Toronto and Vancouver Real Estate Inventory May Get A Boost From AirBNB Slowdown

Canadian real estate markets may be getting another inventory headwind soon. National Bank of Canada (NBC) research estimates AirBNB hosts may contribute to oversupply later this year. As the slowdown impacts hosts, many may be incentivized to sell. By their estimates, just a quarter of hosts selling would cause inventory in cities like Toronto and Vancouver to swell.

AirBNB and Housing Inventory

AirBNB helps homeowners take existing housing stock and convert it to short-term rentals. Rather than staying in hotels, travelers can now stay in existing non-hotel stock. At first, it wasn’t a big issue when just a few people were doing it. As the platform expanded, people began buying additional housing just to operate short-term rentals. By repurposing housing that would otherwise be long-term units, cities now need additional housing. Basically, short-term rentals lead to an inventory squeeze, pushing rents and prices higher. Temporarily at least, for as long as the squeeze persists. That squeeze could end as quickly as travel did.

The Travel Industry Expects A Big Slowdown

The travel industry doesn’t expect travel to recover quickly from the pandemic. The US has approved some routes cutting plane traffic up to 90% until September. The IATA, the trade association for international airlines, also doesn’t see traffic returning to 2019 levels until at least 2023 – at the earliest. What does this mean? Fewer users of short-term rentals, and more competition from hotels for those travelers. All of this can have a big impact on real estate inventory, according to NBC numbers.

Canada’s Biggest Real Estate Markets May See Inventory Spike

If just a quarter of AirBNB inventory is sold off, NBC sees a lot more real estate listings on the market. In Vancouver, the bank estimates real estate listings would rise 12%. Montreal would see an increase of 27% in resale listings. Toronto is another story though, with inventory forecasted to rise a whopping 34%. That’s with just 25% of AirBNB exiting as hosts.

AirBNB Boost To Canadian Real Estate Inventory

The potential increase in real estate listings if 25% of AirBNB properties were listed for sale.

Source: National Bank of Canada, Better Dwelling.

The boost is another headwind for inventory rising later in the year. Inventory was already expected to rise in the coming few months. NBC economists believe this would be “exacerbating oversupply in the coming months.”

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  • Mica 2 years ago

    I have no problem with AirBNB, but they should be taxed like hotel rooms.

  • straw walker 2 years ago

    Our area in the Fraser Valley has been flooded with renters over the past 2 years, as Vancouver rental properties turned into Airbnb ..
    Long term renters have been pushed out of the Vancouver core to be replaced by Airbnb . This has been creating high density living in our quiet neighborhoods. No room to park, with congested streets, and schools.
    Airbnb has created a mess so the inner core could create these mini real estate empires, from Heloc loans financing 2 or 3 houses that are essentially hotels, with NO City of Vancouver controls.

  • zalzon 2 years ago

    I don’t mind people buying houses for flipping them or renting them.. etc.

    But if the gamble proves to be a disaster as it will soon, these same speculators/banks/institutions should eat the loss. In no way should the loss become the liability of taxpayers, wage earners, savers or pensioners under the banner of “saving the economy” or some other BS.

    • Jupiter 2 years ago

      Someone should file a law suite against the government / CMHC /real estate industry for creating and propping up this housing bubble.

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