For anyone who knows their city well, it’s easy to see that the short-term rental boom spurred by Airbnb’s massive popularity is changing things. Figuring out what exactly is changing and how quickly is trickier. In New York, those changes have kept Airbnb and city regulators engaged in a multi-year war over what’s really good for the city. A new deep dive into the rental market is just more fuel for that fire.
The new study, conducted by McGill Urban Planning professor David Wachsmuth, offers some pretty striking data points. While its analyses were conducted independently, the study itself was commissioned by the Hotel Trades Council and the AFL-CIO, two entities with a vested interest in keeping hotel business booming, so bear that in mind.
For starters, the study estimates that Airbnb has driven up long-term rental prices by 1.4 percent, or $384 per year, for the median New York City renter. The research suggests that both restricted availability in the long-term rental market and increased financial incentives in the short-term rental market account for this increase.
To reach those conclusions, the study drew from a comparative model developed by UCLA to rule out confounding variables that, specific to New York, might be driving those increases:
After controlling for a comprehensive set of factors, they find that a “exogenous” 10% increase in number of Airbnb listings in an area (which is to say, an increase that is not driven by other factors which would have increased rents anyway) predicts a 0.42% increase in long-term rents. Applying this relationship to our data, we find strong evidence that Airbnb has increased long-term rents in New York City.
The study also lays plain Airbnb’s potential impact on long-term housing availability in New York, estimating that it has removed between 7,000 and 13,500 long-term rental units from the market. Unfortunately, it looks like that problem is poised to worsen:
Additionally, spatial cluster analysis reveals that 4,700 private-room listings are in fact “ghost hotels” comprising many rooms in a single apartment or building. This is perhaps the fastest growing category of listing in all of New York, and may represent a tactic for commercial Airbnb operators to avoid regulatory scrutiny.
While Airbnb goes to great lengths to promote an image of its average renter — a homeowner renting an extra room to make a little passive income — it’s no secret that a massive swath of Airbnb listings come from professional operators who control many listings across a city.
The McGill study examined this, determining that as much as two-thirds of New York City area Airbnb revenues came from listings that likely violate city rules against short-term rentals for fewer than 30 days in buildings with more than three units with the owner not present. To examine this, the research combined its own data with census information that specified building types.
The results:
… we estimate that between 85 percent and 89 percent of entire home rentals to have been illegal each month. This means, even assuming that all private-room listings are legal, that between 43 percent and 47 percent of reservations in New York City have been illegal. In any given month, between 7,600 and 12,700 listings have had illegal reservations—accounting for between 42 percent and 46 percent of all active listings. In total over the last year, 45% of reservations were likely illegal, and these illegal reservations generated 66% ($435 million) of all host revenue.
Given the predominance of likely illegal listings and “ghost hotels,” it might be less surprising, then, that the top 10 percent of Airbnb hosts generated 48 percent of all revenue in 2017. Not quite the image that Airbnb is projecting about how it plays nice with city regulators in order to help out the little guy.
If these highlights were interesting, you can dig into the full report here. While the hotel industry funding backing the study does raise an eyebrow, the research methods seemed largely sound and it’s hard to argue with quantitative findings that back up the kind of qualitative shifts you’ve seen in your own backyard.
Comment