Along with millions in my generation and those born every generation before, we were told that by hard work and sacrifice, we could earn our place in this world. Buy a house, raise a family, pass a legacy on to our children.
Along comes an app and business model that seeks to exploit the housing market in such a way that it denies the opportunity of others to participate in the economy.
This isn’t just about money. But its financial effect has been crippling for far more than those who make money from it.
To summarize, AirBnB (along with a handful of other websites/apps) allowed a property owner to list suites, condos, houses as short term rentals; ostensibly as competition to hotels. In the beginning, it was just that. One could rent a house for the family if on vacation for a week – instead of a hotel. Or renting a room for a few days as a business professional only in town for a seminar.
Then the housing market went from hot to stupid.
We have a housing shortage for folks ready and able to participate; but are priced out of the market because it makes some people a LOT of money to buy up the properties and flip them into temporary, short term rentals.
There was no limit to how many properties one could own and list as STR’s, so long as you had the resources to buy them in the first place. That itself added to the upward pressure on housing prices.
Even as the industry is genuinely responding to high demand for housing and building more homes, the homes largely didn’t end up for sale for traditional home sales, but as a commodity haul for investors to sweep up and pad their inventory.
This business model has made it impossible except for the one-percent income earners to participate in the market. This had never been the case for all of the history of the post war economy from 1945 onwards.
Again.
Housing became a commodity, not just places for families to live.
Potential homeowners are not opposed to paying fair market value for a house; neither are renters who have reasonable incomes. Its that the going rates for buying or renting outpaced average wages by exponential factors and its just wrong.
The Govt has entered the chat.
Public pressure to ‘build more homes’ and ‘do something for renters, first time home buyers’ is one of those files that was going to be political quicksand no matter how it was approached.
But not this time.
The government has been dumping billions into affordable, low cost, urgent home building – largely to grapple with the unhoused. But it needed a tool to combat the problem at the core.
Short term rentals were the problem.
Suddenly it came into view. You can do largely what you want with your property that you live on. But to own large swaths of homes and condos that are excluded from the rental market – that’s just not ok…and the gov’t can outlaw it.
So that is what they have done.
Starting in May 2024, cities and towns set aside in the provincial regulatory change will have STR restrictions to the home-owners property itself. Cities outside that list may opt into it. Some are indicating that they plan to do just that.
Short term rentals have affected businesses because its forced them to pay higher than usual wages as its impossible to source local talent to run the shops and services in areas saturated with STR’s. Nobody on average wages can afford the high premium rates that STR’s charge for nightly rates, and buying into the market is just unreasonable for someone earning less than $40/h these days…if there’s supply to choose from.
The reforms now pending are not an attack on private property rights. Government, either local or provincial, have always had the right to impose land use regulations; and this version is in response to an industry needing regulations.
Do folks have the right to buy multiple properties? Yes…and that won’t change once the new rules take effect. What is different is that folks doing so would have to put those properties into the long term rental market.
Oh, what’s that? You don’t want to be a landlord? Cool. Then sell your surplus properties so that maybe someone else has a fighting chance to live in a home they can own too.
The NDP are responding to a problem made infinitely worse by short term rentals; and there are likely some who will feel some heat by this. Not everyone involved is a high rolling investment firm; some are small players who gambled with some extra funds in buying another home or five. But my sympathies for those folks are held in check by the outrage I feel at a generation mathematically excluded from anything remotely middle class thanks to a greed-based business model.
Seriously. The business model that sustained short term rentals was the overheated real estate market in BC (and other parts of North America).
There is a high probability that folks affected by these changes will organize and probably file legal challenges; probably looking for compensation. But there’s nothing in the regulatory changes that affect a person’s right to own and profit from their own personal property. There’s no right, however, that guarantees you a profit margin off secondary and subsequent properties under this flawed model. But they’re free to make the argument if they wish.
What I would bet money on is the copycats in other jurisdictions also looking to solve the same housing riddle. This is a good idea and a game changer. I hope it succeeds.
I am tired of this. Homes are for families to live in; not as a commodity for trading. Cracking down on real estate speculation, empty home taxes and now reining in the short term rental market.
Lets build homes for people to live in – like our parents and grandparents did. Its that simple.
my2bits
The view from Pete 