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Is Airbnb Hurting Southern California's Housing Market?

An I-Team Investigation finds vacation rentals also hurting peace and calm of some neighborhoods

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    NEWSLETTERS

    The I-Team investigates how vacation rentals could be driving up your rent and wreaking havoc in neighborhoods. Joel Grover reports for the NBC4 News at 4 p.m. on Wednesday, May 24, 2017. (Published Wednesday, May 24, 2017)

    The popular online vacation rental site Airbnb might be making it harder and more expensive for you to find an apartment or home to rent in Southern California, according to a community advocacy group that's studying the impact of vacation rentals. And, those community advocates say Airbnb rentals are also hurting the quality of life in some areas.

    Consider the neighborhood around Troy Drive in the Hollywood Hills. When a group of eleven young Australians decided to visit Los Angeles, they wanted a big house where they could party. So they rented a house with a scenic view on Troy Drive, through Airbnb.

    And, on their first night in town, they let loose in the backyard with booze and music.

    "You could hear it through 4 o'clock in the morning," said Daisy Marco, who lives next door with her husband Mitch Gould. "It's not a house that a little family goes to; it's the house that Australians will go to to party."

    The elderly owner of the house told the NBC4 I-Team she rented the house to a man named Barry Dadon, who said he was going to live there with his wife and baby.

    But the I-Team found Dadon instead listed the house on Airbnb as a vacation rental, using the host name "Alex."

    Mitch and Daisy have been calling the police and the city of LA for months about the problems with the Airbnb house. They've been awakened repeatedly by Airbnb guests partying next door. They've even seen a couple having sex in the backyard in the middle of the day.

    "It disrupts your sleep, it messes up your sleep cycle, it affects your work," explained Mitch Gould.

    LA Home Rentals Frustrate NeighborsLA Home Rentals Frustrate Neighbors

    The NBC4 I-team reveals what's becoming for many the nightmare next door: short term rentals growing in popularity. It’s a convenient way for homeowners to rent to tourists, who in turn, avoid hotels. But it also means lost tax revenue for the city and frustration for some neighbors who are fed up with the constant turnover. Colleen Williams reports for the NBC4 News at 11 on Monday, Nov. 10, 2014.
    (Published Tuesday, Nov. 11, 2014)

    In fact, the I-Team told Airbnb three months ago about problems with the Troy Drive house, but Mitch and Daisy say nothing has changed.

    "I think Airbnb is being really irresponsible and they don't seem to care about the community they're affecting," said Marco.

    And, short-term rental sites like Airbnb may not only be affecting the quality of life in some neighborhoods, but exacerbating LA's housing crisis, according to the community advocacy group Los Angeles Alliance for a New Economy, or LAANE.

    "In the neighborhoods where there is the highest concentration of Airbnb listings, rents are going up faster than they are in the rest of the city," said Roy Samaan, a LAANE analyst who authored the report "Airbnb, Rising Rent, and the Housing Crisis in Los Angeles." 

    LAANE puts part of the blame on people like Barry Dadon, who they call "commercial hosts." They say these individuals and companies list multiple homes and apartments on short term rental sites in popular neighborhoods that are already experiencing low vacancy rates and rising rents, like Venice, Silver Lake, and Hollywood.

    This graphic shows Airbnb listings in several Los Angeles neighborhoods.
    Photo credit: KNBC-TV

    "Landlords understand that they can make a lot more money listing a unit on the short term rental market then they could renting out to a long term tenant. In some cases, two or three times as much," said Samaan.

    In the case of "Alex," he's not only listing the Troy Drive home on Airbnb, but he's listing at least eight additional apartment units, including two units at the luxury building 8th and Grand in downtown LA. Many of these units are in buildings that forbid renters from subletting their apartments on short-term rental sites like Airbnb, like 8th and Grand.

    When the I-Team asked an 8th and Grand leasing agent whether short-term rentals are allowed in the building, he told us, "No Airbnb allowed. Ever."

    So how did "Alex" get away with turning leased apartments into vacation rentals in buildings that forbid subleasing? We had two I-Team researchers book several Airbnb listings from "Alex" to find out.

    In one case, when we rented a unit at 8th and Grand, "Alex's" assistant told our researcher to say that she lives in the building if asked what she's doing at the property.

    "You can just say you live at (apartment) 4131," the assistant said.

    Later, we booked a unit at the La Belle Apartments in Hollywood from "Alex," another building that forbids Airbnb rentals. This time, his assistant took our researcher into the building through the garage, so residents wouldn't see the Airbnb guest check in.

    "It's just that some residents, they don't really like it," the assistant told our I-Team member.

    We asked Airbnb spokeswoman Connie Llanos if Airbnb is okay with a host listing units on Airbnb in buildings that don't allow short-term rentals.

    "We don't get involved in issues between the tenant and the landlord. This is between the tenant and the landlord," said Llanos.

    In a statement, Airbnb added, "If these buildings do not allow short-term rentals, we believe it is the landlord's responsibility to enforce the rules."

    Aimco, one of the country's largest apartment building owners, said Airbnb needs to get involved and help them enforce the rules.

    The company, which owns the Palazzo near The Grove in LA's Miracle Mile neighborhood, forbids listing its units on short term rental sites. Aimco said they asked Airbnb several times to remove the listings for their units from the website. After their third request was ignored, Aimco filed a lawsuit in California state court.

    In the suit, Aimco alleged that Airbnb, "continues to actively promote illicit leasing of apartments" for vacation rentals. That suit is still pending.

    "Airbnb is aiding in the participation of our residents breaking their lease agreement with us," said Didi Meredith, an Aimco spokesperson. "We get noise complaints all the time, we have people in and out of the apartments at all hours of the night."

    "These big hosts that are moving a lot of people in and out, those are big money makers for the company," said Samaan.

    In a new television commercial, Airbnb says "home sharing is very important to families in Los Angeles." And, they profile a woman in South Los Angeles who explains that "without that income now, I wouldn't be able to stay in my home."

    But LAANE said the story Airbnb tells about helping families share their homes to make ends meet isn't the full story.

    "The majority of their money comes from commercial hosts, from big hosts that have multiple units across many buildings," said Samaan.

    LAANE says their analysis of Airbnb data shows that "commercial hosts" account for more than 40 percent of Airbnb's overall revenue in Los Angeles.

    Airbnb disputes LAANE's findings and said its data and analysis is not accurate. They also point out that the data LAANE is using was not provided by the company.

    The I-Team asked Airbnb for the complete data in February to independently confirm LAANE's findings, but the company has yet to provide all of the information we requested.

    Instead, Airbnb sent us their own report that found the company isn't having an impact on rental pricing or availability when you look at the entire City of Los Angeles. 

    "Airbnb represents a tiny fraction of that housing stock," said Connie Llanos, an Airbnb spokesperson."

    But what about individual neighborhoods? Could Airbnb impact some high density, low vacancy rate areas?

    "Perhaps. But at a very small rate," said Llanos.

    LAANE said you should look at individual neighborhoods and not the city as a whole to understand the impact of short term rental sites on the housing market.

    The group's analysis found that more than 1,300 whole units were available for rent in Venice on Airbnb in March. 966 units were available in Hollywood. And, nearly 500 more were listed in Downtown Los Angeles.

    "Removing additional units from the market, taking additional units out of circulation, is going to tend to increase the prices upwards," said Samaan.

    We wanted to know if Barry Dadon was concerned that the Airbnb business he operates under the name "Alex" was contributing to LA's housing woes and impacting the quality of life in some neighborhoods.

    He declined to speak with us on-the-record during a phone call and avoided our cameras when we approached him. He didn't respond to the letter we sent him through Fed-Ex.

    The I-Team first told Airbnb about the problems neighbors were having with the Hollywood Hills property in February. We told them again in May.

    In a statement emailed to us on Wednesday, Airbnb told us, "When we are made aware of hosting behavior that fails to meet our standards and expectations, we work to make things right and after careful review, we have permanently removed this host from our platform." And they tell us they "have systems in place to prevent bad actors from returning to our platform."

    Airbnb added, "There have been over 160 million guest arrivals in Airbnb listings and the overwhelming majority have been safe and positive experiences."

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