Wednesday, November 04, 2015

San Francisco Voters Reject Airbnb Regulation

On Tuesday, November 3rd, voters in San Francisco rejected the city’s Proposition F, also known as the “Airbnb Initiative,” which would have limited short-term housing rentals to 75 nights a year. Airbnb spent roughly $8 million on organizers and advertisements to defeat the initiative.
Christopher Nulty, a spokesman for Airbnb, said: “This victory was made possible by the 138,000 members of the Airbnb community who had conversations with over 105,000 voters and knocked on 285,000 doors. The effort showed that home sharing is both a community and a movement.”
The price of housing in San Francisco continues to rise rapidly. Proposition F was initiated because policymakers are blaming Airbnb for housing shortages and high rents. However, Airbnb is not the cause of either of these things.
Jared Meyer, Fellow at the Manhattan Institute, wrote a Forbes article where he explains why politicians in San Francisco, not Airbnb, created housing shortages:
San Francisco, where rents for a one bedroom apartment frequently exceed $4,000 per month, has the most serious housing shortage in America. Over the past 20 years, San Francisco only permitted the construction of an annual average of 1,500 housing units. Over that time, San Francisco’s population grew by 97,000. From 2010 to 2013 it grew by 32,000.
According to a Trulia study that examined housing production from 1990 to 2013, San Francisco had the highest median prices per square foot and the lowest rate of new construction permits among America’s ten largest tech hubs.
Nearly 80% of San Francisco’s housing is occupied by rent-controlled tenants or homeowners. This leaves only one in five housing units available for other renters, artificially driving up rents.
Additionally, the booming, high-salary tech industry represents about 8% of the workforce in San Francisco, putting further upward pressure on the price of housing in an already overburdened market. This is why some blame tech workers for the city’s housing shortage. Their solution is for tech companies, such as Google, to create more housing for employees on company property. Although this seems to be a logical proposal, the city of San Francisco explicitly forbids it.
San Francisco, unlike many other major U.S. cities, has building permits that are discretionary rather than as-of-right. This standard makes it more difficult to gain approval for development. For new housing developments in San Francisco, there is a preliminary review, which takes six months. Then there is a chance that neighbors will appeal the permit on either entitlement or environmental bases. These barriers add unpredictable costs and years of delays for developers, the costs of which are ultimately passed on to buyers and renters.
If there is an actual shortage of long-term housing, then it is necessary to allow housing permits to meet this demand, but local California governments stand in the way.
By creating costly regulations and limiting short-term rentals, the "Airbnb Initiative" would have put even more upward pressure on housing prices in San Francisco. Thankfully, voters rejected this unnecessary regulation and now consumers and home owners can continue to benefit from the innovative services offered by Airbnb and other home sharing platforms.