New Study Finds Airbnb Driving Up Rent in NYC

For those of you who may not know what Airbnb is, it is a website that is used by many people to find a short-term rental property. Using this site, any homeowner can rent out a room or a house for extra income. Usually, renters are charged by the day. This means that any property owner can effectively use their property as a small hotel. Needless to say, this has had a negative effect upon the hotel industry, and upon the rental market.

A new study conducted by McGill Urban Planning professor David Wachsmuth attempts to show the impact of Airbnb upon these markets. It should be noted that this study was commissioned by the Hotel Trades Council and the AFL-CIO. They estimate that average long-term rental prices in New York have increased about 1.4% as a result of Airbnb’s increased popularity, which equals about $384 a year.

Their numbers were obtained using a complex comparative research model that is meant to rule out any other factors that could have caused price increases. As for the cause of these price increases, it seems to mostly be the prevalence of “ghost hotels”.

A ghost hotel works like this: Let’s say you’re a property owner, and you want to rent out a bunch of Apartments. If you rent them out in the normal way, you have to deal with a lot of regulations and fees. Renting your properties out individually on Airbnb gives you a way to avoid many of these regulations and fees. While Airbnb was intended to provide private homeowners with a means of extra income, this study suggests that many listings come from professional operators who are simply looking for a loophole.

The study found about 4,700 listings that were obvious “ghost hotels”. In addition, the study found that between 7,000 and 13,500 rental properties have been removed from the market using this method. The end result is an increase in prices across the board. Techcrunch’s article on the subject can be found here: https://techcrunch.com/2018/01/31/nyc-new-york-airbnb-study-mcgill/

Even more disturbing, the study finds that about 45 percent of all Airbnb listings in the last year are in violation of New York law. New York City has a law against renting out property for less than 30 days if the property has more than 3 units, unless the owner also lives on the property.

The study also found that the top 10% of Airbnb hosts generated about 48 percent of all Airbnb revenue, giving additional credence to their theory that unscrupulous property managers are abusing a service intended to benefit the average homeowner.

The Payout of Airbnb in New York

Airbnb’s Median Income for Its New York Hosts

Airbnb is a privately-owned and successful company that lets its user look online to find and rent vacation homes for a certain time.

People living in New York City who are putting their homes up on Airbnb are actually not making tons and tons of money, but they’re making more than enough money on the side in addition to any of their regular incomes. This is actually reflected in a study that tracked the earnings of Airbnb users from June of 2015 to June 2016.

The data suggests that hosts in New York earned an average of $5,474 through Airbnb’s usage that year. However, the median income changes depending on the neighborhoods that are surveyed. For instance, citizens living in Midtown Manhattan earned $8,286 on average from Airbnb while people from Queens earned close to $4,100. New York City has well over 41,000 active listings on the site as of this June.

The findings come just a short time after a report suggested that the rate of rentals tend to be highest in neighborhoods that use Airbnb the most often, and commissioned by people advocating for affordable housing. Airbnb would also happen to be responsible for the gentrification of neighborhoods where the residents are predominantly minorities.

Airbnb has offered their input on the market, saying that even though they regularly monitor hosts with multiple home listings, they pay attention to hosts that offer space that could be used for long term rentals.

Airbnb Ups the Ante in Battle With New York

In late June, the New York State Senate passed a bill that would ban New York residents from listing short-term rentals. In essence, any resident using home-sharing website Airbnb to offer rentals of less than 30 days could be fined up to $7,500.

The bill now sits on the desk of New York Governor Andrew Cuomo. He can either endorse it, veto it, or do nothing and allow it to become law.

According to Airbnb, passing the law would make NY the only jurisdiction on the planet to ban listings for short-term rentals and it has decided to fight back.

The San Francisco-based company announced that it was providing $1 million in funding to a political action committee aimed at educating voters about the pending legislation and its repercussions.

Airbnb and NY have battled for years over the legality of its use by residents. In many instances, the company says that everyday people depend on the site to pay their bills and stay above water. Hospitality companies disagree, claiming that users are turning their homes into illegal hotels.

Airbnb says that the PAC, called Stronger Neighborhoods PAC, will not directly fund candidates but instead focus on ads to make the public aware of the position that its politicians are taking on the matter.

One of the company’s more prominent investors, Ashton Kutcher, took to Twitter to express his frustrations with how the new law is being handled.

Governor Cuomo said that he has not yet decided if he will sign the bill.