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.