting around this specific tax is trivial.
This is mostly for show, similar to the foreign buyers tax - the vast majority of investment properties are bought by local investors, but they're going to completely ignore that and blame everything on the tiny portion of foreign investors.
So no matter who owns the property, they are full. The problem is still too much demand for the supply. Indeed in the UK you're more likely to have a higher population density in rented houses (2 or 3 people rent a single apartment, if they all bought they would need 3 apartments)
Why does it matter who owns the property. If the market worked well there would be no gains from asset inflation, and income from renting would be pushed towards the cost of providing renting, like it does with well functioning markets.
The problem is the lack of supply, not who owns them. Now you could argue that short-term-rents are not "valid" demand, but again with UK stats outside of very specific areas the number of short-term rentals is a tiny portion of the housing market.
Doesn't "rental vacancy" just measure rentals on the market? A unit owned by a foreign investor intentionally left vacant doesn't show up in those numbers.
I suppose but the government also has put effort into tracking empty homes. They've even gone so far so as to measure electricity use to get a feel for empty homes by neighbourhood.
Vancouver now has an empty homes tax and BC also has a speculation tax, which is effectively an empty homes tax. Since the creation of both those taxes the amount of empty homes has steadily dwindled.
It's not likely that there are a remarkable amount of empty investment condos that is having an impact on rental vacancy. The most likely cause of near zero rental vacancy is that there's not enough rental apartments in existence.
That's only the problem if you're almost wealthy enough to be able to buy a home and you see investors as competition that prevents you from doing that.
If you're a working class renter that never really expects to be able to have the wealth to buy a home, the "investor" boogieman that is "buying up housing" is creating more places for you to live.
Investors buying up housing supply are not creating any new housing whatsoever. What they are doing is decreasing the availability of new housing for those who actually want to buy a home to live in, while at the same time cornering the rental market and increasing rents (and therefore speculative RE prices) across the board.
Not most, historically 15% of supply has been bought up by investors. Most recent figures I’ve seen from 2022 it was 19%. That might be still too high but certainly not the majority.
Nah, ~20% of all housing supply is already owned by investors. Over 50% of new builds are now being bought by investors (over 80% in some cities) [0][1].
Where do housing in the rental market come from if they aren't purchased and rented out by investors? No level of the government in Canada is building anything more than a token number of housing, and those that are built aren't added to the general rental pool.
> Where do housing in the rental market come from if they aren't purchased and rented out by investors?
Purpose-built rentals. Also, the need for rentals and rent prices in general would go down if most of the new builds weren't scooped up by investors and people could actually buy homes to live in.
Purpose-built rentals are purchased by big pension funds and other investors.
> Also, the need for rentals and rent prices in general would go down if most of the new builds weren't scooped up by investors and people could actually buy homes to live in.
Are you saying there will be more supply of home built per year if higher % of rental is built? If so, then logically, it will tend to lead to lower rent and lower home price, but I was under the impression that the industry cannot build any faster than it is now and that changing the mix does not help.
Profit margins on new builds have been increasing[0] and the labour market in not too hot from what I understand, so that makes me think we can probably build more. But if we truly can't build more - introduce a tax on multiple properties and invest that into housing (in a smart way).
Airbnb is a convenient scapegoat especially for interests that don't want to change the bigger levers - housing development and immigration (and as mentioned elsewhere, housing prices can't go down for political reasons). So Airbnb gets pushed as a problem. This is basically propaganda.
It's not the only factor, but Airbnb certainly has provided an easy alternative to putting a home up for sale. Supply shortage, i.e., fewer units for sale, is a real contributor to rapidly increasing housing prices.
Does Airbnb take a public stance lobbying for change on these big levers? The company is powerful enough to transparently fund and back political action on these other areas.
Tourism is a plague for local populations. The same exact thing was happening long before Airbnb in more touristic locations. Airbnb has acted as an accelerator of the same phenomenon to bigger cities.
It is not just about "supply and demand". We are talking about different markets. When you profit more from real estate by renting it to tourists vs renting it to long terms residents you are gonna throw residents out and get into the tourist business. In this, supply is largely irrelevant due to the huge difference in margins. Unless the tourist business becomes oversaturated you always profit more from tourists. And outsupplying the tourist demand is extremely hard.
The problem is that tourism often appears to be the only industry because it creates very bad conditions for any other business or industry to exist in places where it takes hold. It tends to increase cost of living, and has so high margins that other businesses are hard to compete for space etc. It makes the living conditions hard to unlivable to workers that are not linked to the tourist business, even essential workers like teachers, nurses etc. Maybe in some places they can put more control over it and minimise this impact.
In a country level, it is even worse as it makes a country totally dependent on tourists as an external flow of money, it usually ends up with most services been owned by big capital (local or foreign) in the expense of local businesses and it halts most forms and potentialities of actual development for other industries. Tourism can be some easy money at best, it is very often harmful for any other forms of activities and business in the long run.
I feel like if tourists weren't so "un-informed" consumers, things would "even out"... you know?
Like tourists bring in "bad" consumer practices, such as buying stuff/food at "tourist traps" thus actually driving up prices, instead of them going to whenever the "locals" are used to go and still contribute to the local economy.
Best example I can think of paying overpriced shitty food at some tourist trap restaurant because you don't know better because you're a tourist, meanwhile locals go to their "known" places that aren't anything remotely similar to a "trap" you know?
Yeah I barely use airbnb - its almost always more expensive than alternatives. I do use it for discovery then go off platform for better spots. It is a premium service provider with a mixed quality outcomes and airbnb rakes in a lot of fees.
That said, the defense of this thread is entertaining. I don't know how anyone can honestly say that airbnb doesn't impact housing supply. Its the equivalent to saying that the earth is flat.
Now, FWIW, I prefer the adapt-or-die mentality, so I'm not anti-tourism, but if a majority of people in a certain place decide "no tourism", then hey more power to the people, they should decide whether they will accept tourism or not, not the tax-dollar-receivers...
Tourism jobs are generally low-wage menial work, and tourists also have the effect of driving local prices up. Particularly the kind of tourism that would benefit from high AirBnB availability.
Last I checked, locals have the right to vote, and tourists do not.
Sad thing (for the people against tourism, which might be the majority in certain places...)is that those don't vote... (1 person 1 vote) but they do lobby/bribes...
Again, I'm just saying listen to what the majority want... you know... good old school democracy...
Do landlords vote? Are they residents? Many normal people are landlords. You will never be a billionaire. Some people will never be guilded professionals or make it to the Ivy League. Many of the normal people who "make it" in life will be landlords.
Everyone's income is someone else's expense.
In San Francisco, where I live, the idea to drive out the "techies" couldn't be more boneheaded. Where are those agitators now? Careful what you wish for.
I don't know how to convince people to lean less into the aesthetics of a political position. If you feel like you are saying something that boils down to, "the right people get all the things, and the wrong people got nothing," it's an easy position to take when charts are going up, when interest rates are low, and when you happen to be part of the group of "right people."
While a lot of people are landlords, most properties on free AirBnB markets are hosted by professional, multi-property landlords, and I don’t personally think that creating a new class of feudal landlords is a great idea.
My local area simply put in the restriction that only one property can be listed on AirBnB by one person, and that the property must be the person’s primary tax residence, and so now the local market has nearly entirely dried up even though that was allegedly the original purpose of AirBnB.
Maybe capitalizable markets aren't the best tool for products that are required for life?
I appreciate that we have a tool like capitalizable markets, but the lack of alternatives is a red flag - every problem is a nail. An underappreciated aspect this is the legal machinery that undergirds the capitalization of housing, and as such is codified. Things that are codified are subject to change.
The markets for short-term housing and long-term housing have historically been different markets.
People are much more willing to pay higher amounts (per unit time) for short-term housing, and this demand is primarily driven by tourism, which is influenced by things like culture, natural beauty, renown, etc. -- those things of course have an impact on long-term housing demand too, but long-term demand is primarily driven by the availability of jobs and potential career income, long-term stability, cost of living, etc.
The factors overlap, but they are not the same.
What AirBnB does is merge the two markets: any long-term housing can become short-term housing; owners of housing can make much more by leasing short-term rather than long-term. With this merger, the cost of long-term housing begins to approach the cost of short-term housing. This is great for short-term-housing seekers (ask anyone who had to book a hotel in NYC before AirBnB!) and not so great for long-term-housing seekers.
In theory, the problem is addressable with "enough housing" -- but now, instead of building enough housing to satisfy the needs of long-term residents, you also need to build enough housing to satisfy the needs of short-term housing seekers, who are much less price-sensitive (since they're only visiting for a short amount of time), and where theoretical demand is much higher (since the market for "tourism in Vancouver", e.g., is essentially global).
That is a lot more housing.
And that is a problem. And that is why people blame AirBnB.
But it isn't strictly speaking AirBnB's fault -- these two markets have been separated largely artificially through transaction costs and legislation. Like with local news, technology is a disruptor, but the solution can't really be "ban technology" because that cat is already out of the bag. But "build more housing" is easier said than done given the amount of new housing that would be required to satisfy demand.
> ask anyone who had to book a hotel in NYC before AirBnB!
I've stayed in multiple hotels and Airbnb units in NYC, and every single time, the Airbnb option was terrible in comparison to my hotel bookings. This is for places of comparable prices as well.
The only benefit of Airbnb, is that the units were slightly larger on average than proper hotels.. but they were usually so run-down, that I didn't want to spend any more time than the bare minimum in them anyway.
I don't think it's surprising that a huge professionally run corporation can offer a better service/product than a small real estate investor.
Yes, this is all true -- and it is also undeniable that AirBnB caused a dramatic reduction in hotel pricing in NYC.
In 2008 it was close to impossible to find a hotel in useful parts of Manhattan for under $500/night (in 2008 dollars!). That pricing seems outrageous now.
Do you think that well capitalized corporations (which, as non-humans, require no housing) are playing on a level playing field with regular people?
I think it's possible to formally model this, but if there are no caps on rent and no attractive alternative investments, it is always the efficient and rational move for a firm with excess capital to buy real estate because they can simply raise the rates until they get the return they want. People will require houses and you can see that in historically high multi-job holding statistics. People will work themselves to death to have a roof over their head.
In my life, larger scale single unit residential REITs are a new phenomenon, and the concentration of wealth that has happened this century has made single unit housing and rental and investable alternative asset class.
This is a really bad situation, it has too many parallels to feudal systems, or more recently, company towns in early 20th century America. This is a tragedy of commons dynamic that requires external intervention.
I'm worried you don't have a good handle on the number of houses and the excess lumber, copper, concrete, and steel for new properties and infra supporting them. That is just ignoring geographical scarcity, and the fact that not all geographies support building up. Just "building more housing" is usually not as easy as it is to sloganeer and blame nimbys.
For me it is a bit weird that
1. House must be fire-safe, asbestos-free, require eco heating system, etc etc. At the same time, nobody can afford to build a house (I think you need to be un top 5% in my country), and rent is really expensive
2. Same with doctors. You often not even get prescription easily, no medical advice, no own/custom medical devices etc etc, qt the same time a lot of people can't afford doctors.
I guess I am with libertarians on these issues. Imo, it is better to warn people and give them choice. Just plainly denying access to housing and medicine to poor people is plain evil.
High-level ideals are all fun, but this ignores the facts on the ground that people are getting evicted right now for no other reason than short-term rentals (that is: AirBnB).
So even if what you say is correct – I don't know enough about the situation in Canada to judge that – then that doesn't really matter because it's pretty clear short-term rentals such as AirBnB add a lot of extra pressure, with all sorts of effects as described in the article.
> The devastating effect is caused by the fact that they aren’t building enough housing. The problem is not the demand for housing, it’s the supply.
codun't agree more. just got a month long apartment in kuala lumpur. its only $800 and its luxury compared to what I can get for that price anywhere else. it didn't make sense till I realized that they have no issues building housing. there's plenty of it. and its one of the reasons this city is so aweome
We moved to a booming resort town last year. We’re seeing a similar attitude among the locals.
There are about 250 units of short term rentals in a city of thousands and thousands of housing units. Neighborhood are going up with more units than the entire short term rental market.
To say short term rentals are driving cost is insane when there is clearly a wholesale shortage.
That being said, I understand the legitimate frustration with what are commercial entities moving into residential areas.
Canada is in the top end of the OECD when it comes to building housing. The problem is that the rate of new house construction has been severely outpaced by population growth. Canada has the highest rate of population growth of any developed nation and it is largely spurred by immigration.
So you claim the markets shouldn't be regulated (what else is the point of moving the focus away from Airbnb, while it obviously is a factor contributing) while blaming the government for not regulating the market?
Yes blame Airbnb (and copycats). There is not enough supply. So it's not good to reduce supply for housing by converting homes to short-term rentals. Also, it destroys community.
How do you build 600,000 houses a year with a population of 40 million? Cancel all other jobs and redirect all labor in Canada to building housing?
I'd be very surprised there are "220-250K housing starts per year" really. A lot of that might be development in the planning stage that is tied up in red tape whether it be in the investment stage, or navigating bureaucracy. I'd be very surprised if there were 100K houses per year actually being built.
edit: Does "housing starts" here refer to bedrooms? E.g. a 3 bedroom house counts as 3 housing starts? If so, the 600K goal (required to keep up with population growth) is much more reasonable, though still far off.
part of the problem is Airbnb though. We have 'investors' owning multiple properties and operating Airbnbs against local laws which does in fact decrease supply.
If you ban AirBNB, you'll immediately get 50,000 (or however many) houses back on the market. You would otherwise need to build 50,000 houses, which would surely require a great deal more effort. Why would you not reach for the lowest-hanging fruit first when attempting to increase the housing supply?
Because stopping someone from renting out their house to make some extra cash is overreach. Stopping firms from buying up tons of houses with the explicit purpose of airbnb on the other hand? More reasonable.
Because you do that, and a decade goes by and you need 50,000 homes again to meet demand, and then what? Its better to put in a mechanism from the start that will allow for this many homes to be built to meet demand. In most high demand markets, they are already built out to the limits of the zoned capacity and cannot add much of any new units of housing until zoning limits are eased. Zoning is the real low hanging fruit here. Back that off and the market will start to right the ship before long building capacity to match demand incurred by job growth.
where did you get this 50,000 housing units number from? This article quotes that New York got 15,000 units from their ban. Are you saying that Montreal has 3x as many short term rentals as New York?
The article quotes has a 15,000 unit delta after closing a loophole, not after banning short-term rentals. The article also claims enforcement on Craigslist, Facebook Marketplace, etc. is still lacking.
canada is building housing like crazy, but also allowing massive immigration numbers, and airbnb is icing on the cake. Its not just one problem. But airbnb is garbage and should be banned.
Wouldn't a more sustainable solution other than banning Airbnb involve coming up with regulations that prevent empire-building?
The problem is not the hosts on Airbnb that are listing spare bedrooms or their vacation homes. It's corporations and ambitious individuals that are depleting the supply.
are you guys really so invested in airbnb being present in Canadian cities? “Just build more housing”, “Just reduce immigration” all for airbnb’s benefit?
AirBNB provides a service to out of towners who want to arrive, use very little social services, spend a bunch of money, and then leave. How is this bad? I don’t understand.
Because a lot of these houses sit there vacant for big percentages of the year. For example (easy numbers) if your mortgage is 1k/month, you can afford to rent it out for 200/night a leave it vacant the other 25 days of the month.
You ever see a hotel on a Tuesday? No one is there. Now stretch that across all the airbnbs in a city.
I don't understand how someone can't see how that isn't bad and is crating artificial scarcity. Homes are not hotels.
"Through removing housing that would otherwise be available on the long-term rental market Airbnb is reducing housing supply and, in turn, housing affordability."
In other words, converting long-term rentals into short-term rentals using AirBnB reduces the effective supply of available housing. This may in turn cause long-term housing prices to increase.
The study suggests the effects of AirBnB are not felt evenly across Canada. For example, some areas are adversely affected while others are not.
"Five years ago, short-term rentals in cities - both in Canada and abroad - were almost universally illegal with the exception of licenced bed and breakfasts. STRs were illegal either through bans on commercial uses in residential areas, through fire codes and regulations on lodgings, or through explicit bans on rentals below a certain threshold of nights. Despite operating in a legal grey area at best, STRs facilitated by platforms such as Airbnb have proliferated."
Montreal is a fully developed Island. Your arguement doesn't make sense.Montreal has become unaffordable for the workers who support the tourism and blue collar industries.
> Montreal has become unaffordable for the workers who support the tourism
That's a self-correcting problem: either tourists pay higher prices to keep attracting workers or the higher prices scare off tourists and fewer workers are needed.
That's a really confused way of looking at the issue. That the only thing we should look at is supply. Demand matters of course too.
Airbnb created massive new demand for housing for people that don't live there. Those people can afford to pay more than locals. That takes away large amounts of supply from locals.
Therefore AirBnb's effect is devastating.
AirBnb should be completely banned everywhere in the world immediately.
> Airbnb created massive new demand for housing for people that don't live there.
That is debatable, does the existence of Airbnb increase the number of tourists visiting a city? If Airbnb's reduced cost of overnight lodging causes more tourists to visit a city, then yes Airbnb increased demand.
There are a few other possibilities:
1. Tourism demand was growing, and hotels failed to keep up.
2. Airbnb shifted traffic away from hotels and to Airbnb hosts.
3. Airbnb induced demand from people who otherwise wouldn't travel using traditional hotel accommodations.
IMHO Airbnb demonstrated that there was an unfulfilled market for certain types of overnight accommodations (ones with a kitchen and laundry service) that existing hotels were failing to fulfill.
The fact is, at the same $ I'll choose an Airbnb over a hotel for anything more than 1 or 2 nights due to laundry services alone. Basically the entire time I've travelled as an adult has been while Airbnb has existed and as such I've had laundry on site, no way do I want to manage the logistics of a 2 week vacation using just hotels in various cities[1]. If I'm hitting up a bunch of different cities I'll maybe have a hotel for a couple nights in-between Airbnbs where I can do laundry.
> AirBnb should be completely banned everywhere in the world immediately.
If hotels offered better services and didn't try to charge me $5 per pair of socks I want washed, Airbnb would lose a lot of business.
[1] Even more so traveling with kids, as an adult I can reasonably bring 3 or 4 sets of clothes and lots of changes of underclothes, but kids need laundry done a lot, it is not unreasonable for a toddler to cover 2 sets of clothes in filth in a single day!
Don’t blame Airbnb when you refuse to build enough housing, the markets going to figure out how to market.