Tiny House, Big Payday: The $7M Flip That Stole the Show

Good Morning,

Here’s whats been going on in AirbnbLand:

• A Texas short-term rental entrepreneur turned tiny houses into a massive $7 million exit. Big flips come in small packages.

• Utah lawmakers are coming for short-term rentals, blaming them for a housing shortage the size of Salt Lake City.

• Airbnb’s latest financials sent its stock soaring 9% - Wall Street approves.

• And NYC? It might be rethinking those harsh short-term rental rules that sent thousands of listings packing.

Let’s dive in.

Headline Roundup

• I built a 'tiny house' Airbnb hotel and sold it for $7 million. (Business Insider)

• Does Airbnb Ruin or Enhance a Neighborhood? (Chicago Booth School of Business)

• Airbnb CEO: Co-Host Initiative Is an ‘Alternative’ to Property Management Companies (Skift)

• How much are short-term rentals like Airbnbs actually cramping Utah’s housing stock? (Utah News Dispatch)

• New report finds NYC’s short-term rental law takes toll on outer boroughs (Airbnb News)

• Short-Term Rental Headwinds: U.S. Supply Growth Is Slowing (Skift)

• Airbnb Challenges Barcelona's Short-Term Rental Ban Proposal (Reuters)

• Short-term rental party shooting leaves teen critically injured (KSDK)

The Host Report Highlight

A recent report by HR&A Advisors highlights the significant economic impact of New York City's Local Law 18 (LL18)

In September 2023, LL18 introduced strict regulations on short-term rentals, leading to a 92% reduction in Airbnb listings citywide. This decline has resulted in an estimated $1.6 billion decrease in projected visitor spending in the outer boroughs, the potential loss of over 15,000 jobs, and a reduction of $573 million in worker earnings.

Here’s the thing: LL18 has not led to significant changes in vacancy rates or rent reductions, which was its intent. Vacancy rates have remained unchanged at 1.9%, and rents continue to rise despite the sharp decline in short-term rental listings.

So who has benefitted from this? The hotel industry.

Hotel Average Daily Rates have risen by 6% from May 2023 to May 2024, reaching a record high of $524. This increase has limited accommodation options for visitors, particularly in areas outside Manhattan. This also concentrates tourism spending in central locations and adversely affects small businesses in the outer boroughs.

The report suggests that LL18 has not achieved its goals of improving housing affordability and availability. Instead, it has led to economic challenges for residents and businesses in Brooklyn, Queens, the Bronx, and Staten Island, while benefiting the hotel industry

Maybe every city considering Airbnb restrictions should study this? 

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