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For example, San Francisco imposes a 14% hotel tax (i.e., a Transient Occupancy Tax) and a cap of maximum 90 rental days per year. Other cities have banned “owner absent” rentals, which defeats the whole idea of home sharing for those who want a flexible living option.
While all these facts represent strong support for home sharing, public policy needs to catch up. Licensing and regulatory schemes need to adjust to the new reality — that home sharing is on the rise, largely because Millennial and Gen Z renters are focused on a flexible lifestyle, fueled by a pandemic- induced shift to “work from anywhere.” Licensing and regulation, therefore, need to be flexible — a quality not always associated with property laws.
In 2019, Warton School of Business at University of Pennsylvania expressed the view that, “The sector will continue to grow, much more quickly than the traditional rental economy.”
Further, they opined that employment will continue to change, and that, “Governments that look ahead and adapt to these developments will derive substantial benefits for their economies and their communities.”
AIRBNB INFLUENCE
From their inception in 2008, Airbnb has laid the foundation for the STR model,
which is now being applied to home sharing via the company’s partnership with Migo. As the years have gone by, Airbnb has stepped up its ability to verify guest identity and perform background checks, and that has led to greater security in the STR process.
Moreover, Airbnb has gotten travelers comfortable with local hosts and home-sharing accommodations. And, by 2018, when the company was logging roughly 500,000 average stays per night, about 65% of those bookings were in multifamily buildings.
By mid-2020, Airbnb reported that the number of reviews mentioning “remote working” had tripled, and by the beginning of 2021, 24% of their stays were being booked for 28 days or longer.
Now, Airbnb has partnered with the gold standard in multifamily technology — RealPage — specifically to be more aligned and integrated with multifamily systems and practices.
THE CHANGING EMPLOYMENT LANDSCAPE
In the pandemic-accelerated world of remote work,
the “office” has become synonymous with “wherever I choose to work,” with Zoom, Slack, Teams and other cloud-based platforms providing virtual office connectivity and collaboration tools.
As a result, young career professionals are no longer encumbered by the need to reside within a commutable radius from their employers.
CHANGING RENTER PREFERENCES
The Millennial and Gen Z generations prefer to rent. Millennials “job hop,” so they savor flexibility, both in their career and where they live, which is why they are mobile. A recent survey revealed that 73% of Millennials said they would move in the next 10 years, and 33% say they’re delaying home ownership because they’re “not ready to settle into a more permanent lifestyle.” That’s why Millennials are more likely to rent and will keep doing so.
Another reason why the Millennial and Gen Z generations prefer to rent is the high price of buying a home, which reduces their living options. In California, the third-largest state in America, the median price of a home in 2020 was $600,000 — nearly 88% higher than the national median.
In 2021, the median price for a home in California increased to $725,000. That hefty price tag has convinced Millennial and Gen Z renters that buying a home is, for the foreseeable future, beyond their financial reach. That’s why, in recent surveys, Millennial and Gen Z respondents have indicated that they will likely extend their renting period and delay homeownership.
In fact, although the vast majority of Millennials want to own a home, 12.3% of them say they plan to “always rent.” And Gen Z renters view homeownership as being something that may never happen for them. As a result, there will be sustained demand for multifamily rentals going forward, especially those that offer flexible living options.
Warton has identified Millennials as one of the major proponents of this growing STR sector, citing that 7 in 10 Millennial business travelers want to stay in local-host rentals, not in hotels. Further, they quoted a survey by Expedia, which found that 62% of Millennials are willing to extend their travel after a business trip to experience local life.
And Millennials are “the most sustainability- conscious generation.” In fact, sustainability is a key concern for this generation of renters. They are
APARTMENT MANAGEMENT MAGAZINE - JULY 2022 CS-29