The short-term rental industry has repeatedly been blamed for driving up housing prices by contributing to housing shortages in the United States and abroad. Some of the major travel destinations like Amsterdam, London, New York and Los Angeles are most criticized for the sheer size of their operations. In fact, New York now has more Airbnb locations than apartments for rent! That’s crazy.
The theory is that Airbnb — and other short-term rental companies like VRBO and HomeAway — are converting long-term rentals that would have housed local residents and families and putting them on the short-term rental market for visitors, thus further reducing an already insufficient supply of accommodation.
There is some data to suggest that this shift in the tenant market has the potential to cost tenants thousands of dollars due to pricing pressure. Essentially, there are fewer rentals available, so those that become available have inflated prices. Supply and demand that drastically weigh down the pockets of local residents.
It’s a tricky knot to untangle, as there are a lot of factors at play in the market. Outside of New York and its insane rental imbalance, local price increases as a direct cause of Airbnb appear to hover around a single percentage point. However, converting long-term rentals to short-term rentals is known to shrink a housing market that is already experiencing historic shortages. But it’s hard to measure how directly companies like Airbnb drive up house prices.
What is clear is that as discontent grows and cities start to take action, we could see a shift in the short-term rental landscape over the next few years. Many cities have already adopted restrictions against the short-term rental market, ranging from near-total bans, to limits on how long a property can be rented, to limits on the number of people who can get licenses to open an Airbnb. I expect these kinds of restrictions to continue to tighten in the years to come.
Seth Lejeune is a partner/team leader at REMAX HOMEPOINT in Royersford and can be reached at [email protected] or 610-804-2104.
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