Cause and effect: San Francisco AirBnB bookings tanking

Should this be surprising to anyone?

I think not, but the city and residents sure seem to act as if it came out of left field.

Cathryn Blum has lived in her San Francisco home in Potrero Hill for nearly three decades. For the last 13 years, she has rented out her spare room on Airbnb to help with the cost of her mortgage, maintenance and property taxes.

But when looking at her calendar for the typically busy summer months this year, Blum is seeing a whole lot of “nerve-wracking blank space.” Last year, she had 21 days booked in July and August. This year, she only has three and zero days for those months, respectively.

I can’t imagine what they thought would happen. And they’re blaming “bad press,” not “bad government”?

Perish the thought they blame themselves for voting for “bad government” over and over and over again.

Where on earth would all the bad press originate from, if they didn’t have the people who have been in charge of it for generations (last Republican mayor was 1964) allowing the city to wallow in the disrepair, social engineering experiments, benign neglect, and outright danger that it does now? When even the Sheriffs are calling the mayor out – and the victims in the smash and grab robberies video are tourists, HELLO…

Mayor @LondonBreed does not take enforcement of misdemeanors seriously. There is little to no consequences for misdemeanor crimes in SF. Jail population is being controlled at an average of 800 inmates. No Fear to Commit Crime. SF Residents Pay the Price! https://t.co/ygshgGGAtJ

— San Francisco Deputy Sheriffs’ Association (@SanFranciscoDSA) July 4, 2023

…and national news is full of stories of bat-wielding children – BAT-WIELDING CHILDREN – terrorizing mothers in an upscale neighborhood…

Bat-wielding kids attack San Francisco moms, nannies outside school

“Kids wielding baseball bats are attacking and robbing helpless mothers and nannies in a San Francisco neighborhood known for its young families”

Our cities are dying before our eyes https://t.co/O2DokaOpG0

— Phil Holloway ✈️ (@PhilHollowayEsq) July 5, 2023

…what in the wide, wide world of sports did they think the cumulative result would be?

San Francisco did this to San Francisco.

The Hilton downtown isn’t leaving because their bookings are full. They’re leaving because the crime is insane, and the real estate is too expensive in relation to plummeting value. Oddly enough, rental owners closest to downtown are also seeing a corresponding drop-off in bookings.

Go. Figure.

The depressed market for bookings is hitting their pricing leverage, too, and that really hurts when you use that extra cha-ching to pay your mortgage or taxes, and many in this story do. The market will dictate, though. When you’re desperate to put a body in a bed, you discount, and that’s what they’re doing across the board.

According to data from SFTravel, convention room nights for 2023 are off around 30% compared with 2019. There’s also continued consternation around remote work. Office occupancy in San Francisco, according to access card company Kastle, has not budged past 50%.

…Based on his numbers, Freedman estimated that pricing for Airbnbs in San Francisco is down about 40% from last year, and occupancy has declined by roughly 20-25%. He’s noticed that the properties his company manages out in the Avenues are faring better than locations Downtown, due in part to steeper discounts provided by the city’s hotels.

…According to short-term rental data company AirDNA, nights stayed in vacation rentals in San Francisco in May 2023 were down 29% from May 2019.

…Peter Kwan, a retired law professor, is the co-chair of the Home Sharers Democratic Club, which represents a few hundred short-rental hosts in San Francisco. He says that his message to members is that they have to work a lot harder to get the same reservations as before.

He’s advising members to review their rates and make sure they’re competitive with other hospitality options and spruce up their listing or offer perks like high-speed internet. Kwan uses a hotel close to his North Beach residence as a benchmark for his own pricing, and has lowered his price 15% accordingly.

Things aren’t going to turn around any time soon. The office vacancy rate in the city is already at an eye-popping 31% and fixin’ to get worse, along with delinquency numbers.

…Vacancy Rate: 31.8%
That’s the preliminary office vacancy rate for the second quarter of 2023 in San Francisco, according to real estate company CBRE. Finalized numbers are expected early next month.

CBRE’s data shows that net absorption was at negative 1.9 million square feet in the second quarter, meaning far more space was vacated than was newly leased—and implying that the vacancy rate, already at record highs, could go even higher.

…Delinquency Rate: 4.02%
That’s the office delinquency rate for commercial mortgage-backed securities in May, according to data provider Trepp. The national figure is the highest tracked by the company since 2018. The delinquency rate is a precursor to defaults and foreclosures and a sign of general distress in the commercial real estate sector.

Office loans had the greatest increase in defaults in 2022 and accounted for the largest share of total defaults at 49.4% ($1.58 billion). This was more than double the $725 million and 17.6% share of defaults in 2021, according to Fitch Ratings.

One private employer company alone has dumped over 700,000 square feet into the downtown sub-lease market just this year.

There’s no one working downtown, the businesses that used to occupy all the office space and bring visitors to the hotels and AirBnB-type lodgings are, for the most part, gone.

It’s one thing to be a Hilton or Nordstroms and hand the building back – quite another thing entirely when it’s your home.

…To hosts like Blum, though, the pace of that timeline could mean the difference between staying in the city that she’s called home since 1979.

“I’m house rich and cash poor. Airbnb has been a blessing,” Blum said. “I’m not a native, but I am an old-timer in San Francisco. I’ve been here a lifetime.”

“Oh, it’ll shake out” probably rings a little hollow right about now.

Both John and David have written about the city’s “doom loop” and I’ve done any number of pieces on its real estate implosion and the crime.

None of it is anything that writing another check will fix next year. These people should be worried…and doing some serious soul searching about who and what they support, if they are even capable of such introspection.

Progressives only progress in one direction and it’s never up.