Airbnb Is Coming for Your Neighborhood

March 14, 2018

This is a big problem also in Europe…

There are two kinds of horror stories about Airbnb. When the home-sharing platform first appeared, the initial cautionary tales tended to emphasize extreme guest (and occasionally host) misbehavior. But as the now decade-old service matured and the number of rental properties proliferated dramatically, a second genre emerged, one that focused on what the service was doing to the larger community: Airbnb was raising rents and taking housing off the rental market. It was supercharging gentrification while discriminating against guests and hosts of color. And as commercial operators took over, it was transforming from a way to help homeowners occasionally rent out an extra room into a purveyor of creepy, makeshift hotels.

Several studies have looked into these claims; some focused on just one issue at a time, or measured Airbnb-linked trends across wide swaths of the country. But a recent report by David Wachsmuth, a professor of Urban Planning at McGill University, zeroes in on New York City in an effort to answer the question of exactly what home sharing is doing to the city.

“There’s been a kind of increasing outcry from communities, from housing organizations, from activists, and from elected officials that short-term rentals are having a negative impact on housing,” Wachsmuth said. New York City is the third-largest Airbnb market in the world, and it’s also one of the oldest, so it could serve as a useful model for what smaller, newer markets might expect to see when home sharing takes off. “[New York] has been a big center of activity for a long time. When we look at cities that have much smaller markets, we’re seeing them grow in a way that already happened in New York before we started gaining the data. And we’re seeing the exact same process repeat, kind of in real time.”

To map this process, Wachsmuth and his team used estimates of Airbnb activity from AirDNA, a California-based firm that scrapes and analyzes Airbnb data. They studied Airbnb activity from September of 2014 to August of 2017, including more than 80 million data points, for the whole 20 million population of the New York City metro region. They also used a number of new spatial big-data methodologies developed specifically to analyze short-term rentals.

Their conclusion: Most of those rumors are true. Wachsmuth found reason to believe that Airbnb has indeed raised rents, removed housing from the rental market, and fueled gentrification—at least in New York City. To figure out how, the researchers mapped out four key categories of Airbnb’s impact in New York: where Airbnb is concentrated and how that’s changing; which hosts make the most money; whether it’s driving gentrification in the city; and how much housing it has removed from the rental market.

Is It Really Still “Home Sharing”?

The phrase “home sharing” evokes an image of an individual who opens their home and rents out their extra space to wanderlust-y strangers. This is, after all, how Airbnb got its start: Struggling to make rent in San Francisco, founders Joe Gebbia and Brian Chesky started renting out floorspace in their living room and cooking breakfast for their guests in 2007. Today, it is worth some $30 billion.

While many people still use the platform this way, Wachsmuth found that 12 percent of Airbnb hosts in New York City, or 6,200 of the city’s 50,500 total hosts, are commercial operators—that is, they have multiple entire-home listings, or control many private rooms. And these commercial operators earned 28 percent of New York’s Airbnb revenue (that’s $184 million out of $657 million).

Like hotel managers, these hosts tend to be market-savvy: They often charge less per night than other hosts do and adjust their rates to attract a high number of rentals overall. Unlike hotels, they don’t pay commercial property taxes or hotel taxes. And that’s a problem, both for the city itself and for other hosts.

“If we didn’t have this dominance of commercial operators, the home sharers would do better,” Wachsmuth said. “Currently what’s happening is that the price the actual part-time home sharers need to charge in order to get a booking is getting pushed way down.”

If this sound illegal, that’s because it is. It contradicts Airbnb’s “one host, one home” policy, which was introduced in New York City in 2016. That policy limits New York-area hosts from listing rentals at more than one address. It also violates New York State’s multiple dwelling law (MDL), which forbids short-term rentals of fewer than 30 days in buildings with three or more units, unless the owner is present. While it is certainly possible for a host to have multiple legal listings that all refer to the same property, using American Community Survey data from 2011 to 2015, the researchers calculated that anywhere between between 42 percent and 46 percent of all active listings have had illegal reservations.

New York’s MDL, which has been in effect in some iteration since 1929, is difficult to enforce. In a situation where the law tries to go after someone, Wachsmuth said “the landlord can say, ‘Oh, I was there—I was just in a different room.’ They can’t prove that they weren’t.”

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