Watch: Airbnb’s negative impact on housing supplies explained

At a panel on Hawaiʻi’s affordable housing problem sponsored by AF3IRM Hawaiʻi, Annie Koh, a Ph.D. candidate at the Department of Urban & Regional Planning at the University of Hawaiʻi at Mānoa, explained the impact of short-term rentals on the housing supply in a given area. You can watch her remarks above.

Koh focuses on the larger economic systems at play. In taking this broader perspective and looking beyond the short-term financial benefits of vacation rentals for a limited segment of the population, Koh makes it clear that Airbnb’s common argument of “no material impact” on Hawaiʻi’s housing market is pure fantasy.

It’s estimated that there are approximately 8,000 whole-home listings on Airbnb in the State of Hawaiʻi right now, a relatively small fraction of Hawaiʻi homes. However, Koh says, the sum impact of those 8,000 homes on the market goes beyond their individual parts. The financial incentive that short-term rentals offer exerts a market force that drives costs up and saps economic activity in the aggregate. By converting housing into an investment stream, there is no longer an economic incentive to rent long-term to locals.

The City of San Francisco concluded in a study that Airbnb produces a net negative economic impact on the city; partially due to the cost of replacing a single housing unit ($250,000 per year in San Francisco), and partly because short-term rentals create continual disruption to community through a lack of permanency—and that disruption has an economic cost as well.

While it’s true that Hawaiʻi is unique, it also exists as part of a global system. Examining the ways in which other tourism-dependent cities are experiencing Airbnb and the costs associated with short-term rentals is important. In Paris, Amsterdam and Barcelona (all high-tourism cities), authorities say that the taxes collected from short-term rentals aren’t worth the economic costs.

Hawaiʻi needs to create a better balance within the housing stock in favor of long-term rentals for locals through policies that prevent whole segments of communities from converting to short-term rentals.

And, although the official tally for whole-home, legal short-term rentals in Hawaiʻi is only 8,000, there is plenty of evidence that the true number of whole-home short-term rentals is much higher, with many owners operating illegally. Strengthening our enforcement regulations will help the situation as well.