Mammoth Real Estate Sales, July 29, 2018

Airbnb is back in the news as they are now backing litigation against New York City. A couple of weeks ago NYC passed an ordinance forcing Airbnb to disclose all of their host information for hosts in The City (there are approximately 40,000). The move was clearly the next step in attempting to ban short term rentals. The hotel industry has apparently been lobbying the city council to shut down all of the competing activity. Other council members are claiming that the Airbnb activity is seriously impacting rents and affordable housing (sounds familiar).

And now Airbnb is financing one of their hosts as plaintiff against NYC. Apparently the host who has lived in the same house for 56 years spoke at a council meeting in support of short term rentals and Airbnb. A week later he was served with summonses and tens of thousands of dollars in fines. The result is a perfect opportunity for Airbnb to take on the City because this is an owner who is is “just trying to make ends meet” by renting out a room or two.

Meanwhile, one of the reoccurring questions I get from potential buyers of condominiums is “Will the Town of Mammoth Lakes ever try to shut down nightly rentals in the local condominiums?” (like in the single-family neighborhoods). The answer is clearly no; the majority of condo properties are zoned for nightly rentals and the existing CCR’s allow for nightly rentals. But most importantly the majority of the Town’s operating budget is derived from bed tax generated in local condominiums. And most of the “hotels” are actually condominium projects, so there isn’t likely to be sufficient hotel industry lobbying.

In fact, one of the misunderstood reasons the Town bed tax receipts have been so strong in the past two to three years is the influence of dynamic pricing in the market. Dynamic pricing is something Airbnb helped bring to the forefront because of their vast data and sophisticated software. Hosts and rental companies have been able to tap into the data and raise or lower prices based on demand. It has been very effective. That creates more overall revenues and obviously more bed tax revenue for the Town. It has also upwardly influenced condominium values in Mammoth Lakes.

And recently some local public officials have pushed the idea that one way to solve the workforce housing crises is to rent properties (at great cost) that are currently in the nightly rental pool and turn them into long term rentals. Basically, compete with the nightly rentals. One of the glaring problems is that most of the owners of these short term rental properties actually want to come and use their property on occasion (like to go skiing with their Ikon Pass). The other glaring problem is the long term rents would have to be massively subsidized by the Town (my estimate is by 2 to 3 times the “affordable market rent”) ANDthe properties would also not be generating the thousands of dollars in bed tax every year. Maybe the Town should just be buying used motor homes for the workers.

Sometimes, math is hard.