New York City report pins millions in rent hikes on Airbnb

A report from the New York City Comptroller’s office asserts that New York residents are paying hundreds of millions in extra rent linked to the effects of Airbnb . Naturally, the company bitterly rejects these findings.

(Update: Airbnb and AirDNA, the source for the study’s data on hosts, strenuously object to the study, saying the data has been interpreted incorrectly. Specifically, the latter says that the report considers all listings as the same regardless of type and activity, which obviously would paint a biased picture of their effects. I’ve asked the Comptroller’s office for comment and left the post as-is for now.)

The report, which you can read here, is fairly straightforward. It looks at hundreds of neighborhoods and their various demographics and characteristics, along with how much their rents rose over the last 10 years or so. It finds that when controlling for other variables, Airbnb contributes to a part of the rise on its own:

We find that as the share of units listed on Airbnb goes up by one percentage point, rental rates in the neighborhood go up by 1.58 percent, after controlling for neighborhood level demographic and economic changes. The result is statistically significant at the 1-percent level.

By the researchers’ calculations, the total cost of these increases across the city amounted to about $616 million. That came from running their numbers with Airbnb rentals set to zero instead of the actual tens of thousands of listings and seeing what rents would be in that alternative universe.

The amounts of rent increases and the number of Airbnb listings are tightly and reliably correlated, the Comptroller’s office explained. They were careful to control for other factors, for instance a neighborhood becoming trendy or new housing changing the supply. The hypothesis is that Airbnb listings, contrary to the company’s assertions, do in fact reduce housing supply, which has a knock-on effect on rent in remaining rentals.

The increases, the report and its accompanying press release say, are concentrated in midtown and lower Manhattan, where 20 percent of the rent increases were attributed to Airbnb effects. The effect was much weaker in the outer boroughs, as you might expect, where density is lower and fewer listings are available.

Airbnb, of course, calls it a pack of lies and takes the opportunity to pontificate a bit (which, to be fair,  Comptroller Stringer did too):

Unfortunately, this report is wrong on the facts, falsely asserting that middle class New Yorkers who share their space are responsible for the rising cost of housing in New York… Pandering to the powerful by attacking middle class families won’t do a thing to make New York more affordable. It’s time to stop the scapegoating and work with us on a solution.

Its criticisms are a mix of reasonable objections and straw men. It rightly points out, for instance, that Airbnb hosts are most frequently just renting out a room a few nights a month for some extra income, which logically should improve affordability, not harm it. Then there’s the idea that Airbnb units tend to pop up in fashionable areas, which are inherently more likely to see rents increase.

Some of Airbnb’s gripes are less reasonable, however.

“The notion that less than 1 percent of housing stock — much of which is only occasionally shared with short-term renters — is the sole source of New York’s housing affordability challenge is simply not credible,” the company writes. That’s true — which is probably why the report doesn’t say anything like that.

“We never blamed the whole increase in housing costs on one factor – we quite clearly said that Airbnb was just one factor and explained that it’s 9.2% of the increase,” wrote Tyrone Stevens, the Comptroller’s press secretary, in an email to TechCrunch.

Airbnb also criticizes using 2009 as the starting year for its data, saying the financial crisis changed the whole housing market. Then it cites a report showing that a one bedroom in Williamsburg cost the same in 2018 as it did in 2011.

“We picked 2009 as our base year because that was the year prior to Airbnb’s presence in NYC, and it made sense to measure the full impact of the rise of Airbnb. But the choice of base year is utterly irrelevant to measuring the contribution of Airbnb to rent increases,” Stevens wrote. “And randomly picking an industry report on 1-bedroom apartments in one neighborhood over a different time period doesn’t refute a citywide analysis.”

The fact that rents are leveling out lately doesn’t hold much water, either — arguably that might have occurred sooner but for Airbnb’s alleged contribution to their increases in the first place.

Ultimately the difference comes down to whether or not Airbnb effectively removes housing from the market. The company swears up and down that isn’t the case, and cites user numbers to support that position. The city says there’s little other possible explanation for the close correlation between listings in certain neighborhoods and the specific rent increases it sees in them.

Both, however, seem to agree that the lack of regulation puts everyone at risk. Hopefully that common ground will lead to a fruitful collaboration on new rules in the future.

Update: Airbnb has filed a Freedom of Information Law request for “any and all communications regarding the conception and development” of the report, which it calls a “snow job” and alleges “was influenced by powerful special interests,” namely the hotel industry.