
What Airbnb Did to New York City - pmcpinto
https://www.citylab.com/equity/2018/03/what-airbnb-did-to-new-york-city/552749/
======
ordinaryperson
Easy to blame lack of affordable housing on AirBnB and not, say, rent control
laws or the difficulty of building new housing stock in the city.

I get not throwing grandma out of the $250/month 4BR she’s been living in for
50 years, but it means something like 200,000 rent-controlled/rent-stabilized
units are also raising everyone else’s rent by decreasing inventory.

The endless red tape in new construction makes non-luxury bulidings
unprofitable. Want cheaper rents? Fast-track approval for new apt buildings.

~~~
teh_klev
I've said this before, and I'll say it again. AirBNB is a blight on rural
areas (I can speak to this because I reside in rural Scotland) where
affordable rental properties are simply disappearing from the market. These
properties are barely fully booked during the summer months or holiday/peak
seasons, and are empty for weeks at a time in the winter and off-seasons.

This is such a waste and hugely frustrating for folks who live and work in
these communities trying to find accomodation.

~~~
lmm
If the price has gone up so much, there's a financial incentive to build more
until supply matches demand and prices drop to previous levels.

> These properties are barely fully booked during the summer months or
> holiday/peak seasons, and are empty for weeks at a time in the winter and
> off-seasons.

> This is such a waste and hugely frustrating for folks who live and work in
> these communities trying to find accomodation.

A lot of people get a lot of joy out of holidaying somewhere like Scotland in
the summer. When there are limited houses and a lot of people who want to use
them, there will always be winners and losers. Is it really so implausible
that for a house in a scenic rural area, a succession of people renting it for
a week or two each over the summer might end up getting more out of it
(between them) than someone wanting to live and work in it for a whole year?

~~~
teh_klev
> Is it really so implausible that for a house in a scenic rural area, a
> succession of people renting it for a week or two each over the summer might
> end up getting more out of it (between them) than someone wanting to live
> and work in it for a whole year?

Are you really suggesting that just because you live and work in your local
(scenic) rural community you couldn't possibly enjoy the surroundings just as
much, if not more, than as a few fleeting transient warm bodies with suitcases
could? As residents, we're quite proud of our village and surrounding rural
lot and deeply care about and appreciate what we have.

Also, and ultimately, it's the local permanent residents that sustain, year
round, the two pub/restaurants, the village shop and the assortment of
plumber, electrician, carpenters (all of which also provide substantial local
employment), not infrequent visitors occupying holiday homes that lie empty
for 50% or more of the year.

~~~
lmm
> Are you really suggesting that just because you live and work in your local
> (scenic) rural community you couldn't possibly enjoy the surroundings just
> as much, if not more, than as a few fleeting transient warm bodies with
> suitcases could?

There's got to be diminishing returns on beautiful surroundings, surely -
seeing a mountain for the hundredth or thousandth time can't compete with
seeing it for the first time. So better to give dozens of people a chance to
see it once than have a few people see it over and over again. (Or if someone
really does want to see it over and over again, they can pay what it costs).

> Also, and ultimately, it's the local permanent residents that sustain, year
> round, the two pub/restaurants, the village shop and the assortment of
> plumber, electrician, carpenters (all of which also provide substantial
> local employment), not infrequent visitors occupying holiday homes that lie
> empty for 50% or more of the year.

Well if tourists are able to pay more for housing than permanent residents
then they're probably also going to be spending more on meals out, more likely
to want upgraded plumbing or electrics (or damage those in an unfamiliar
house).... But assuming you're right, employment is a means to an end, not a
goal in itself. If someone has their heart set on a career as a chef or
shopkeeper or plumber or electrician or carpenter, good for them, but that
doesn't mean they're entitled to do that job in a particularly picturesque
place.

~~~
JBlue42
>There's got to be diminishing returns on beautiful surroundings, surely -
seeing a mountain for the hundredth or thousandth time can't compete with
seeing it for the first time. So better to give dozens of people a chance to
see it once than have a few people see it over and over again. (Or if someone
really does want to see it over and over again, they can pay what it costs).

 _lol_ Who let in the robot?

------
personlurking
If anyone is interested, I recommend the nearly 18-hr PBS documentary on New
York City [1], especially the latter parts (6 & 7) which focus on the building
boom and the obsessions of Robert Moses [2].

Part 7 in particular (57 min)
[https://www.youtube.com/watch?v=GaLSRTNT5fw](https://www.youtube.com/watch?v=GaLSRTNT5fw)

[https://en.wikipedia.org/wiki/New_York:_A_Documentary_Film](https://en.wikipedia.org/wiki/New_York:_A_Documentary_Film)

[https://en.wikipedia.org/wiki/Robert_Moses](https://en.wikipedia.org/wiki/Robert_Moses)

~~~
piffey
"The Power Broker" is also a great read if you want to know more about Robert
Moses.

------
somberi
As an apartment owner in Manhattan, I find one part of the study surprising.
Most Co-ops and Condos (two types of apartment financial structuring that is
common in NYC), explicitly ban AirBnB rental. The apartment I own, in a fancy
part of the city (Upper East Side), penalises the owner $350 for first
infraction, and the fines escalate for each subsequent infraction. Most Co-ops
even prohibit non-owners living in the building (they cannot rent it out). I
wonder who these people are, that are able to buy AirBnB'able apartments.

I just searched Streeteasy.com, a popular NYC real estate listing site for
Airbnb and I was not able find any listings (Query:
[https://streeteasy.com/search?utf8=%E2%9C%93&search=airbnb&c...](https://streeteasy.com/search?utf8=%E2%9C%93&search=airbnb&commit=)).

I also looked at the data-source in the Citylab article (Airdna.com) and I see
that I would earn 10% more by Airbnb'ing my apartment than finding a tenant.
For me this 10% is not worth optimising for, considering the tenants go
through a credit evaluation process, I don't risk any vacancy and I do not
have to change the sheets every other week.

~~~
bradleyjg
Why would you think people willing to violate state law would have any
scruples about violating a propriety lease or condo agreement?

~~~
ng12
You do not want to mess with a co-op board in NYC. You'll have neighbors who
will rat you out whenever they can, the doormen/supers will be on the lookout
for sketchy behavior, and the board will be draconian in it's enforcement. It
sounds silly but people take co-op rules very seriously.

------
dgudkov
AirBnb not just hikes rent prices, it hikes real estate prices as well because
it is a way to offset mortgage payments. It effectively brings down mortgage
interest rate. Have some free money? Get a mortgage and put the property on
AirBnb. We know what happens when this type of thinking scales out.

------
gpickett00
The article should have mentioned this at the very top: "It’s also worth
noting that Wachsmuth’s research was funded in part by some avowed foes of
home sharing—the New York City Hotel Trades Council—and was cosponsored by
housing and tenant advocacy organizations."

~~~
RestlessMind
You need big money to fight big money. So as long as they are not lying, I am
fine with it. If they are lying (or even "selectively telling the truth"),
AirBnB should fund research to expose them.

------
camgunz
My take, after living in NYC Airbnbs for around a year, is the effects are
most dramatic in non-white areas. And it's not lower income people who are
renting their place out on Airbnb; it's typically commercial renters and
hipsters/professionals looking to supplement their income. So it certainly
feels like the main effect is to accelerate gentrification.

~~~
throwaway_80bf3
After living there for 10 years I moved on from NYC at the end of last year.
My last apartment was in a neighborhood in Brooklyn that is still heavily
African American but will probably look significantly different in 5 year. The
number of European tourists that just show up and come and go on the subway
platform there was wild. I have lived in post-gentrification neighborhoods
mostly and had not seen anything like this. The only reasonable explanation
was AirBnB.

------
lewis500
This is not quite Pareto distributed but it's getting there:

"half of all Airbnb rentals that are conducted by only 10 percent of hosts,
who earned a full 48 percent of all the revenue earned in the city last year.
That’s some 5,000-people earning a combined $318 million. In contrast, the
bottom 80 percent of New York’s hosts—the city’s 40,400 true home
sharers—earned just 32 percent of all revenue, or $209 million, in 2017."

While I like the exploration of facts like this, I don't really believe AirBnB
is important to rents in New York City. In spatial statistics it is difficult
to really prove anything rigorously, and this study doesn't even try to go the
distance.

"Applying Barron et al.’s national average ratio of exogeneity to New York
City, this implies that, city-wide, Airbnb drove up rents by 0.8% in 2015,
0.4% in 2016, and 0.2% in 2017 (all for years ending in August). This is a
cumulative 1.4% increase in rents over these three years attributable to
Airbnb’s presence in the city."

So while it might seem like the study looked statistically at AirBnB's impact
on NYC, in fact it did not. They just used a sort of rough rule-of-thumb from
a national average. But the rule-of-thumb is useless in particular cities
(suppose a city had one unit on AirBnB; would adding one more increase
rents?), and isn't even from published work. The authors of this study are not
economists or econometricians, and it isn't peer-reviewed and never will be.

Moreoever, you can use common sense:

"Airbnb has removed between"

(Dr. Evil voice)

"7,000 and 13,500 units."

New York City has 3.4 million housing units. While year to year housing
production varies a lot, on average it produces that number of new units every
few months: [https://imgur.com/a/gnzUf](https://imgur.com/a/gnzUf) The report
also notes that these units are concentrated in the most expensive
neighborhoods anyway. And NYC is only part of a much larger housing regional
housing market. It simply strains credulity to think even the upper bound of
13K units has any impact---especially when you consider some of the people
occupying such units would have letted or subletted in NYC anyway (the report
notes many are long term rentals).

Of course, the real action is in zoning. NYC has seen some upzonings, but
mainly massive, consistent downzonings over the past few decades. It is funny
people worry about about supply when a private firm removes a tiny bit of it,
but nonchalant when the government removes lots of it. Construction costs have
also soared, and are now sure to get worse thanks to Trump's tariffs on steel,
aluminum and canadian timber.

~~~
eric_h
> sure to get worse thanks to Trump's tariffs on steel, aluminum and canadian
> timber.

this[1] suggests that most New York City construction uses US steel and will
be minimally affected by Trump's policy. Admittedly, basically all new
construction is concrete and steel so it will undoubtedly be affected in some
way by changes in the steel market.

1)
[http://www.crainsnewyork.com/article/20180306/REAL_ESTATE/18...](http://www.crainsnewyork.com/article/20180306/REAL_ESTATE/180309940/steel-
tariff-unlikely-to-hurt-nyc-construction)

~~~
lewis500
It does not matter what particular country produces one one's steel. What
matters is the price of steel. US mills will be able to charge higher prices,
so the cost of NYC construction will rise; although in the short run builders
have probably locked into certain contracts. That is the whole point of the
tariffs: to raise steel prices.

------
snarfybarfy
Slightly of topic, but I always find it funny/sad that all over the world:

Driving a car you (and also partially others not owning a car) indirectly pay
_non market_ land cost, construction and maintenance costs.

Whereas getting a roof over your head requires directly paying _market rates_
for land, construction and maintenance costs _PLUS profit on capital_.

In my opinion having a roof over your head is a more fundamental human right
than driving around in an vehicle. But obviously those two are related as
those unable to afford market rents/house prices have to live in the boondocks
and then are forced to use a car.

------
peg_leg
Air BnB is terrible for smaller, more touristy towns as well, like Traverse
City, MI where housing prices and rents have skyrocketed. Used to be able to
rent a granny flat as a service worker...those are all Air BnB'd now.

~~~
devit
That seems a good thing economically.

Imagine there's a place on Earth that is somehow truly amazing and fills you
with happiness for a long time for just visiting it.

Obviously, it makes sense to have as many different people as possible be able
to appreciate it, which requires having them visit only one or a few nights.

Clearly, people should not be able to monopolize a flat there for 365 days a
year, and if they do they should pay a fortune since they are denying other
364 people access to the place.

This also works for less amazing but still touristically interesting places.

Also the best solution would be to have enough housing to meet needs both from
one-day-per-year demand and for 365-day-per-year demand, but if that's
impossible tourists should definitely be the priority over wanna-be residents.

~~~
notfromhere
cities aren't tourist destinations, people live and work there. skyrocketing
rent just so tourists can frolic is a disservice to the people who live there
day-to-day

~~~
lmm
> cities aren't tourist destinations, people live and work there.

Cities are both in various ratios. Those cities that tourists particularly
value should probably allocate a large proportion of their limited housing to
tourists, those cities that people particularly value living and working in
should probably allocate a large proportion of their houses to homes.
Fortunately the market can sort this out.

------
spunker540
How do you think they calculate Airbnb’s effect on rent in certain
neighborhoods? It seems like a hard figure to prove.

------
troydavis
tl;dr: The underlying product - properties - were actually more useful than
was widely recognized. Given new demand, expecting anything other than price
increases is unreasonable… but so is treating current prices like they're
written in stone.

Here's one way to think about Airbnb: prior to Airbnb (and VRBO and…), housing
values - both rents and asset prices - didn't incorporate all of the legal and
zone-permissible demand for them.

Imagine if, until now, the only way to rent an apartment was by pre-paying for
a year. Instead of $1,500/month or $2,000/month, every landlord quoted and
charged a price per year, like $18,000/year.

A company or business model then introduces the idea of only charging by the
month (ie, what the US market is now based on) rather than requiring pre-
paying for a year. 2 things would happen:

1\. Demand would increase (and prices would probably go up), because someone
would be serving previously un-met demand. (From the article: "over the last
three years, Airbnb has increased long-term rents in the city by 1.4 percent")

2\. The customer base would change, since the demographics of those able to
come up with 1 month's rent are very different from those who can front 1
year's rent. Some of these newcomers would be non-residents or short-term
residents.

If this sounds a lot like what Airbnb has done, you see the challenge. There's
nothing inherently permanent about current rents or asset prices, nor the
current customer base. They're just reflections of the ways that a property
can be used at one point in time – and there's nothing special about those
ways. People got used to the current demand because the product mix changed so
little for so long.

Whether that's good, bad, or some of both is a reasonable question, but in any
other industry (even with other supply-constrained assets), society almost
always considers it good. The underlying product was actually more useful than
was widely recognized.

(If the yearly vs. monthly rent example sounds outlandish, here's another
that's actually happened: 10%-15% mortgage interest rates, as existed for most
of the early 1980s. 13% mortgages could change the supply of housing enough to
meaningfully impact asset prices and rents, that is, create a new normal
price.)

I agree with the article's sub-point that this has little or nothing to do
with home sharing. The core change is that it's now possible to use an
existing product to serve a market that was previously not served well.

(Note that I'm ignoring housing where short-term rentals were not legal prior
to Airbnb - say, before 2013 - or were legal but not permissible under zoning.
While those are important considerations, many or most short-term rental
limits were passed in response to Airbnb.)

------
ForHackernews
Manhattan should probably just admit that it's going to become the Venice of
America: a playground for tourists and the ultra-rich, with virtually no
residents.

There's nothing wrong with that. They can tax the hell out of it and use it to
fund services in the rest of the city where real people live.

~~~
ironjunkie
Kind of agree with you. Don't even think living in Manhattan if you don't pull
at least 150k$. (Or be ready for some of those roomshare situations).

I'm also amazed by the average night price at Manhattan hotels. Even during
normal weeks, the cheapest is well above 300$/night.

~~~
stevenking86l
Lived in Manhattan for 6 years 2011-2017 in The East Village. Made about half
that. 1 roommate. 2 bedroom. Occasionally worked a side job (tutoring) but was
for extra cash more than necessity. I was working in the live music industry
so I had free access to a lot of live shows around town which allowed me to
save money but still do the things that make living in NYC Great.

It’s very possible.

Was kind to my landlord, and tried to fix whatever I could rather than calling
her when I needed something. The goal was to have her forget I existed. Rent
was raised $50 every other year which was completely manageable.

~~~
WingH
Tons of people live in the Lower East Side with affordable rent. Think
Chinatown, etc.

Of course that is not where people usually associate with Manhanttan..

~~~
acomjean
I did a walking tour of the lower east side last year. It was run by the
"tenement museum" (which is much more interesting than I expected.).

[http://www.tenement.org](http://www.tenement.org)

It turned into a talk about housing, and housing prices (we had a california
developer on the walk and some english people adding perspective).

------
techservative
AirBNB and Uber are the least racist companies on the face of the earth. No
other companies on earth have opened up the avenues for direct social
interactions across race and class lines the way these two companies have.

Before Uber and AirBNB, how many opportuinities could you name for white
Americans to do the following:

1\. Get in a car with a black person for an hour and have a conversation about
the election

2\. Go into a racially diverse neighborhood and have a black family open their
home to you and spend the weekend together

3\. Have a black person come and rent a room in your own home and stay with
your family for a weekend

4\. Allow people of color who own property in predominantly black communities
to profit from their own home

The only ones who benefit from these hit pieces on AirBNB are hotel groups who
want to regulate these arrangements out of existence and drive up costs for
hotels.

Who do you think is harmed the most when hotel prices rise? It is the same
people of color (and everyone else), who have to pay more to stay downtown in
major metropolitan cities.

Any study of AirBNB that does not take into consideration social mobility and
prices of affordable overnight rentals is a BS study, they are comparing
bananas to coconuts.

Yet we only see half of the story told in the media. Why is that? It’s almkst
as though the authors of these studies have a distinct agenda.

How are the effects any less racist than the rising home prices, which could
easily be explained by...uh...the massive stock market rally we just had?

Where are the studies about how people of color who own the buildings and
units being rented out in ethnically black neighborhoods can now afford to
send their children to college?

Reading the comments here: Too many people ask too few questions and have too
little understanding about the free market. Freedom of personal property is
GOOD for Black People. It is the ONLY way black people improve their
situation.

~~~
nugi
All 4 happened with regularity before uber. Are you literally 12? And how did
mentioning that minorities were disproportionately affected become calling
either company racist? The only racisim i see is buried in the assumptions
made in your comment.

~~~
visarga
I think the grandparent poster was right - AirBnb opens up a way for people to
see life in communities that were difficult to access before. That's what I
appreciate most about it - how natural it feels to live like a local person.
Living in a hotel while travelling feels artificial now.

~~~
sudouser
you’re saying that cities should be ghost towns where nobody lives and every
single place is an airbnb... because obviously we would like to have as many
people see this amazing community uh?

~~~
visarga
When I'll need an interpreter, I'll call you. But in the meantime please don't
tell me what I am saying.

~~~
sudouser
so, can you elaborate on your comment?

