Lessons from the San Francisco Airbnb Fight

In 1979, the Pacific Research Institute opened its doors in San Francisco. Jimmy Carter was President; Diane Feinstein was mayor; and Brian Chesky, the founder of home-sharing platform Airbnb, was still two years away from being born.

San Francisco voters this month gave Chesky and Airbnb a win, defeating Proposition F by a vote of 45% to 55%.

Airbnb didn’t put Proposition F on the ballot; the idea was the brainchild of a group called Share Better SF and was largely funded by hotel and service industry unions.

San Francisco Supervisors had already worked out a compromise plan with Airbnb and similar home-sharing services. That compromise limited the number of days units could be rented, and allowed the city to collect taxes owed. But Prop F went further. The Los Angeles Times’ editorial on the measure stated Prop F “would have required hosts to divulge sensitive information, exposed them to a minefield of bureaucratic requirements and allowed neighbors to sue hosts whom the city had found to be in compliance.”

Forbes magazine noted “Airbnb clearly understands Prop F [was] a threat to their business, possibly even to their business model.” No wonder the company spent more than $8 million to explain the initiative’s serious flaws.

The centerpiece of the Prop F campaign was the assertion that home-sharing by Airbnb and other similar companies had wreaked $1 billion in economic harm upon the people of San Francisco.

Their math is as follows: According to City’s Office of Economic Analysis, removing a 2 bedroom unit from the local housing stock imposes costs between $250,000 and $300,000 per year on the city economy.

Proponents simply multiplied this number by the roughly 4,500 Airbnb listings in the city – and voila.

Except the number is absolute nonsense.

First, it assumes every Airbnb listing would otherwise be a long-term rental unit and has been permanently removed from the renal market. That assumption is without any factual basis. In fact, Airbnb has stated that only 10% of hosts rent out a space where they do not live.

And second, it ignores the impacts other policies have had on the supply of rental housing in San Francisco.

Last year, KALW public radio reported on the high number of apartments taken off the housing market completely – up to 10,000 – because of rent control and other policies that pose significant financial risks to small time property owners.

Senator Diane Feinstein supported Prop F, saying Airbnb encourages “property owners and renters to vacate their units and rent them out to hotel users, further increasing the cost of living.” But the former mayor has it wrong.

San Francisco struggled with housing prices long before Airbnb launched in 2008. During the 1990s, the city’s population grew by over 50,000 people while only 16,000 new housing units were added to the housing stock.

Dale Carlson leader of the Share Better SF campaign, pledged to launch more expensive campaigns across the nation, saying “Airbnb isn’t going to be looking at spending $10 million if it has to fend off these ballot measures in eight, nine, 10 cities at a time.”

Rather than export bad ideas to other municipalities, perhaps these activists could reevaluate housing policies that restrict the supply of new housing to keep up with rising demand.

Nothing contained in this blog is to be construed as necessarily reflecting the views of the Pacific Research Institute or as an attempt to thwart or aid the passage of any legislation.

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