Short-term rental app Airbnb may have another banner year, but many question the ripple effect of vacation rental services on the housing market.
Communities have become ghost towns. The housing market has become insurmountable for new buyers. There are more Airbnb listings than long-term rentals in major cities like New York. A simple search of the #airbnbnightmare hashtag will yield more than just complaints about unreturned deposits and missing towels.
“Airbnb is destroying communities,” one user tweeted. @MeMeBoomer is no stranger to talking politics on Twitter, but her feelings for Airbnb couldn’t be more personal. She describes her community as a lonely and desolate place to live. Airbnb dominates its neighborhood, making it difficult for new tenants or potential landlords to settle permanently.
“No long-term housing options for people working in these cities, so businesses and services are suffering as well,” she tweeted on June 21. @MeMeBoomer isn’t the only story being shared on the social media platform.
Airbnb, founded in late 2007, has been providing convenient vacation rentals for fifteen years. However, with cries that they are destroying communities, causing widespread housing shortages and driving up house prices, the question arises: are we finally paying the price for our convenience?
Airbnb is having a great year
“The first quarter of 2022 was another record-breaking quarter for Airbnb,” says co-founder and CEO Brian Chesky. Reservations are up 30%. However, what might surprise you is the length of stay customers book.
According to their Q1 report, long-term stays – meaning 28 days or more – are the fastest growing category based on trip length. Moreover, these long-term stays are at an all-time high, a figure that has doubled compared to the same quarter in 2019.
In 2007, two hosts were welcoming guests into their home. Today, the site has 4 million hosts and 6 million active listings. According to Airbnb, their hosts have earned $150 billion since the app launched.
A viral tweet paints a picture of how some consumers view the holiday juggernaut. In a June 17 tweet, user Kelsey Glamor had this to say, “Back when Airbnb started, it was like natural hosts renting out their cute homes and thinking, ‘There’s beer. craft for you in the fridge! and now it’s someone’s 80th rental property with plastic Ikea furniture, and the soap is out. The tweet received nearly 200,000 likes.
Are long-term rentals successful on Airbnb because traditional rentals are less available to potential tenants?
Airbnb’s “It” couple
Despite all their criticism, Airbnb has been a proven opportunity to turn a side hustle into a career in its own right. Just ask Lauren and Chris, who now run a small rental property empire. They represent a model of flexible work with financial autonomy that is desirable for many Americans today, but their hard work may have had negative effects on the housing market.
Since buying their first vacation home in 2017, the couple had expected to rent it out occasionally on weekends, but they never imagined it would go from a little extra spending money to a full-time career. Today, they own fifteen rental properties, all listed on Airbnb, and have since quit their day jobs. Their rentals generate around $115,000 per month.
The couple faces challenges, especially when it comes to expansion. Lauren admits it’s a lot more complicated now than when they started five years ago. “The real estate market is brutal,” she says, “and a lot of people want to do what we did.”
Their struggles with the housing market might suggest that Airbnb’s “It” couple are dealing with a problem they helped create.
The neighbors are not happy
We spoke with several real estate investors to learn more about what they describe as the “Airbnb effect”.
“It’s a lot like gentrification,” says Eyal Pasternak, founder of the Liberty House Buying Group. “It’s going to be difficult for locals to buy the property around them, which increases wealth disparity,” Eyal says.
“In the midst of the housing market crisis, there are many different ‘boogeymen’ labeled as the problem,” says Cristina Cason, investor and real estate agent. “But there’s a jailbird no one talks about. Airbnb has inflated the housing market beyond belief,” says Cristina. She calls for government regulation to tame the app.
Airbnb has had a negative impact on local communities around the world. “Our downtown neighborhood has been hollowed out as investors buy homes and rent them out as STRs…while true Austin residents are unable to find affordable homes to buy or rent,” tweeted user @LSajbel on July 5.
Another user says, “Nashvillians can’t afford to live in Nashville anymore.” This aforementioned “Airbnb effect” could spill over to small businesses and residents, increasing tensions between locals, Airbnb hosts and vacationers unaware of their impact on these communities.
Airbnb speaks out
Meanwhile, there are currently more Airbnb listings in New York City than apartments for rent. Douglas Ellman reports that there are 7,669 units available in New York, compared to 10,572 Airbnb rentals.
“New York City hasn’t built enough affordable housing,” Airbnb fired back. “Rather than attacking ordinary people who use their homes to help pay bills and cover rising food and other costs,” the spokesperson says, “leaders need to focus on building more homes. for the people”.
This isn’t the first time Airbnb has had to come to its own defense. While some Arizona residents might criticize Airbnb’s intrusive efforts, they’ve compiled data to suggest they’re boosting Arizona’s economy.
A report by Rounds Consulting Group showed that short-term rentals supported more than 75,000 jobs in Arizona in 2021. They contributed $2.8 billion in labor income, $6.6 billion from expenses customers and $500 million in state and local tax revenue.
What about the housing crisis?
In a study published a few years ago, researchers Kyle Barron, Edward Kung and Davide Proserpio investigated the effects of Airbnb on rents and house prices. They found that a 1% increase in Airbnb listings leads to a 0.018% increase in rents and 0.026% in house prices.
While these margins may be low, coupled with the aftermath of the pandemic and the vitriol expressed by communities, it is more likely than not that Airbnb has contributed to a spike in house prices, although the rental app at short term may not be entirely to blame.
Since its inception fifteen years ago, Airbnb has proven to be a powerful and practical force alongside other apps like Seamless and Netflix. Yet their success comes at a price. We will slowly observe the long-term effects of these applications that became popular in the early 2010s and their impact on the economy. And soon we will have an answer to our question: is the convenience of apps worth it?
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