Airbnb costs New York tenants $ 178 million per year: UPenn study

New York tenants lose $ 178 million annually due to reallocation of long-term rentals to the short-term market, one study found (Getty; Pixabay)

The founders of technology have long proclaimed that their products or services will change the world – to the point that it becomes a cliché – and the founding team of Airbnb was no exception.

“What we do with Airbnb feels like the junction of all that’s right,” Airbnb co-founder Joe Gebbia once said. “We’re helping people be smarter with the space they already have, and we’re connecting people around the world. “

But this ingenuity has also impacted permanent residents of Airbnb markets – and not necessarily in a positive way.

Studies have looked at Airbnb’s impact on rental prices in New York City, finding that short-term rental service drives rents up. But Sophie Calder-Wang, an assistant professor at the Wharton School at the University of Pennsylvania, went further in a new study, which examines the differential impact of Airbnb on renters by race, income, education, or location.

Calder-Wang combined 2018 Airbnb listing data scraped by AirDNA with demographics from the Census Bureau’s American Community Survey to assess the impact of reallocating units from the long-term market to the short-term rental market. term. In Calder-Wang’s study, a unit is considered “reassigned” if it has been marked as available on Airbnb for at least 180 days per year.

The analysis found that tenants in New York City experience a net loss of $ 178 million per year due to rent increases, which stem from the withdrawal of units from the long-term rental market and their short-term market listing.

These losses are not concentrated among New York’s most vulnerable residents: White, highly educated, high-income renters lose more money, the study finds.

Source: Sophie Calder Wang

While the median loss due to housing reallocation for all New York City tenants is $ 125 per year, the median loss for white tenants is $ 152 per year. Median losses are also higher for those with a university degree, those with incomes in the top 20% of earners, and those living in one-person households.

The location and size of housing occupied by these tenants is critical: White tenants with college degrees and high incomes tend to live in desirable neighborhoods.

In Greenpoint and Williamsburg, for example, Airbnb listings made up almost 10% of all listings. The population of these neighborhoods is 61% white and has a median household income of $ 99,000, according to data from the American Community Survey 2019. The population of New York City is only 32% of White and has a median family income of $ 69,407.

Calder-Wang also found that one-person households tend to experience larger losses, possibly because Airbnb’s penetration is highest in the entire city for one-bedroom apartments.

Renters are unlikely to make a difference by putting their homes on Airbnb: Renters in New York City only earn $ 23 million a year from accommodation, and those earnings are highest among small households in high income who live in expensive and desirable neighborhoods. The median gain for renters in the richest 20% of earners is $ 5; that same figure is only $ 0.01 for renters in the lowest 20 percent of incomes, according to the study.

At first glance, the study shows that Airbnb does not worsen inequalities among tenants, as the most financially secure tenants suffer the greatest losses. But Calder-Wang cautions against this conclusion, as these losses constitute a large transfer of wealth to landowners, who on average tend to be wealthier.

“In the presence of severe restrictions on the supply of the housing market, the transfer of welfare from tenants to landlords becomes substantial,” she writes. “In a city where the majority of residents are renters, unregulated Airbnb will likely hurt the middle person. “

Calder-Wang also notes that the severe housing shortage in New York City is partly responsible for this dynamic.

“Airbnb’s entry provides a channel for existing space to be used by the highest bidder, but the total quantity restriction increases rents for everyone,” Calder-Wang writes. “Therefore, a reasonable alternative regulatory approach is to allow the housing supply to grow more easily.”

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