Torontonians have been scratching their heads trying to figure out when and how our housing crisis got this bad, and experts say they might have a culprit to add to the growing list.
A new study is shedding light on how short-term rentals like Airbnb are apparently making housing less affordable.
According to The Conversation, a news agency spearheaded by scientists, scholars, experts and journalists, the average asking price for a rental unit in Canada reached $2,042 in June.
That’s a 7.5 per cent increase from 2022.
The study was written by PhD Candidate from DeGroote School of Business at McMaster University Iman Sadeghi and Lang Chair and Professor of Marketing at the University of Guelph Sourav Ray.
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They studied Toronto’s rental market by using data from Toronto Regional Real Estate Board and Airbnb listings from 2015 to 2020, and found that there were a few ways Airbnb was allegedly hurting the housing market during this period.
This includes reducing the number of available rentals and contributing to the gentrification of neighbourhoods.
The study claims that short-term rentals create space for outsiders who have “little regard for local community norms.”
That’s not all. Data also shows that when homeowners transform their space into Airbnb rentals, it can apparently reduce the long-term rental supply in some of these neighbourhoods.
As a result, it increases rental prices and stretches the budget of lower-income families.
“We found that Airbnb rentals can squeeze out long-term rentals in neighbourhoods. As the number of Airbnb rentals in a neighbourhood increased, the availability of long-term rentals decreased and vice versa,” the study reads.
“We found evidence that Airbnb may be leading to higher potential rent income for property owners. This difference in income between the potential short-term rentals and traditional long-term rentals, known as the rent gap, draws investors to properties that can be used for short-term rentals.”
And in a city like Toronto, this can quickly lead to crazy bidding wars, which ultimately causes even higher rent prices.
