A leaner vacation-rental market
SF short-term rentals transformed as Airbnb, others make peace with city. Stricter rules stop homes from becoming hotels.
By Carolyn Said | Feb. 16, 2018
Under the threat of huge penalties, Airbnb, HomeAway, FlipKey and others have jettisoned hosts who ignored the city’s registration requirement for short-term rentals. That’s dramatically revamped the universe of listings, erasing more than half, tilting the market even more toward Airbnb, easing enforcement of local laws, and returning some rental units to a city that desperately needs them.
The Chronicle asked Host Compliance, a San Francisco company that helps cities monitor vacation rentals, to capture snapshots of Airbnb, HomeAway and FlipKey in late August, just before a legal agreement required Airbnb and HomeAway to start telling hosts to register or get kicked off. Host Compliance then extracted data from the three sites on Jan. 19, just after a deadline for all Airbnb and HomeAway hosts to register. (FlipKey did not have the same deadline but is subject to the same requirements.)
“The regulations had a massive impact on the number of rentals in the city, with an overall 55 percent reduction,” said Ulrik Binzer, Host Compliance CEO and founder.
Airbnb saw the smallest percentage loss. Both HomeAway and FlipKey showcase many second homes, which cannot qualify as vacation rentals here because the owners are not permanent residents. Neither of those two sites list private rooms or shared rooms, which remain staples on Airbnb. Smaller, maybe better
A stricter enforcement system has transformed San Francisco’s market for short-term vacation rentals. Airbnb and HomeAway agreed to delist hosts who haven’t registered with the city over a five-month period starting in September. FlipKey jettisoned unregistered hosts too. These snapshots show the composition of the market before (Aug. 29) and after (Jan. 19) the purge of unregistered hosts.
John Blanchard / The Chronicle
“We see Jan. 16, 2018, as a hard reset,” said Airbnb spokesman Christopher Nulty. “We’re proud of the fact that as of then, every listing on our platform in San Francisco is in full compliance with the rules.”
Airbnb listings fell from 8,740 in August to 4,191 in January, data showed. That number includes a couple of hundred listings at hotels, hostels and time shares, which don’t have to register. Airbnb said in addition it has 2,480 listings exempt from registration because they rent for more than 30 days.
FlipKey, owned by TripAdvisor, said it worked closely with San Francisco to comply with its laws. Its listings plunged from 401 in August to 78 in January.
HomeAway, owned by Expedia, did not respond to requests for comment. It had 1,208 listings in August; 509 in January.
The data further reveal a series of dramatic alterations in how the short-term rental market works in San Francisco.
Frequent renters. Entire homes with frequent streams of tourists are a controversial category. The city caps whole-home rentals at 90 days. Vacation rentals where the host is present have no cap.
While prolific whole-home listings remain, many may be suites in people’s homes, which are legal to rent year-round.
For instance, Gustav Choto and his wife, Nataly, turned the family room in their Crocker-Amazon home into an Airbnb rental. They’ve outfitted it with a microwave, coffee maker and mini fridge, and list it as a whole home, which some travelers prefer. But others prefer to socialize.
“Sometimes we just pop open the door (to the rest of the house) so we can hang out with the guests,” Choto said.
Many of the busiest listings are hotels. The most-booked Airbnb properties are the Bartlett Hotel, the Green Tortoise Hostel and the 325 Hotel.
Some may be properties that have applied to register and can stay on the site while their applications are pending. There are 900 registrations in process.
“Some of what you are seeing as noncompliant listings would be weeded out through our review — and ultimately denial — of such applications,” said Kevin Guy, director of the Office of Short-Term Rentals.
At the other end of the spectrum, dormant listings — ones with little or no activity — virtually vanished. Many locals may have thrown up a listing in early 2016 hoping to lure lucrative Super Bowl visitors without ever having hosted. Neighborhood impact
Most neighborhoods saw a big drop in listings, with the biggest declines in areas with a larger proportion of renters. Some renters may have decided to forgo registration because it requires that the city contact their landlords.
John Blanchard / The Chronicle
Neighborhood impact. The Mission remains the most-popular neighborhood for vacation rentals, but it now has 505 listings across all three sites, down from 1,127 in August.
Some neighborhoods, such as Russian Hill, Nob Hill, Mission Bay and Western Addition, had particularly steep declines in listings. Hosts and others said that’s because those areas have a higher concentration of renters who didn’t want to register, because that process involves the city contacting their landlord — and subletting may violate their leases.
Lakeshore saw a steep decline, which the Office of Short-Term Rentals attributes to college students who rent at the Parkmerced complex scrubbing their Airbnb listings. Treasure Island, run by an agency that does not allow vacation rentals, saw all its listings wiped out.
But not all landlords eschew Airbnb rentals. In 2015, when Ryan Booth first saw a North of Panhandle flat on the top floor of a Queen Anne Victorian, the landlord said he wanted prospective tenants to compete with their best offer. Booth said he could pay $5,000 a month if the landlord gave him permission to rent via Airbnb — and he landed the place.
He turned the living room into his bedroom and the original bedroom into a space for tourists. After expenses, it covers about 60 percent of his rent, although it’s more work than simply having a roommate.
“In my mind it’s worth the extra effort,” he said. “I like interacting with guests.” Average price per day
The law of supply and demand suggests that shrinking the number of listings would send prices up. Instead, by eliminating little-used or overpriced listings, San Francisco’s registration push was followed by price drops. In addition, there’s seasonal variation: “Before” data are from August, during the summer travel season, while “after” data are from the slow winter months, when some hosts cut prices to attract guests.
John Blanchard / The Chronicle
The housing market. HotPads, the Zillow Group’s rentals site, saw an unprecedented surge of new ads for apartments to rent the third week in January — just as the registration deadline kicked in. The increased inventory did not affect pricing.
HotPads said the increased listings were existing buildings heavily concentrated in the Mission, South of Market and South Beach, all popular Airbnb spots.
It appears “that a large number of people who got lopped off Airbnb changed to advertising as long-term rentals,” said Joshua Clark, HotPads economist.
But Airbnb disputed that, noting that HotPads does not release the exact numbers of units, and that HotPads overall is growing as it catches up with Craigslist. In fact, HotPads showed that total San Francisco inventory rose only modestly in the third week in January, which it attributes to rapid absorption.
Even the San Francisco Office of Short-Term Rentals cautioned that it’s a leap to portray the city ban as the sole cause of a dramatic increase in rentals.
Some, but not all of the gain, could be because of former short-term rental listings, Guy said. For instance, his office weeded out some syndicates in South of Market that rented out three to 10 properties and ran high-volume Airbnbs. Those presumably now have been returned to the rental pool.
“I think Airbnb was a convenient scapegoat for not addressing the root causes” of San Francisco’s housing shortage, such as failure to build enough units, said David Jacoby, an Airbnb host who also runs a business called Hostfully that helps hosts create digital guidebooks for their spaces. Number of listings
The least active hosts were most likely to be removed. San Francisco law restricts entire-home rentals while the host is absent to 90 days a year. Most listings appear to comply, but some hosts will have to rent less often. While many units were rented beyond the city’s cap, some might be suites within homes or hotels, both of which are not subject to the limit.
John Blanchard / The Chronicle
Multiple-property hosts. San Francisco wants to catch landlords who turn apartments into hotels. Hosts who list several vacation rentals around the city are an obvious target because no one can live in multiple residences.
The number of hosts with multiple listings shrank. While there are still 600 hosts who control two or more listings, the Office of Short-Term Rentals thinks they fall into permissible categories.
Many are property managers, either professionals or family members, Guy said. Hosts with a couple of listings could easily be people with two or more bedrooms to rent, or a bedroom plus the entire unit when they are away. With the registration system, the city can see for itself if this is the case.
“By and large, folks who take multiple units off the market have been swept out through enforcement and this settlement agreement process,” he said.
John Blanchard / The Chronicle
Longer-term short-term. There’s a loophole for landlords who can’t register because they don’t live here. They can rent for a minimum of 30 days, exempting them from registration. Airbnb said it has 2,480 such listings. HomeAway and FlipKey showcases scores of these rentals.
Although 30-plus day rentals are less popular — and less lucrative — than the shorter-term ones, they can lure corporate travelers or people relocating.
“A lot of people are switching to (30-plus) day rentals,” said Emily Benkert, who runs Guesthop, a vacation-management service. “They’re not greedy slumlords. They’re people who travel a lot, and have multiple homes; they may be bicoastal. They don’t want to rent out full time and be stuck with a tenant for the rest of their life.”
Many hosts say they’ve made peace with the new system and hope it will usher in a new era of detente between Airbnb and its hometown.
“I think it’s a good idea,” homeowner Choto said. “We’ve all seen how some people were not true to the spirit of Airbnb, which is a hosted experience. There were people out there who used to make profit and take properties off the market, which I think is wrong. It’s good to hold people to standards.”
Among hosts, “not everyone is happy with how this all happened,” Jacoby said. “But they’ve come to terms with this as a fair compromise.”
Carolyn Said is a San Francisco Chronicle staff writer. Email: csaid@sfchronicle.com Twitter: @csaid
Methodology
Host Compliance collected data from the websites of Airbnb, HomeAway and FlipKey on Aug. 29, just before Airbnb and HomeAway began a five-month process of informing San Francisco hosts that they need to register with the city to stay on the sites. Host Compliance collected data again on Jan. 19, just after a deadline for unregistered hosts to be jettisoned. It used proprietary analytics tools to determine factors such as rental frequency and to analyze the composition of hosts who left and those who stayed.