Airbnb Causes Price Hike in NYC Residential Rental Market
Airbnb, the home sharing platform, has changed much more than just how to book a room for a vacation. The now decade-old service, which is worth close to $30 billion, has made lasting imprints on the real estate market, taking housing out of the rental market and creating makeshift hotels. New York City, being the third-largest Airbnb market in the world and one of the oldest, has been altered the most. As such it can also serve as a model for newer or smaller markets and how Airbnb will affect them as it expands in their areas. A recent report by David Wachsmuth, a McGill University professor of Urban Planning, looks into what the service has done to New York City and its communities.
“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. As per a recent article in Citylab, in Wachsmuth's study, he sought to answer questions like: how much housing has Airbnb removed from the rental market; where is it concentrated; which hosts make the most money; and is it driving gentrification in the city. In essence, he was trying to prove the rumors right or squash them all together.
For his research, Wachsmuth utilized estimates of Airbnb activity from AirDNA, a Santa Monica-based firm that analyzes Airbnb data, from September 2014 to August 2017. The research found that 12 percent of Airbnb hosts in NYC, or 6,200 of the NYC's 50,500 total hosts, are commercial operators. That means that unlike the typecast of a person renting out his own rooms to earn an extra buck, these users have multiple entire-home listings. Also, these commercial operators earned 28
percent of all the NY revenue on Airbnb, which amounted to $184 million out of the $657 million total NY revenue. These hosts are still not required to pay commercial property taxes or hotel taxes, which gives them an unfair advantage. The study further concluded that Airbnb has actually raised rents, removed housing from the rental market, and fueled gentrification in New York City. The only question that remains now is how we can remedy the situation, and keep other city's from experiencing the same affects.
The now decade-old service, which is worth close to $30 billion, has made lasting imprints on the real estate market, taking housing out of the rental market and creating makeshift hotels