The Great Airbnb Halving

A few months ago I wrote about the upcoming STR ordinance here in San Diego. At the time, I thought that it would be implemented this fall but I’ve recently found out more about the timeline. So I figured I’d update here with the latest info.

STR Ordinance

The ordinance affects largely those who are renting out a whole home on Airbnb, VRBO etc. It’s going to require that anyone who rents a dwelling for less than one month is required to have a license. There are 4 tiers of license and the top two are applicable to whole home STRs. The whole home licenses are capped in number.

Everything in moderation. STRs included.

For whole home rentals in Mission Beach, they are capped to 30% of total units in Mission Beach.
For whole home rentals not in Mission Beach, they are capped to 1% of units not in Mission Beach.

Why does it matter?

It matters because currently there are something like 12,000 whole home rentals but less than 1000 homes for sale in San Diego city. So when the ordinance happens, around 5800 units will not win the license and sellers will have to decide what to do with those rentals.

They could turn them into long term rentals or choose to sell them. Either way, that should relieve some pressure on the rental or purchase market. Here are some numbers I found in an earlier article.

Read more on why Airbnb regulation matters in San Diego.

At that time, total homes for sale or rent in San Diego was just ~2900. So 5800 homes coming on the market would triple the available housing.


So what has changed? Well we now have a timeline. Originally I thought that the ordinance would be enforced in the fall but it looks like it’s further out than that.

  • The application process for the licenses will completed Nov 30, 2022.
  • The lottery will be conducted Dec 16, 2022.
  • The ordinance will be implemented May 1, 2023.

Here’s a useful visual created by the city of San Diego.

San Diego STRO Ordinance

In other words, come late December, about 50% of whole home Airbnb owners will be informed that they’ve lost the lottery and can no longer rent out their homes short-term. Then, they have to decide what to do about it by May.

The majority will choose to long term rent or sell, either increasing vacancy rate in Summer 2023 or increasing house inventory. Both are good for housing in San Diego.

For more info on the regulation, head to the San Diego STRO Ordinance website.

Illegal Airbnbs

There may be a minority that decide to continue short term renting and skate under the radar. Not entirely sure how the city intends to find those without Airbnb’s collaboration.

I did notice they have shared the list of active vacation licenses on their data site. So I created a map of the vacation licenses to aid people in verifying if an airbnb is legal.

Click below to access the interactive map with addresses and license status.

Is Airbnb bad?

I’ll be honest, I’m not against Airbnb or STRs in general – I’ve actually have stayed in many. However, when unregulated, they have the potential to make housing unaffordable for actual residents of a city. Cities also haven’t properly taxed them as they would any normal hospitality business. Some were also bought with tax benefits aimed at homeowners.

There is a version of STR that works, but it requires more thought and planning. The sudden proliferation of them has been blatant speculation fueled by both the Federal Reserve’s cheap money, and pandemic-induced migrations. We need to get back to a better balance. Everything in moderation – Airbnbs included.

“Just two percent”

Some people believe that there are just too few to make a difference. They make the mistake of comparing Airbnb stock to total housing stock – “oh it’s just two percent” of all houses. They should be comparing to vacant rentals or housing inventory.

There’s a reason why we talk about inventory as a barometer of the housing market health. Inventory is not supply or total stock of houses. It’s just those that are on the market. That’s what drives market dynamics and sets median sale and rent prices. The parallel to “inventory” in the rental market is vacant LTRs. Not total rental stock.

Read more -> Inventory is not supply.

Personally, I think at no point should there be more STRs on the market, than homes for rent or sale, as we have currently in San Diego. If 5000+ homes end up released to the rent or sale market here, come next year, I believe that balance will be restored.

Disclaimer: I’m an idiot first time home buyer. I’ve never taken an econ class in my life. I’m just sharing what I see and learn as it happens. I am 100% certain I will get things wrong, so don’t take any of this as the golden truth.

9 Comment on this post

  1. Unfortunately, we don’t believe it’s as rosy as this. Using the methodology that uses, the number of tier 3/4 properties is around 6,300. The number of permits the city is issuing for tier 3/4 is 6,500. Effectively, this means that the restriction to 1% of housing doesn’t really change much, except for a net reduction in mission beach. We reviewed internal city emails where a STRO software provider informed the city that they believed the amount to be around 7,000 listings +/- 15%. But we welcome a regulatory framework for accountability, So we would like to see more action on the city in preventing evictions for conversion to Airbnb. It’s clear that a huge majority of these airbnbs were founded in the last two years, and we are aware of dozens of people in San Diego who have been evicted from their apartments for this reason. Some of these were done by the biggest independent vacation rental agencies in San Diego. They should know better.

    1. That’s extremely valuable info, thanks. This number is the only one I’ve had access to from the earlier articles related to the Coastal commission. It’s entirely possible that it’s fewer than that. It seemed to jibe with numbers from AirDNA. On the other hand, actual number of active TOT licenses is ~9000 but those are not necessarily tier 3/4 properties.

      It will definitely be disappointing if it’s just 200 that return to normal housing. But I also welcome the start of the regulatory framework, especially if San Diego county starts to consider it as well.

      1. Does AirDNA show you breakdowns for full-time vs part-time listings? As you point out, the estimated total listings is 12,300 from the coastal commission report ( now says 11,848 (I’d add 10% for listings on other platforms = 13,033). The estimate from Deckard Technologies (STRO compliance software company) is 10,309 as of Jan 2022.

        As you know there is no cap on Tier1/2.

        The reduction is a bit more than 200, simply b/c of Mission Beach capped at 1,100. We don’t currently have a method for getting the TOT regs that are only in MB (best we can do is 92109 which includes PB as well). The commission report says a 27% decrease, 400 or so units using their numbers just in MB.

        1. No airdna does not show part-time listings – just whole home vs private room listing. Tier 2 sounds like that would cover ADUs so that would show up as whole home but not need to get licensed. So yes, that would reduce a bunch from the cap.

          Thanks for all this extra data!

        2. curious, how did you get 6300?
          using filters i got 10754, then say subtract 1533 and 1776 (frequency of 0 and 1-30), 7445…so maybe 945 gets converted to long term rentals or sold

      2. check ” Only entire homes/apartments” “Only recent and frequently booked” “Only short-term rentals”. The current number is 5,745. We believe this underestimates b/c bookings are often done last-minute and are missed, about 10% off. We believe Deckard’s numbers are more accurate because they most certainly scrape more often.

        ADUs are generally not allowed to be used as STRO in San Diego. See under “Clarification of legality of Accessory Dwelling Units and Guest Quarters use for STRO” and SDMC §141.0302(b)(1)(B).

        And also

      3. Unfortunately, as of now, no lotto was needed and there are still a couple thousand permits open for str.

        Seems like there was no impact

        1. It’s all down to enforcement now. And it’s going to be difficult. I’ve already identified a few hosts using the same permit numbers across multiple of their listings. I’m already aware of ADUs and guesthouses that received official STR permits when they shouldn’t have.

          I expect the platforms (Airbnb, VRBO, flipkey) to turn a blind eye to listings without a permit or that use duplicated permits. I expect them to ignore city takedown notices. I expect them to refuse to provide booking numbers to the city to prevent Tier 2 hosts under the 90day cap. Not sure why San Diego is different, San Francisco and others have been able to coerce platforms into compliance.

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