
NYC Renters Paid Extra $616M Thanks to Airbnb, Study Says - pulisse
https://www.bloomberg.com/news/articles/2018-05-03/nyc-renters-paid-extra-616-million-thanks-to-airbnb-study-says
======
pithymaxim
Maybe, but the regression they use to argue this is pretty bonkers...they need
to assume that once they control for income, population, education, and
employment, the coefficient on the Airbnb share captures the causal effect of
Airbnb on prices. But obviously AirBnB share will be correlated with many
other things that make a neighborhood nice, which will also be correlated with
prices. So this just says that desirable neighborhoods are desirable.

~~~
wikiwawa
Note that the regression is on the differences, y_t - y_t-1 not the levels,
just y_t.

So the argument is more subtle, that the "change" in AirBnB share is
correlated with changes in rents. So level effects such as being a nice
neighborhood are accounted for.

Having said that, a large change in AirBnB share is probably still related to
unobservables related to factors that would increase rent. E.g changes in
hipness of a neighborhood unaccounted for by changes in demographics.
Therefore the $616M figure is biased upwards, though I bet in reality still a
large number.

------
pyrophane
For anyone interested, here is the full text of the study:
[https://www.dropbox.com/s/u4s1fcync2gseyl/AirBnB_Report%20FI...](https://www.dropbox.com/s/u4s1fcync2gseyl/AirBnB_Report%20FINAL.docx?dl=0)

A brief description of how they attempted to control for other factors:

> We also control for demographic and economic changes in neighborhood level
> by including average household income (in log form), population (in log
> form), and the shares of college-educated and employed residents in the
> neighborhood. We also included year and neighborhood-level fixed effects
> (dummy) variables to control for otherwise uncontrolled-for trends and
> neighborhood characteristics.

~~~
kolbe
I can't dl the report, but based on your quote, I'd say there's nothing about
this 'study' supports their conclusion. It's fine that they control for some
stuff, but it's absurd attribute the remaining price effects to AirBnB.

------
loceng
'Airbnb Inc. disputed the study’s findings, calling them “wrong on the facts”
and containing “substantive issues with the methodology.”'

Did Airbnb publish what these wrong facts and substantive issues are?

~~~
dragonwriter
The odd thing is that AirBnB’s entire value proposition to hosts is that it
increases realizable income from the property they control and make available
through AirBnB; if true, especially in the presence of supply constraints,
this has to increase market clearing prices.

They are in a position where what they need _hosts_ to believe is directly at
odds with what they want _policymakers_ (including people voting directly on
policy or for politicians) to believe.

~~~
DubiousPusher
The spin is preposterous. They should just say that that's a natural outcome
of better real estate utilization and that the city needs to figure out how to
build more affordable housing.

~~~
toomuchtodo
Easy there with terms like “better real estate utilization”, which could be
conflated with “more efficient rent seeking at the expense of housing
consumers”.

The end goal is not always maximum profit extraction. NYC is served best by
balancing the needs of both long term and short term renters, while ensuring
investors reasonable compensation/rates of return on capital invested for
services provided.

~~~
sdhgaiojfsa
This is not what people traditionally think of as "rent-seeking." Rent-seeking
behavior is doing something to get more money without providing any
corresponding value. AirBnb hosts do provide value -- just not to the people
who live in the neighborhood. But it is fine to argue that, based on their
willingness to pay more, out of town visitors provide better utilization of
the housing resource.

TL;DR: Extracting rents from things you own by providing economic value to a
customer is not "rent-seeking."

~~~
bobthepanda
Short-term, <90 day accomodations are not "housing", and never have been
considered as such. That's why they're in a completely different regulatory
category and always have been.

In a democracy it makes sense that a city would prioritize the needs of the
citizens who live and vote there over short-termers and people looking to make
a quick buck.

~~~
sdhgaiojfsa
I'm not commenting on the validity of the policy, only one whether rent-
seeking is the correct term to describe lending one's property out on AirBnb.

------
charlottetrvm
The exact same true is for hotels, only worse. ANYTHING that uses up space
that is not used for housing is by definition increasing rent for everyone.
Hotels have a much bigger effect than Airnb because you'll find hotels in all
of the most expensive and densely populated cities. If you replaced all hotels
with regular rental units, think about how much rents would go down.

To be more accurate, the report should say: NYC Renters paid extra thanks to
ANYTHING that takes up space that is not a rental unit, especially hotels.

~~~
iamcasen
Exactly. I wonder too if they are accounting for increased tax revenue due to
more travelers visiting the city thanks to AirBnb. Honestly I've been able to
travel a lot more because of AirBnb, and how affordable it is compared to a
hotel.

At this point, prices are starting to stabilize with hotels in some of the
bigger cities like NYC and SF, but still. I prefer the idea of freeing up
under-utilized space for dynamic purposes as opposed to a fixed number of
hotel location.

------
travisp
If a few thousand airbnb units cost renters that much money, imagine how much
renters would save if more and taller buildings were allowed to be built!

~~~
icebraining
Does NYC impose heavy restrictions on the height of buildings? I've never been
there, but they seem tall to me.

~~~
travisp
Yes, much of the city is limited to four or five stories or otherwise
restricted [1]. Keep in mind also that much of NYC is not just the financial
district of Manhattan.

In addition to actual height restrictions, neighborhood associations also
fight tooth and nail to prevent new development and to limit the height of new
development when they can't.

[1] [https://www1.nyc.gov/site/planning/zoning/districts-
tools/re...](https://www1.nyc.gov/site/planning/zoning/districts-
tools/residence-districts-r1-r10.page)

~~~
ch4s3
Yeah, my neighborhood in Brooklyn is mostly 2 to 3 story building. Many of
them were multi-family homes until the 1980's, and are now single family
homes.

------
briandear
I am curious, doesn’t the legality of roommates also drive up rents? It seems
like if roommates weren’t a thing, it would drive rents down simply because
people wouldn’t be able to afford apartments in many cases without a roommate.

I am not suggesting a ban on roommates of course, but it does seem like there
are a large number of variables that affect rent prices. We could argue that
AirBnB constricts long term housing supply while roommates constrict long term
housing supply for single or family renters as well.

If a one bedroom goes for $4000 and there are two roommates, that means the
price the market would support for a single person is $2000. So without
roommates, the market would have to adjust to the price people were able to
pay: $2000. But then again, that could also restrict supply since there are
more people competing for a finite supply.

My point is that while it’s convenient to blame AirBnB — the truth is far more
complex. We also have to consider the effects of the extra income earned by
owners — that income goes to buying things or investing, which, it could be
argued, benefits the economy. There is also the question of how many visitors
to New York actually can now afford to visit New York because of wider housing
availability — if we drive up lodging rates, that’s less money coming into the
city. If I have to spend $250 for a hotel vs. $150 for an AirBnB, that means I
can buy more pizza, thus putting more money into pizza shops and supporting
those workers. Additionally, if a hotel is $250, maybe I don’t visit at all,
which would result in 0 economic benefit to the city.

The economics of this aren’t as sound-byte friendly as many might think.

If we want to be fair, we should also address how much additional rent New
Yorkers pay due to rent-control and the housing illiquidity that promotes.

If the hotel industry is so concerned, then perhaps they ought to reevaluate
their efficiency and pricing and reconsider their years and years of charging
$10 for a bottle of water. Perhaps the city could also reconsider the
occupancy taxes, sales taxes and all the other fees cities love to stick
tourists with.

Tourists already pay sales taxes when they buy a meal. They buy products and
experiences which generate significant economic activity, jobs and all the tax
revenue that creates. But for some reason, cities see tourists as a piggy bank
rather than the engine of economic activity they are.

~~~
cimmanom
Prohibiting roommates would drive the rent per person up and the rent per unit
down. That would make the city less affordable to both renters and landlords.

The problem with AirBnB is that it benefits landlords and _tourists_ at the
expense of renters by driving the rent per unit up, the short term rent per
person down and the long-term rent per unit up.

------
josephorjoe
Is there really much evidence that the majority of Airbnb properties would
otherwise be traditional "12 month lease" rental apartments if it were not for
Airbnb.

I mean, I'm sure there are a few, but if I'm a landlord, why would I give up
having a stable tenant paying market rate rent for 12 months at a time for
essentially managing a hotel room?

Sure, the 'rent per day' is going to be a lot better with the hotel room
model, but it seems like an entirely different business to manage say 30-100
property rentals per year rather than 1.

People have always subletted their apartments when they are out of town -- I'm
guessing a lot of the Airbnb rentals are just those traditional sublets
showing up in an easy to quantify form.

I'm open minded to the possibility I'm wrong -- I don't have the data on the
history of the properties showing up on Airbnb -- but it seems like the
profile for the landlord/apartment that ends up on Airbnb is a bit different
from the ones that show up on StreetEasy with 12 month leases.

~~~
dkirkman
I think in general, it's very difficult if not impossible to realistically
explore the counterfactual of "what would this property be if not for Airbnb".

However, in my neighborhood long term 12 month lease rentals most definitely
seem to be being turned into Airbnb rentals. I live in Tahoe, so this isn't
necessarily going to generalize to non-tourist areas. In the last five years
there has been a steady conversion -- I personally know of four in my
immediate neighborhood. (As in, they were long term rentals converted to
Airbnb. I know the people that were kicked out of the long term rentals) When
we'd recruit new people to Tahoe there used to be numerous options for local
housing, things have gotten so bad that the company I work for opted to buy a
condo to provide temporary housing for new recruits while they look for more
permanent accommodations.

An additional (also anecdotal) data point: our realtor told us that investors
looking to convert homes into Airbnb are very active right now.

On the plus side (potentially, not everybody agrees) Airbnb also seems to have
converted a number of second homes that were previously unoccupied most of the
year.

~~~
stevenwoo
Have the anti-rental things Tahoe done anything to curtail the local movement
or is that not in your neighborhood?

[https://www.sfgate.com/travel/article/Study-Tahoe-s-
Airbnb-l...](https://www.sfgate.com/travel/article/Study-Tahoe-s-Airbnb-law-
raking-in-cash-from-12832110.php)

~~~
dkirkman
Tahoe has a surprising number of jurisdictions! I'm on the Nevada side, so I
don't have personal experience with the SLT enforcement.

Here there seems to be a fair amount of teeth gnashing about airbnb -- there
are clearly more people in the neighborhoods and rentals for locals are now
hard to find. But the homeowners think it's raising property values and are
kind of happy that if they ever leave Tahoe there is now a pretty
straitforward way to hold on to their property. The end result is not much
happening.

The SLT ordinance is addressing the what I think is the major fear for many --
that a nearby house will become an unbearable party house. I think pretty much
all of the Tahoe jurisdictions have moved quickly to ensure that doesn't
happen. In our neighborhood, I've been told the sheriff responds in minutes to
a noise complaint, and that the visit results in fairly draconian fines to the
property owner.

------
tvchurch
How much extra do NYC renters pay from not building enough new supply?

Or from rent control stifling the development of new supply?

~~~
busterarm
Yes, the 0.7% of "rent controlled" units of NYC's available inventory that's
shrinking by 2.5%/yr is totally stifling new supply.

Feel free to tell us about how the rent stabilized units, which do compromise
1/3 of the inventory but in 3/4 of cases are within spitting distance (10%,
and see 4% rent increases every 2 years) of market rate are keeping down
supply though. Tell us about about how luxury condos in places like East New
York, Edenwald, Brownsville, Morrisania & Crotona, and Hunts Point are going
to increase affordable housing in NYC. I am very interested in learning about
this.

~~~
busterarm
Or instead, how about I tell you about my time working for a real estate tax
certiorari firm in NYC and how landlords with multiple properties will
deliberately underutilize their buildings for tax advantages.

Occupancy maximums of 90% and one or multiple buildings deliberately at 0%
occupancy (usually the primary residence of the landlords' extended family
members for undeclared income) is the norm.

~~~
bogomipz
>"Or instead, how about I tell you about my time working for a real estate tax
certiorari firm in NYC and how landlords with multiple properties will
deliberately underutilize their buildings for tax advantages."

When in the 1980s? Was Ed Koch the mayor?

Market rate on a modest(500 sq foot plus) apartment is worth close to $3K a
month or 36K a year. Please provide a citation this tax break which is worth
more than 36K a year in 2018 for leaving a unit unoccupied?

~~~
busterarm
2000 and 2001.

~~~
bogomipz
So during the dot com boom when the city's economy was doing gang busters and
the vacancy rate was less than 2%? I don't think so.

~~~
busterarm
[https://www.huduser.gov/portal/publications/pdf/NYC-
comp-16....](https://www.huduser.gov/portal/publications/pdf/NYC-comp-16.pdf)

Also, this data does not agree with you. Lowest vacancy rate of any borough
was 2.3% in Queens in 2000 and between 3.1 and 4.2 in every other borough.

The economy is doing even better in NYC right now and the vacancy rate is over
11% right now. [https://www.6sqft.com/nearly-250000-nyc-rental-apartments-
si...](https://www.6sqft.com/nearly-250000-nyc-rental-apartments-sit-vacant/)
Hrmmm....

~~~
bogomipz
Nice cherry picked data. That's a HUD report. Try checking the NYC Rent
Guidelines Report for accurate data:

Manhattan 2.57 and Queens 2.11 [1]

That's from page 2. It also shows a -25% and -35% change for vacancy rates
from 3 years prior for those two boroughs.

And you can't seem to produce any citation for your assertion about a piece of
the tax code that allows landlords to make more money from empty apartments
than renting them at market rate.

[1]
[https://www1.nyc.gov/assets/rentguidelinesboard/pdf/hsr00.pd...](https://www1.nyc.gov/assets/rentguidelinesboard/pdf/hsr00.pdf)

~~~
busterarm
As a lifelong NYC resident, I trust HUD a lot more than I trust the Rent
Guidelines Board, appointed by the mayor and a total staff of like 9 people.

The Rent Guidelines Board has been an advocate for landlords for as long as
I've lived here. Even now: [https://ny.curbed.com/2018/4/13/17234694/nyc-rent-
stabilizat...](https://ny.curbed.com/2018/4/13/17234694/nyc-rent-
stabilization-wars-2018)

------
api_or_ipa
Anyone have access to the report? I don't have readily available access to a
terminal but I'd love to read the study. Any kind of analysis such as this one
relies heavily on _ceteris_ _paribus_ --assume everything else is the same. Of
course that's a poor assumption to make, so most studies fiddle with the
assumption and try to tease out the effects of one market (short-term rentals,
a la AirBnB) on another (resident friendly long-term rentals).

~~~
throwawayjava
[https://comptroller.nyc.gov/reports/the-impact-of-airbnb-
on-...](https://comptroller.nyc.gov/reports/the-impact-of-airbnb-on-nyc-
rents/)

 _> Any kind of analysis such as this one relies heavily on _ceteris_
_paribus_ --assume everything else is the same_

That's not the assumption made by this report.

Of course, predicting alternate futures when humans are in play is always a
non-trivial task, but they did put some effort toward controlling for the
obvious stuff:

"A summary of the regression results is presented in Table 1. 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. Coefficients of other
control variables including household income, population and share of college
graduates are positive and statistically significant at 1-percent level.
Employment rate is not statistically different from zero."

------
erdojo
This is such propaganda. Not even worth discussing. I mourn the loss of
factual journalism and critical thought.

~~~
asdsa5325
Honestly, your comment sounds like propaganda more than the article...

~~~
erdojo
Honestly? Did literally and unfortunately have a baby, or are you in the habit
of dishonesty and needed to clarify your intent to tell the truth?

------
DubiousPusher
The finding is somewhat interesting on its own but I don't really see why it
matters all that much. No one likes paying higher rent and I can see rent
increases as being particularly hard on the poor, so that's bad. But I'm not
sure interfering with these micro-leases is the best solution. It makes more
sense to me to focus on how we can expedite construction of safe, quality,
affordable housing. That would help address the AirBnB inflation problem as
well as the basic housing crisis. What's more, we'd retain the benefits of
micro-leasing.

~~~
michaelmrose
We can totally crush people turning rental properties into unsanctioned hotels
while allowing people to occasionally rent out a bedroom and work on other
solutions to affordable housing.

Just fine renter and airbnb 100x what they are liable to earn in the former
case and shockingly such a case will trivially go away.

Those caught with their pants down because they invested a bunch of money in
illegal hotels can sell and roll that money into another illegal enterprise of
their choosing that is less trivial to regulate out of existence.

------
TAForObvReasons
> For each 1 percent of all residential units in a neighborhood listed on
> Airbnb, rents in that neighborhood went up 1.58 percent, Stringer said. The
> estimated $616 million impact is for 2016 alone.

~~~
lend000
I doubt these factors are statistically independent -- the most popular
neighborhoods for tourists and yuppies have always seen prices grow faster
relative to the overall metro, and more popular/high-growth/expensive
neighborhoods will naturally attract more Airbnb hosts to take advantage of
their location.

In any case, assuming people travel the same amount, it is zero-sum (Airbnb
saved NYC visitors 616 million dollars and also transferred some percentage of
tourism income from hotels to a broader collection of residents). However, I
think Airbnb enables people to travel more (I certainly travel more with the
incentives of cheap, reliable Airbnb lodging), so we need more data to
determine whether the lower prices actually incentivize a sufficiently high
increase in tourism to be a net positive for tourist-mecca economies.

Even if it comes out to a net negative to tourism-based economies and it
increases costs for local residents, I'm curious what the Airbnb witch-hunt
crowd is proposing. Limit tourism / make it harder and more expensive to
travel? Reinstate the hotel cartels?

~~~
alonmower
Don't 'limit' tourism but yes, don't allow tourists to get price breaks at the
expense of residents that rent in a city.

As it stands property owners and tourists are coming out on top. Property
owners can now easily make more money renting short term than long term, this
raises property prices (because, hey, i can buy that house and make a bunch of
money renting it on AirBnB) while also reducing the rental housing stock
(because houses that would have been rented to long term renters are now on
AirBnB). So now, as a renter, I pay more for rent because I'm competing for
fewer houses AND it's going to cost me more money to get into my first house.
So I save less money per month because more goes to rent and I have to save up
more money to put a down payment down on a house.

Now, sure, how big this effect is is up for debate but I think it's naive to
assume it doesn't exist. I expect cities with housing crises that also don't
rely too heavily on tourist revenue to start regulating short term rentals
aggressively to combat this effect (this has already happened in many places).

Sure, if you're a tourist town and most properties are second/vacation homes
then this is less of an issue but in growing cities where renters are already
barely getting by this is going to continue coming to a head. Alas, homeowners
are more likely to get out and vote and have more directly measurable skin in
the game vs a renter who might be more transient and less aware of the effects
that are conspiring to squeeze them out.

~~~
zip1234
Where would those tourists stay if they didn't use AirBnB? I can see where the
residents may get priced out of a certain area because short term rental
drives up the price, but the increase demand and higher prices should
stimulate new construction. Now, if height restrictions are causing no new
construction to be built, then perhaps the city should ease those so more
housing can be built, driving the prices down. The 'character' of Manhattan
isn't going to be ruined by higher building heights.

~~~
alonmower
In hotels? Further away? It'd be more expensive or more inconvenient so fewer
would come, but residents wouldn't be bearing the negative externalities as
much as they are today.

I live in SF so while I wholeheartedly agree that more building should help
solve the problem the reality (here at least) is that existing homeowners have
strong incentives to oppose rezoning and new development as it might hurt
their home's values. Many people have overextended to be able to buy here that
anything that could cause dips in prices is vehemently opposed. I'll admit SF
has a broader set of issues at play here but AirBnB just further strains an
already strained situation.

------
piinbinary
I'm sure that number is dwarfed by how much extra renters paid due to actions
of the city (e.g. height restrictions).

~~~
bdcravens
Which would be true regardless of AirBnB's presence, right? So the "AirBnB
inflation" is still a thing.

~~~
PurpleBoxDragon
But what about the things that aren't true because of AirBnB's presence? Maybe
prices for short term stays went down, tourism went up, and there is more tax
revenue that can be used to improve the city for the renters.

If we only look at one part of the picture we may miss that an overall trend
is different. Is it really beneficial to talk about how many died because they
were wearing a seat belt without also considering how many who lived for the
same reason?

~~~
dragonwriter
> Maybe prices for short term stays went down

Sure, allowing residential property to be used for short-term rental drives
regular residential rents up and short-term rents down (forcing, over time,
more residential proerties to be used for short-term rental to the extent
possible), narrowing the gap between short-term and long-term rentals. It
makes things less expensive for travellers and more expensive for non-
travellers.

~~~
lazerpants
Perhaps the problem then, is that the city slaps a huge tax burden on
travelers who choose to stay in hotels? Last time I stayed in a hotel in NYC,
taxes were about 25% of the total cost.

------
loeg
$616M / (⅔ * 8.5M) (Edit: was 8M) residents = about $109 (was: $77) per
resident renter in 2016.

~~~
kazinator
Residents are not renters. The number of renters in NYC was evidently around
5.4 million in 2016.

Even so, not every renter is a separate rental unit; dividing the figure by
the number of rental units would be more useful since it would indicate the
impact on the price of rent.

~~~
loeg
Do you think there are a substantial number of property owners?

[https://www.citylab.com/equity/2015/06/new-york-is-a-city-
of...](https://www.citylab.com/equity/2015/06/new-york-is-a-city-of-renters-
at-every-age-level/396509/)

[https://www1.nyc.gov/site/planning/data-maps/nyc-
population/...](https://www1.nyc.gov/site/planning/data-maps/nyc-
population/population-facts.page)

> Approximately two-thirds of dwelling units in New York are renter-occupied,
> over twice the national average.

Ok, not insignificant, but the order of magnitude is roughly correct. I'll
update the computed figure.

~~~
kazinator
The problem is still that your $109 is per renting person. A family of five in
one dwelling is five renters: but they are not paying 5 x $109 more on their
rent because of AirBNB!

The denominator has to be the number of rental dwellings; then we have a
better idea what the impact is on rental prices, on average. Still, it must be
dependent on area, and the size of the place and rent amount. Not everyone
pays some sort of "flat AirBNB tax" across the board.

~~~
loeg
The more specific we try and make the $616M figure, the less accurate a
predictor it becomes :-). I didn't want to go too far in that direction.

~~~
kazinator
And anyway, AirBNB allows more people to visit NYC, so it's good for tourism.
That has to be counted as money coming in. It's just not going into the
pockets of some traditional hoteliers.

------
peterjmag
Strange, I'm getting a 404. If anyone else is having the same problem, here's
Google's cached version: [https://goo.gl/BmbnJ2](https://goo.gl/BmbnJ2)

------
joelrunyon
Now do it for San Diego.

The last 2 years, the prices have gone absolutely bonkers and landlords have
ridiculous demands based on inflated airbnb prices they can charge to out of
towners.

I really like Airbnb, but these effects are real and they suck.

~~~
moate
Not to be difficult, but what do you like about AirBnB? There are benefits to
it, but you also seem to understand the problems specific to it. Why do you
feel the benefits outweigh the problems created?

------
zjaffee
It's important to look under the surface of what this is saying. This boils
down to an extra 77 dollars per person per year, so basically this amounts to
an extra 10 dollars per month for any given unit.

~~~
murph-almighty
Just curious but what's your math here?

If you divide by number of people in Manhattan (8.538 million) you get roughly
$72.14 per person, but this isn't really accurate since not everyone in
Manhattan rents- maybe you're a kid, or you own a co-op, or you're homeless.

You'd really need to divide the value by the number of rented units in NYC to
figure out the average raise in rents per apartment, and even then that won't
draw a perfect picture because many people live with roommates who contribute
to rent.

I started picking out values from here:
[https://www1.nyc.gov/assets/rentguidelinesboard/pdf/17HSR.pd...](https://www1.nyc.gov/assets/rentguidelinesboard/pdf/17HSR.pdf)

I don't know the nature of rent control that well in NYC so I'm just going to
take a few approaches:

If we assume only unregulated apartments picked up the burden, the cost per
unit is 725.80.

If we toss in the "other regulated" apartments, 546.42.

If we toss in all rent-stabilized (pre and post 46), it's 368.96.

All rented units together? $363.

~~~
cimmanom
There are under 2 million residents of Manhattan. 8.5 million people living in
NYC, tho. NYC is all 5 boroughs, not just Manhattan.

------
hb3b
Unfortunately, Airbnb is probably the only way a middle-class family can earn
money on investment properties. No one in their right mind would rent a
$1,000,000 condo for (1% rule) $10,000.

~~~
jedberg
What is the 1% rule? As a landlord I usually assume 0.5% per year.

So a million dollar condo would be 50K a year, or about $4200/mo, which is
exactly in line with current nyc rents.

~~~
sidlls
The rule is a residential rental is only worth the risk or has a good return
if the property can be rented at about 1% of the value per month or more (e.g.
a $100k home should rent for $1k/mo). I generally try to get an annual cap
rate of 9% or more (1%/mo less expenses).

~~~
jedberg
Wow. That rule must only apply in smaller cities. I can't think of a single
residential property in the Bay Area that would even come close to that.

On the other hand, all the properties I manage do 0.5% per year and have all
been profitable, not even including the appreciation on the property.

~~~
sidlls
Not smaller, just different areas. It's fairly easy to achieve that in the
Midwest and larger urban areas in the southeast. I typically got ~0.8%/mo or
more.

I'd go so far as to say that if single family residential is your strategy
it's better to take the multi-million dollar investment in a single home in
the Bay and make one in 5-7 (or more) homes elsewhere. The appreciation is
drastically lower but the cap rates are amazing (much higher cash flow) and
the risk is spread out. Of course, with that kind of investment it's better to
go multi-family or commercial anyway.

------
pravda
Sounds like the PR firm for the hotel industry has been busy!

------
sigfubar
So, I'm paying an extra $68/month because of Airbnb.

Alright.

~~~
evanlivingston
$68 a month is easily 5% of income afters taxes for many people. In a country
where we already spend an absurdly high percentage of our income on rent, this
doesn't seem trivial.

~~~
sigfubar
Numerically you're right, but you're showing a distinction without a
difference. In the kinds of neighborhoods where Airbnb has a foothold
(gentrified, desirable, centrally located) rents are already so high that an
extra $68 doesn't make a damn bit of difference. I live in one of these
neighborhoods, and I speak for absolutely everyone who can afford to pay the
rent I'm paying: we don't care about the additional $68.

Those for whom $68 really is 5% of net monthly income don't live in Airbnb-
infested neighborhoods, and thus are even less affected by the impact Airbnb
has on rental prices.

I don't mean to sound insensitive to the plight of those for whom NYC is too
expensive. I think such people need to be helped, but spending even an iota of
thought on Airbnb is a waste of time: its impact is concentrated in
neighborhoods that are already too far out of the reach of rent-challenged New
Yorkers. And this isn't the case because of Airbnb.

~~~
michaelmrose
You are insisting on the $68 a month figure based on dividing the total
prchange in prices over all rentals then insisting the effect is actually
almost entirely concentrated in a small segment of neighborhoods which means
that we ought not logically to divide it between all parties but insisting on
using the smaller figure derived from doing so.

This is bad math based on already uncertain math.

In a pathological case where we have a rich neighborhood consisting of 3
owners and 7 renters transformed into 3 owners 3 renters and 4 airbnbs not
only would the price increase presumably by much more than 68 for the
remaining renters the other renters would seek rent elsewhere increasing
demand and therefore price. Given more buyers than sellers they would push
someone out presumably to a still less desirable neighborhood where they would
displace someone else.

Your neighborhood isn't a market unto itself and you can't pretend changes
their don't have pervasive effects on the rest of the market and decreasing
supply MUST increase price throughout the market.

------
dumbneurologist
This just a PR-driven article that states an obvious fact (demand influences
the market) in order to advance an agenda.

------
rubyn00bie
This article is totally worthless without some way to gauge what $616M
actually is... I have a VERY hard time believing in NYC that's anything but
"piss in the wind" compared to total amount spent on rent.

Too many articles come out with a "shocking number" that doesn't mean anything
except to those who don't know the scale.

This is mostly a click-bait article and study.

~~~
tribune
According to [1], there are 2,146,892 occupied rental apartments in NYC. So
this works out to an average of $287 per rental per year. Hardly "piss in the
wind".

[1] - [https://www.nakedapartments.com/guides/nyc/renting-in-new-
yo...](https://www.nakedapartments.com/guides/nyc/renting-in-new-york-
city/high-demand-low-supply)

~~~
rubyn00bie
Absolutely piss in the wind. Are you kidding me? Again numbers and scale throw
people off...

The average rent for an NYC apartment per month is $3375
([https://www.rentjungle.com/average-rent-in-new-york-rent-
tre...](https://www.rentjungle.com/average-rent-in-new-york-rent-trends/))
totaling: $40,500 per year.

So that $287 increase is less than 0.7% per year.

------
ynniv
1.58% doesn't get as many clicks as $616M

------
hungerstrike
Are AirBnb competitors contributing to this as well? Companies such as
Tripping.com, FlipKey, HomeAway, etc.

------
nnm
"For each 1 percent of all residential units in a neighborhood listed on
Airbnb, rents in that neighborhood went up 1.58 percent, Stringer said."

Correlation does not imply causation[1]. Looks to me this is one of the
studies that I would label as "shallow" or "problematic".

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

~~~
cuchoi
Yes, they calculate using a simple regression with some controls (fixed-
effects model): [https://comptroller.nyc.gov/reports/the-impact-of-airbnb-
on-...](https://comptroller.nyc.gov/reports/the-impact-of-airbnb-on-nyc-
rents/).

------
JohnStudio
People wanted disruption ... well that's what you get. Economics of capitalism
at work.

~~~
crawfordcomeaux
Be careful what you wish for, especially if wishing for profit over anyone's
well being or if wishing for disruption over sustainability.

I hypothesize an antidote to capitalism could be collaboratively learning how
to sustainably contribute to all life's needs together through science, art,
and love.

I'm very interested in picking apart this hypothesis. If you (the person
reading this) disagree, would you be willing to specify the words you disagree
with and/or specific examples explaining why you disagree? Same for if you
agree <3

~~~
briandear
Profit creates well-being. Without profit, the economy stops.

~~~
crawfordcomeaux
I'm fairly certain well-being comes from needs being met. Life has no need for
profit or money. Those are constructs that require believing what you said in
order to be true.

------
49bc
Wait a second. The entire population of New York state is 20 million. How
could they possibly have paid an extra $616 million? Each person in New York
paid an extra $30 million?

~~~
icebraining
616M/20M is not 30 million - you have to take out the million :)

