Seattle’s data-blind rush to regulate Airbnb is a recipe for unintended consequences.

Dan Bertolet of the Sightline Institute sees no reason to panic. While Airbnb's critics aren't necessarily wrong, we don't know enough yet to make a judgement. For one thing, restricting Airbnb would place additional regulatory pressure on an already constrained market. Bertolet writes, "web-based STRs, LTRs, and hotels are each interrelated components of the same citywide housing market, each utilizing the same basic resource: bedrooms."

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As usual, it all comes back to supply and demand. And the demands of Airbnb users more closely align with those of hotel guests than long-term renters. "Hotel and apartment developments compete for the same scarce urban land, so more new hotels means fewer new apartments, and fewer apartments means higher rents. If so, then STR restrictions may be a zero-sum game for affordability." 

His overall message is one of caution, but Bertolet also notes that the hospitality industry wouldn't be so vigorously opposed to Airbnb if it didn't cut into their business.1

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The meteoric rise in popularity of online STR services speaks for their tremendous value to both hosts and guests. Meanwhile, data confirming any negative impact on housing affordability are lacking.

The meteoric rise in popularity of online STR services speaks for their tremendous value to both hosts and guests. Meanwhile, data confirming any negative impact on housing affordability are lacking.

But more importantly, what policymakers may be missing is that web-based STRs, LTRs, and hotels are each interrelated components of the same citywide housing market, each utilizing the same basic resource: bedrooms. Restricting a specific type of STR will have the unintended but unavoidable consequence of shifting demand to bedrooms elsewhere in the city. It’s like sticking your finger into a balloon: it just bulges out everywhere else. And that’s why regulating away Airbnb units is unlikely to yield any net gain in housing affordability for Seattle.

Anecdotes abound of people taking LTRs off the market and using them for Airbnb instead—or even worse, of premeditated evictions to clear out long-term tenants and make way for more lucrative STR guests. Any reduction in long-term rental supply increases rents, while economic evictions traumatize families and fray the community fabric. In rapidly growing cities, enacting policies that prevent these serious harms would serve public interest, no question.

Whether or not Seattle’s proposed restrictions would achieve the desired outcome, however, is an open question. There is a paucity of non-anecdotal data on the potential relationships between Airbnb and affordability. Without solid data to untangle the complex web of the housing market, we can only speculate about what the proposed regulations would do for net housing supply.

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