Since April 2014, rising real estate prices have raised concerns for Los Angeles residents seeking to buy a home. In this big city, the amount of people that rent their home is roughly 52% of residents, coming in at 17% higher than the national average in 2012.
Airbnb is a web based company that provides owners the opportunity to rent out that spare room upstairs or even a vacation home on the beach. In Venice Beach it’s estimated that 6-7% of all housing units are listed on Airbnb, 10 times the national average. This phenomena isn’t confined to the Venice Beach area though, it’s radiating throughout all of Los Angeles. Why is this happening? Tourists. Los Angeles sees roughly 40 million tourist a year and they need a reasonably priced home to stay for a weekend or maybe a week. The craze for short term housing has skyrocketed in this area in the past year, nearly tripling. This overwhelming amount of listings could undoubtedly be the cause for the shortage in housing in the Los Angeles area.
In a landlords prospective it’s like this, you can either rent out your apartment, home or condo for 12 months to one tenant or now you have to option of numerous short term tenants without a constant binding agreement and potential to make exponentially more money.
Regardless, it’s affecting the real estate economy, driving rent prices skyward and the chances of home ownership are depleting. The increase in available property to short term tenants provides a great additional income to the economy and funding to jobs that may not be possible without these rentals. So yes, it is convenient and great for tourists but it’s also affecting those not directly involved in the rental process.
This also affects the lifestyle of the community, owners can’t leave because they have ‘tenants’ to tend to around the clock from check-in to check-out. For the home buyer, it greatly affects their experience and desire to constantly fight a growing battle. The reduced amount of available property is increasing the rent in all homes as well as the purchasing price of homes. These rising prices are affecting a potential owners chances of being able to buy because they can’t save as much throughout the year.
Now the main concern is how can communities, residents and others protect their cities and stop the revolution before it takes over? They’ve already begun the fight to protect the rights of fellow residents, crafting new laws that would require a governed taxation on these types of listing. So for now, the chances of you buying a home in Los Angeles may be reduced but soon enough these short term agreements will be more regulated and controlled to ensure it does not affect the city’s residents or their buying power.
Zachary Escabedo is an analyst for New Home Source