One of the changes to housing that is coming to San Diego this fall is the new short term rental (STR) regulations. According to the ordinance, whole house Airbnbs will be limited to 1% of housing units in San Diego.
Note, this ordinance is only for San Diego city, not the county. Also, it’s a short term rental ordinance, so it includes VRBO etc, but I’m just going to call them Airbnbs for simplicity.
Edit as of 20220922: Dates are old on this article, the STRO committee has more recently published a timeline.
Currently, about 2% of housing units are Airbnb’d, so there should be a 1% drop once the ordinance is enforced. Good news, but seems rather insignificant, right? Just one percent. What difference could that make?
Here we go… I ran the numbers on what sort of impact the upcoming Airbnb ordinance in san diego might have.
One percent of what?
One thing I’ve been learning about housing is that small changes can actually have huge effects. So when someone throws out a stat about the housing market, it’s important to know whether they are talking about a percent of ALL HOUSES, or a percent of the HOUSES ON THE MARKET (which is a much smaller amount of houses, something like 2% normally).
The Airbnb delists coming this fall could add 2x to available housing or rental inventory, essentially tripling options for renters and buyers.
In the case of Airbnbs, they represent 2% of the all housing units. The upcoming regulations are expected to reduce the number of listings from 12,300 to 6,500. This means 5,800 units can no longer be Airbnbs. Let’s call them the Airbnb delists.
Altogether, about 6,500 licenses will be available in the city, which would represent a reduction of 48 percent compared to the current estimate of 12,300 vacation rentals, according to the Coastal Commission.
– San Diego Union Tribune
This ordinance applies to whole house Airbnbs, which means it’s very likely these homes are unoccupied normally, or are perhaps vacation homes. So what happens when they get delisted? Some small percentage of owners might be able to hold on to the home without any income coming in (as a vacation home). But the majority are very likely to end up needing to find long term renters, or buyers.
Let’s compare these delists to the housing market and rental market.
Housing market
5,800 is just 1% of all housing, but is 385% of the housing market. Here’s why, inventory for sale on the market is currently 1504 units, according to Redfin. So 5800/1504 is 385%. The Airbnb delists coming this fall will be 385% of current inventory. Wow.
Note again, this is San Diego city, not county. Let’s imagine they all end up selling – that inventory will go from 1500 to 7304. That is off the chart above in terms of inventory!
Rental market
But not all will sell, right? Many will rent. Surely they won’t make a dent in the rental market? Let’s compare.
5800 is just 1% of all housing but 429% of the current rental vacancies. Looks like there are 1351 open rental listings in San Diego, according to Zillow rentals (which might be understating the number of rental vacancies, if anyone knows a better source, let me know!).
So Airbnb delists coming this fall will be 429% of current rental vacancies. Double wow.
Of course, each home will either add to the rental or housing stock so it’s not like both rental and buyer housing will increase, rather the increase will be split between the two. Either way, they represent a massive increase of current stock.
Here’s what it looks like if we just look at all available housing today (rental + purchase) and add on the expected STR delisted properties. Basically 3x the available vacancies. Again, some owners will just keep an empty vacation home, so we should keep that in mind as well. There’s no way to tell how many can afford to do that.
That is… significant. As I mentioned before, I expected that the airbnbs would help improve rental vacancy rate in the fall of this year. But I didn’t understand how the numbers compared to the current available stock of housing. Which is what led me to look up the numbers.
Some caveats
As mentioned before, some of the Airbnbs might just go back to being used as vacation homes. I’ve no way to estimate how many of those there would be.
Similarly some might be listed as whole home airbnbs but actually are occupied the rest of the time and the family just rents out the place once in a while. These would fall under Tier 1 – which is places that are airbnb’ed less than 20 days of the year and do not require this permit. Again, no way for me to estimate their numbers.
Finally, it remains to be seen how well-designed and enforced this ordinance is. An unenforced ordinance will be as good as useless. So it’s a good idea for San Diego residents (especially renters and buyers) to contact their city council member and ask for proper enforcement of this ordinance.
Final words
All that said, even 50% of those 5800 units represent a healthy addition to San Diego city’s rental or housing inventory. Even San Diego county currently only has around 4k housing inventory.
So in short, this could be very good news. The Airbnb delists coming soon could add 2x to available housing or rental inventory, essentially tripling options for renters or buyers.
Edit: I’ve actually heard this might not start being enforced this fall, more likely early next year. No idea what the firm timeline is, if there is one. Will keep an eye out.
Disclaimer: I’m an idiot first time home buyer. I’ve never taken an econ class in my life. I’m just sharing what I see and learn as it happens. I am 100% certain I will get things wrong, so don’t take any of this as the golden truth.