I grew up on Oahu from age 10 to age 30. I began coming to Kauai in 1966, lived in Wailua Homesteads for several summers while working on a banana farm there, and now have the good fortune to own a home near Haena. I read with interest the forum article by Mr. Randy Weir about the impact of TVRs (transient vacation rentals) on housing and rental prices (TGI March 2, 2019). In that article Mr. Weir states that those who believe that TVRs increase housing and rental prices are incapable of critical thought, are blinded by special interests, and further he states that the claim that TVRs are one of the causes of unaffordable housing and rentals is ….a claim with absolutely no basis in fact and one never verified by legitimate research findings.
I grew up on Oahu from age 10 to age 30. I began coming to Kauai in 1966, lived in Wailua Homesteads for several summers while working on a banana farm there, and now have the good fortune to own a home near Haena. I read with interest the forum article by Mr. Randy Weir about the impact of TVRs (transient vacation rentals) on housing and rental prices (TGI March 2, 2019). In that article Mr. Weir states that those who believe that TVRs increase housing and rental prices are incapable of critical thought, are blinded by special interests, and further he states that the claim that TVRs are one of the causes of unaffordable housing and rentals is “….a claim with absolutely no basis in fact and one never verified by legitimate research findings.”
I am a professor and social scientist by training. My observations and conversations with people on the North Shore, especially past Hanalei, have caused me to wonder whether TVRs are having an impact on the availability of rental property, as well as increasing rents. I had no particular speculation about housing prices. In my discussions I found that many people out here believe Mr. Weir is wrong. Mr. Weir’s emphatic and somewhat vitriolic statements sent me on a search of the scientific literature on how TVRs impact rental and housing prices, and whether there were data on rental property availability and TVRs. Given Mr. Weir’s statements I expected to find little available evidence. Interestingly, the Wall Street Journal had an article on October 22, 2017, “How Airbnb Affects Home Prices and Rents.” It led me to three recent studies which found that in urban areas in New York and California, the existence of TVRs (such as Airbnb) was associated with higher housing prices, higher rents, and reduced amounts of housing for those seeking longer-term rentals. Another report from Sonoma County, which is more rural, comes to similar conclusions. It is possible that findings from studies on the mainland will not completely generalize to Kauai, but nonetheless, the data are becoming clearer. TVRs in varying geographic settings can impact housing and rental markets, with reduced rental availability, higher rents and higher housing prices. There are many factors that influence these dynamics in addition to the existence of TVRs, but this evidence suggests that Mr. Weir has misstated his case.
I hope that our lawmakers and policymakers on this beautiful and precious island will be informed by the experiences from other areas that have seen an influx of TVRs, will pay attention to the scientific findings relevant to these issues, and will not be unduly swayed by special interests or unfounded claims.
•••
John S. Brekke, PhD, is a Haena resident.
TVRs may take a few homes out of the long term rental market. It is unlikely that the multi million dollar homes on the NS will ever be rented to Local residents. They may change the feel of the neighborhood, but will not add rentals. Kauai County onerous anti-housing policy is the reason there are no rentals. NY, SF and Hawaii all have anti build attitudes. Not one of these States or cities care for the average person. Randy was spot on.
So, an anti-build policy is a bad thing? Not in my book. The last thing I want is for Kauai to become like Honolulu which loves building. If you want the quality of life we have, we can’t have a pro-build policy. Keep Kauai rural and beautiful! Learn from Honolulu’s mistakes.
So a social scientist found one obscure article in the WSJ(known as being a mouthpiece and training guide for the kleptocratic class) and one other un-cited study from Sonoma county and talked to a few wealthy(or regular, again no distinction) Haena residents? I know people’s attention spans can be limited, but can we get a more in depth article professor? Thanks.
Anyone looking at CL housing over a period of time can see that the vast majority of rentals are furnished and or short term, not ideal for people looking for a new home. Not scientific but look for yourself.
Thank you for your post. I agree with you. I have seen the mess TVR’s create first hand and how they take homes off the market, thus creating less available homes for long term rentals. I hope, too, that the gov’t can finally get off their butts and crack down on these illegal rentals once and for all.
Maybe TVR do increase the cost of rental or owning housing in Hawaii but hopefully Hawaii has no desire to ban TVRs. Hawaii being dependant on tourism needs to have TVRs for the tourists. Ok some would say there are too many tourists…But really what else runs the economy. Sugar, coffee , pineapple exports have all declined.
If you look at Lawai Rd in Poipu you will find that homes sold without a TVR are valued about 25% less than homes with such a license after adjusting for size and condition.
Or if you look at the rental income for a similar house and location anywhere on the island with or without a TVR you will see that the income for one is about 25% higher than the other. You don’t need a Phd to figure out which type has the higher income.
For those who are interested, here are primary and secondary sources. The links were working when I posted them.
Barron K, Kung E, Proserpio D (2018). The sharing economy and housing affordability: Evidence from Airbnb. Available at SSRN: https://ssrn.com/abstract=3006832 or http://dx.doi.org/10.2139/ssrn.3006832
Wachsmuth D, Weisler A. (in press). Airbnb and the Rent Gap: Gentrification through the sharing economy. Environment and Planning. DOI: 10.1177/0308518X18778038
Sheppard S, Udell A. (2018). Do Airbnb properties affect housing prices? Williams College Department of Economics, 24 Hopkins Hall Drive, Williamstown, MA 01267
Economic & Planning Systems, Inc. (2015). The Impact of Vacation Rentals on Affordable and Workforce Housing in Sonoma County. Prepared for: The Sonoma County Community Development Commission.
https://www.epi.org/publication/the-economic-costs-and-benefits-of-airbnb-no-reason-for-local-policymakers-to-let-airbnb-bypass-tax-or-regulatory-obligations/
https://hbr.org/2019/04/research-when-airbnb-listings-in-a-city-increase-so-do-rent-prices
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3006832
https://www.urbaneconomics.nl/airbnb/
Unmentioned is the counties 2 tiered taxing system on rentals. Affordable rentals where the rental price is regulated by the county according to the income level. This pushes rents really low but saves the owner on property tax. The other tier is higher and the property tax is higher, pushing the rents even higher. If you don’t have a house that can be rented for 1200-1600(dependent upon number of bedrooms), then the counties tax system is going to push the rental prices higher to cover the taxes. The government is actually silently contributing to the problem while trying to regulate it with its left hand.
For those who are interested, here are primary and secondary sources. The links were working when I posted them.
Barron K, Kung E, Proserpio D (2018). The sharing economy and housing affordability: Evidence from Airbnb. Available at SSRN: https://ssrn.com/abstract=3006832 or http://dx.doi.org/10.2139/ssrn.3006832
Wachsmuth D, Weisler A. (in press). Airbnb and the Rent Gap: Gentrification through the sharing economy. Environment and Planning. DOI: 10.1177/0308518X18778038
Sheppard S, Udell A. (2018). Do Airbnb properties affect housing prices? Williams College Department of Economics, 24 Hopkins Hall Drive, Williamstown, MA 01267
Economic & Planning Systems, Inc. (2015). The Impact of Vacation Rentals on Affordable and Workforce Housing in Sonoma County. Prepared for: The Sonoma County Community Development Commission.
https://www.epi.org/publication/the-economic-costs-and-benefits-of-airbnb-no-reason-for-local-policymakers-to-let-airbnb-bypass-tax-or-regulatory-obligations/
https://hbr.org/2019/04/research-when-airbnb-listings-in-a-city-increase-so-do-rent-prices
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3006832
https://www.urbaneconomics.nl/airbnb/
I’ve owned a small condo on the SS for 20 years.
It started out as a friendly mix of long-termers, owners and a few short terms.
The place has transformed over the years into a hotel, with an aggressive association board of non-local investors who seem to prefer the short term vacation concept.
I have rented my unit out long term several times, and it has always become a very negative experience when I then would want my place back to use it myself, after their lease ended.
The long term rental laws in HI are skewed towards favoring the tenant and they have avenues to prolong their stay like needing to find “like rent” – Meaning that the tenant has to find a place with similar rent. There’s some good reasons possibly for this, but it has chilled the desire to rent out long term. I also realized that since I’d like to use the place that it’s not a good candidate for long term.
CL is filled with dreamy desires of folks wanting to move to Kauai. No job, no money, looking to trade skills for rent.
This is a two examples of pressure on an already tight market.
The problem with the TVR’s and the county’s attempt at regulation is the lack of uniformity in application.
A new regulation was affixed to an older, the TVR. The result is not pretty. The whole concept needs to reworked. i.e., Why should some homeowners have this option while others do not? Where’s the logic? A suggestion: TVRs are expanded to the entire Island but the length of time required for a stay is 60 days or more. This would keep the tourist in the hotels and allow every home to rent. Yes or no?
Let’s not forget that people wouldn’t be looking at Tvrs if they didn’t have to pay excessive resort fees for car parking for instance. With the Advent of internet and advance bookings the entire tourism industry is in a bit of turmoil. Hotels have gotten away with charging what they want basically because there was no alternative. Spending per tourist is down because , in small part, people aren’t in a hotel with all their opportunities to spend additional money. Travellers are looking for a deal and Tvrs are a deal, for now.
Great letter! Illegal TVR’s ruin neighborhoods and take moderately priced long-term rentals off the market. Why should your neighbor be allowed to break the law because of their greed? All to the detriment of the long-term housing market and to the detriment of that neighborhood? Crack down now!
So, if you are correct and Weir is wrong….prove it.
Do some research, real research not anecdotal nonsense, and see if you can produce a study that shows a coefficient (R value) of correlation >0 and at or close to 1. You’re a PhD…maybe you forgot basic statistical analysis?? Here’s a reminder and link with which you can refresh your memory.
“Correlation Coefficient: Simple Definition, Formula, Easy Steps
Correlation coefficients are used in statistics to measure how strong a relationship is between two variables. There are several types of correlation coefficient: Pearson’s correlation (also called Pearson’s R) is a correlation coefficient commonly used in linear regression. If you’re starting out in statistics, you’ll probably learn about Pearson’s R first. In fact, when anyone refers to the correlation coefficient, they are usually talking about Pearson’s.”
https://www.statisticshowto.datasciencecentral.com/probability-and-statistics/correlation-coefficient-formula/
RG DeSoto
I always see you challenge someone to do research or prove something. Yet I never see you give evidence to support your claims here.
…and if all of the TVRs currently situated in residential neighborhoods, and NOT in a VDA, were legal and required to have a GE license, and pay their 4.25% GET; and pay the 10.25% TAT, and have all the proper insurance coverage, my guess is that more than half of them would not choose to operate as a TVRs any longer.
I love how some twits always like to throw out the word “greed” when someone, not them of course, is providing a service or product that others buy. Well, did you ever hold a job, Greed Sayer? Did you work for free or for pay? Well according to you and your ilk , you’re greedy if you worked for money!!! And most likely you’re the type of person who wants to get paid MORE than they’re worth vs. the person who works hard, trains themselves and learns to make themselves more productive. Ya, you want to work less and get paid more! Now that’s GREED! Think of that whenever you throw out the word GREED to disparage someone whose work and achievements actually have value to an employer or customer.
Of course it does and an island environment amplifies the effect. You can make more money renting out your house legally or illegally to tourists short term. Kauai has a limited amount of houses and people can’t just live in another town and commute like you can on the mainland. Watch Kilauea or Kekaha. These are traditionally working class towns, but one by one houses are being bought up and turned into vacation rentals and no new houses are being built. Every year more tourist staying in your town and they have no connection to the community at all. You don’t need a scientific study to see this, you just need to live in one of these towns. Anybody talking stink about this is probably profiting off the displacement of locals. If you own more than one home and buy another “investment property” to turn into a hotel for cheap tourists that can’t afford a real hotel, you are part of the house problem. You can keep telling yourself different, but you’re not fooling anybody. And if you’re doing it illegal like so many, best just keep your mouth shut.
Weird…Using your logic, 50% of the blame (since it must be someone’s fault), should be on the seller then. Not trying to fool anyone but I imagine one reason these “traditional working class “ neighborhoods have houses for sale is because there’s no traditional WORK! Can’t blame that on some tourist wanting a vacation of a lifetime.
So, blame the county and state for not allowing more development— but you might not want development.
So, blame and talk trash, constantly looking for the real culprit who ruined your lifestyle.. Where in the world is that not the case?
—Maybe Clarksdale MS! A land that time forgot.. you can buy a house for 8,500$ cash! Got the Delta blues museum, like 15 different blues festivals, drive Hwy 49 (the blues highway) down to Belzoni and have some great soul food!!
My point is there’s culture everywhere and it’s cool to see it! —Don’t need a local connection to look in someone’s eyes.
Get out there, go on a trip. It’s a way to realize that we’re all in this same situation…
Your skin color and heredity are but mere illusions of the physical world,
Which of course timeout and turn to dust. Only your soul (holy spirit ) moves on. You have no control over it.
I just try to do the best I can.