Short answer: A shift in the mix of listings toward hosted home-sharing, plus a halt to rapid overall growth thanks to increased enforcement, but maybe only a modest reduction in the number of illegal rentals

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Two years ago, Santa Monica legalized some short-term rentals of houses, condominiums, and apartments. “Short-term” means 30 days or less. The City split them into two categories:

  • “Home-sharing” is now allowed: hosted rentals, with at least one of the unit’s residents continuing to live there during the rental, sharing the space with the paying guests
  • “Vacation rentals” are still illegal: unhosted rentals, either because the residents stay elsewhere during the rental or because the unit doesn’t have permanent residents

Santa Monica paired this partial legalization with increased enforcement. They started issuing licenses, dedicated an analyst and two code enforcement officers, and went to court when necessary. Some of their enforcement efforts have been highly visible through the media.

Since West Hollywood is headed down a similar path (see the current situation and upcoming change), we wondered what Santa Monica’s experience can tell us about what to expect. Please keep in mind that West Hollywood’s approach to enforcement will be somewhat different, relying on data and services from a specialized contractor, Host Compliance.


Reported results

Santa Monica proposed their ordinance in April 2015, adopted it the next month, publicized it, and began actively enforcing it in November 2015. There were 120 City-licensed home-shares by March 1, 2016. The City described their enforcement results this way:

“In spite of significant obstacles, in the first few months of enforcement of the law[,] staff has been successful in collecting over $40,000 in fines, $400,000 in transient occupancy tax, and reducing the number of illegal vacation rental advertisements by more than 600 listings. Enforcement actions have resulted in the closure of approximately 100 cases as a result of staff obtaining code compliance.”

As of July 2016, the City had issued 893 citations, according to a KPCC report. About 70% went to Airbnb and other online listing platforms. That same month, the City won a high-profile misdemeanor conviction of a multi-property Airbnb host. In March of this year, a judge backed up the City in a fight with a short-term rental company accused of 36 violations.

Sources: City of Santa Monica, City Council Report, “Vacation Rentals and Home-Sharing,” April 28, 2015; City of Santa Monica, Information Item, “Short-Term Rental Program Update,” March 10, 2016.

The City estimated there were 1,700 short-term rental listings before the Council adopted the ordinance. In a March 2016 report, they estimated the number had been cut to 1,071. That’s about a 40% drop in less than a year. A February 2016 press report quotes an even lower City estimate of 962.


What does external data say?

We’d like to independently confirm the drop in listings. The City estimated there were 1,700 on the major platforms in early 2015, falling to 1,071 by early 2016. Unfortunately, we don’t have external data for that time period for all of the major platforms.

We do know that there were 1,047 listings across platforms in March 2017. That’s according to Host Compliance, which “scrapes” the data from their websites.

Note: According to the City reports, the 2015 estimate covers Airbnb, HomeAway, and VRBO and the 2016 estimate applies to Airbnb, VRBO/HomeAway, and Flipkey/TripAdvisor. Host Compliance counts those and others. Sources: City of Santa Monica; Host Compliance, “City of West Hollywood: Enforcement and Regulation Case Studies,” March 2017, included in a West Hollywood City Council agenda item, July 17, 2017.

We have more data specific to Airbnb, thanks to a third-party website, Inside Airbnb. They’ve scraped Santa Monica listings from the Airbnb website on 11 days in the past two years and shared the data. The rest of this report is based on our analysis of their data.


Total Airbnb listings

The Inside Airbnb data differs from Santa Monica’s estimates for Airbnb. According to press reports, the City estimated there were 1,000 Airbnb listings before the ordinance was adopted in May 2015 and 500 listings by July 2016. The Inside Airbnb data included roughly 850 listings in May 2015 and about the same in July 2016.

The Inside Airbnb counts are shown in the chart below, along with limited information from two other sources. We don’t see convincing evidence of a permanent reduction in Airbnb listings.

Notes: (1) Inside Airbnb scraped the listings on one day in each of the months shown. (2) Excludes a small number of listings from Inside Airbnb that weren’t short-term rentals because the minimum stay was more than 30 days. (3) We don’t know why there’s a dip in the Inside Airbnb data in March 2017, but it’s not unique to Santa Monica, so we suspect it’s a data issue, not a dip in supply. (4) The AirDNA line is approximate because we took it from an AirDNA number-of-listings graph without the underlying numbers. (5) The AirDNA website says there are currently 1,240 “active rentals” in Santa Monica, but we don’t know if that’s directly comparable to the values in their graph. Sources: Inside Airbnb; City of Santa Monica; KPCC; Los Angeles Alliance for a New Economy; AirDNA; our analysis.

We suspected the number of listings might be propped up by listings that pre-dated the ordinance, a kind of informal “grandfathering.” We were wrong. Only 25% or so of the May 2017 listings pre-dated the ordinance. The other 75% were added after the ordinance was adopted. That’s middle-of-the-road for communities in this area.

Sources: Inside Airbnb; our analysis.

We also wondered if commercial hosts might be bolstering the number. They rent out investment properties they own or lease. They’re more likely to have multiple listings. Almost 40% of Santa Monica’s May 2017 listings were from hosts with other listings in Santa Monica or greater Los Angeles. That was up from 35% two years ago, but on the low end among nearby communities. Hollywood and Venice were both close to 55%.


Growth in total Airbnb listings

Even if the number of listings hasn’t dropped substantially, Santa Monica has avoided the rapid growth in Airbnb seen in nearby communities. The number of listings grew just 7% in two years, compared to about 40% in West Hollywood, almost 50% in Venice, roughly 65% in Beverly Hills, almost 90% in Culver City, and over 100% in Hollywood. If Santa Monica had grown like Venice, there’d be another 350 listings.

Sources: Same as above.


Whole-home Airbnb listings

Whole-home listings may be the most telling for enforcement, given that Santa Monica requires at least one resident to share the home with the guests. Of course, not every whole-home listing is problematic. For example, a guesthouse may be marketed as whole-home even though, legally, the host in the main house is sharing their home. Nevertheless, full compliance would mean relatively few whole-home listings.

What does the Inside Airbnb data show? Santa Monica still had about 500 whole-home listings on Airbnb as of May 2017. That was a 15% decline from May 2015. There were bigger drops along the way, but the number partially rebounded.

Note: The AirDNA website says there are currently 815 “active rentals” for the entire home. Sources: Same as above.

Even a 15% decline is notable compared to the increases seen in nearby areas. Over two years, the number of whole-home listings grew about 40% in West Hollywood, roughly 45% in Venice, and about 60% in Beverly Hills. It doubled in Culver City and Hollywood.

Sources: Same as above.


Partial-home Airbnb listings

We assume that partial-home listings are much more likely to involve hosted home-sharing. The number of partial-home listings has grown 50% in Santa Monica over two years. It looks like most of the growth happened in the first year after the ordinance was adopted.

Note: The AirDNA website says there are currently 425 “active rentals” for a room or shared room. Sources: Same as above.

Santa Monica’s 50% growth in partial-home listings was still lower than most communities in the area, except West Hollywood at about 35%. Venice’s growth was a few points higher than Santa Monica’s. Beverly Hills and Culver City were between 70% and 80%. Hollywood was over 90%.

Sources: Same as above.


Whole- versus partial-home mix

Partial-home listings were about a third of the Santa Monica total in May 2015. Now they’re closer to half, thanks to the growth in partial-home listings and the decline in whole-home listings. The shift is important because partial-home listings are much more likely to be the kind of hosted home-sharing envisioned by the City.

Sources: Same as above.


Airbnb listings with license numbers

Santa Monica issues business licenses for hosted home-sharing. There are 166 today. Hosts are required to include the license number in any advertisement.

In May 2017, an estimated 16% of Santa Monica Airbnb listings included a home-sharing license number. That’s based on a manual examination of the Inside Airbnb data. We found 119 unique numbers and 8 hidden ones in 148 listings. There were more listings than unique numbers due to separate listings for rooms in the same house or a main house and guesthouse.

Note: We didn’t count two numbers that looked different from the other home-sharing license numbers, but we assumed that the eight hidden license numbers were valid. Sources: Same as above.


http://wehobythenumbers.com/wp-content/uploads/2017/08/201709-short-term-rentals-santa-monica-airbnb-v2.jpghttp://wehobythenumbers.com/wp-content/uploads/2017/08/201709-short-term-rentals-santa-monica-airbnb-v2-300x300.jpgDavid WarrenBusinessHousingPerformance (effectiveness)airbnb,beverly grove,beverly hills,burbank,culver city,fairfax,hollywood,santa monica,venice
Short answer: A shift in the mix of listings toward hosted home-sharing, plus a halt to rapid overall growth thanks to increased enforcement, but maybe only a modest reduction in the number of illegal rentals | Two years ago, Santa Monica legalized some short-term rentals of houses, condominiums, and apartments....