Will Airbnb’s success destabilize Vancouver home prices?
Coronavirus has led to cancelled conferences, suspended cruise lines, postponed sports leagues, and government-imposed travel bans. An inability to travel will result in higher short-term rental vacancies and lower nightly rates. Many Airbnbs may not be able to sustain a year without a high season.
Travel Disruption
Cruise Ships
Vancouver hosted 1 million cruise ship passengers in 2019. Many passengers add a stay in Vancouver at the beginning or end of their voyage. On March 12th, Princess Cruises announced they would suspend all trips for two months, and their suspension could be extended depending on how events unfold. Many other cruise lines may suspend operations as a result of mass cancellations. For example, think of all the Europeans and Chinese travellers who might have booked a cruise departing from the United States – they will be forced to cancel because of government-imposed travel bans.
Airlines
On February 25th, Air Canada cancelled flights to China until April as government braces for domestic coronavirus outbreak.
Cancelled and Postponed Conventions and Events
Many people travel from out of town for events and conventions. These postponed events result in cancelled hotel and Airbnb bookings.
TED2020: Uncharted. “Uncharted” explores humanity’s uncertain future
BSides Vancouver Cybersecurity Conference
CORT 2020 (Conference On Religious Trauma)
Sakura Days Japan Fair an annual highlight of the Vancouver Cherry Blossom Festival
Nowruz Bazaar: Iranian-Canadians are gearing up to celebrate Nowruz or New Year without their annual bazaar in the Tri-cities
Vancouver Real Estate Forum postponed to September 30th
Asia-Pacific Association for International Education Conference
Sports Leagues
Often spectators from the Fraser Valley, Okanagan and Interior come into town to see a professional game. Other times Vancouverites chose to turn a hockey game into a big night and stay at a hotel downtown rather than cab home. The arenas, stadiums, and sports bars will all be quiet this Spring.
Airbnb Concerns
Vancouver hosts nearly 4,950 Airbnbs and 70% of them rent out the entire home. Can they sustain three to six months without any bookings? Airbnb owners will face a choice between selling a property or turning their short-term rental into a long-term lease. Either decision will add housing supply to a weak real estate market and that may increase market volatility.
For perspective, Vancouver built roughly 18,000 net new homes in 2019.
If hot markets lead to Airbnbs that reduce housing supply and slow markets convert Airbnbs into housing supply, then Airbnbs are amplifying market trends and increasing volatility. In this respect, Airbnbs are different from hotels because hotels do not have the option of shifting the use of their rooms to other purposes.
Time will tell whether Airbnbs are helpful to residential real estate markets or do more harm than good.
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