Is Airbnb contributing to the housing crisis?
When Airbnb Launched nearly 15 years ago, it offered a new and innovative solution for booking short-term stays without hassle. By renting a guest room or an entire apartment, he offered an alternative to traditional hotel models that were often overpriced and overbooked. Airbnb now faces a lot of criticism as the company has grown rapidly, offering hundreds of thousands of stays around the world, but not without a handful of negative experiences. Today, planners and decision makers are beginning to see the effects of the abundance of Airbnb listings and its impact on a growing housing crisis.
Investors building Airbnb rental empires have become increasingly popular over the past decade. Especially these days, where people are looking to get back to their normal travel habits, Airbnbs have been a popular option and have played an important role in the short-term rental market. In 2020, the purchase of vacation homes in the United States exceeded the growth of existing homes sales of more than 40% from 2019. Homeowners see the benefits of buying these homes and renting them out with high profit margins. Opportunistic landlords can pay off their mortgage in just days by renting out their homes to visitors. However, this has partially contributed to a housing shortage that has affected the world, driving up rental prices in almost every major city. This correlation between the increase in the number of homes dedicated to serving Airbnb and the increase in rental rates has been dubbed “The Airbnb Effect”.
In addition to the lack of long-term rentals that could better serve residents, there has been a significant slowdown in the construction of new housing projects given global supply chain issues and a difficult funding climate. Exclusionary zoning laws that dictate the types of low-density housing that can be built have also played a role in the housing shortage. While some cities have started enforcing short-term rental laws, especially in places like New York, which has already reported having more Airbnb ads than vacant apartments on the market.
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Another report, published in 2016felt that due to the overwhelming amount of Airbnb announcements, New Yorkers were paying more than $600 million in additional annual rent due to the rising cost of rent. While Airbnbs certainly generate economic gains, especially in cities that rely heavily on tourism, most of the revenue goes to a disproportionate number of landlords. On the inside Airbnb estimates that about a quarter of hosts manage about two-thirds of ads. Even further, their study found that most listings are for entire apartments that have been turned into makeshift hotels where operators can earn far more revenue than they would from residents paying market rents. Small family landlords aren’t the only ones involved in building short-term rental empires. Big corporations and real estate investment companies are building their own mega-portfolios, pouring in billions of dollars to create holding companies for their assets, which only further contributes to the housing shortage.
Around the world, renters looking for affordable homes are being driven by the boom in short-term rentals, including Airbnbs. Over the next decade, it is expected that construction will not be able to meet the demand for affordable housing, especially as these homes and apartments are taken off the market to be used only as rentals. holidays. While short-term rentals are a serious problem, it raises the question that even if the Airbnb burst was to occur tomorrow, is there a guarantee that these units will immediately join the long-term housing stock? Or does Airbnbs still have a role to play in housing management in our cities? There are negatives to Airbnb, but there are also positives, and both should be considered before deciding how to deal with them.
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