Renting with Airbnb can be lucrative in Texas, but it can also increase housing costs
In just over a decade, short-term rental company Airbnb has redefined the way Americans travel and rent their properties.
Nine Texas Cities Are Among the Nation’s 50 Cities cheaper for the purchase of an Airbnb investment property. Still, the Economic Policy Institute warns of Airbnb’s potential to make money without a healthy dose of skepticism.
A new cost-benefit analysis of the impact of Airbnb-type short-term rental services shows that the economic costs probably exceed the benefits, according to the Washington, DC-based think tank. The institute analyzed housing costs, taxes and tenant behavior as well as the impact on adjacent industries.
He concluded that Airbnb style rentals should “play by the same rules” as the rest of the accommodation industry.
In an editorial for The hillThe institute’s report author Josh Bivens described short-term rental companies as a benefit to the few that essentially amounts to circumventing regulations that apply to many.
The most important, and potentially the most disturbing, finding from the Economic Policy Institute’s cost-benefit analysis is Airbnb’s effect on the availability of long-term rental housing.
The analysis revealed several cities in which landowners have driven the increase in long-term rental prices by shifting the housing stock to the short-term rental market. For example, the institute said the introduction of Airbnb increased average rents by almost $ 400 a year in New York City.
“It would encourage owners and operators to be a bit more price-aggressive just because the consumer would have less choice when looking for long-term housing,” said Greg Willett, chief economist at the company. RealPage property management firm based in Richardson.
Dallas is a renter city with six in 10 Dallas residents renting rather than owning their homes. And the most recent real estate forecast indicates that apartment rental prices in Dallas will increase by more than 4% this year. In 2018, rents increased by 2.4%.
Willett shares the concern about rising rental rates, but believes Dallas is better positioned than other cities in terms of housing stock.
“It’s a market where we still have a lot of products,” he said. “We have around 34,000 apartments under construction. The next biggest tally across the country would be around 20,000.”
Over the past year, several cities in North Texas, including Arlington, Grapevine and Hurst, have attempted to contain the explosion in Airbnb-style short-term rental properties.
Hurst city council unanimously voted to ban short-term rentals from 2019 and there was very little outcry from residents, a city spokesperson said in December.
Things are a little different in other cities, like Arlington, where short-term rental owners work with city leaders to write rules and regulations that work for both parties. And in Grapevine, the city has faced legal challenges in its attempts to limit short-term rentals.
Promote the concentration of wealth
As homeowners move from long-term accommodation to short-term travel accommodation with services like Airbnb, travelers looking for accommodation enjoy more choice and potentially lower costs. However, the report stresses that real estate wealth is not evenly distributed.
In Dallas, white residents make up a smaller portion of the population, but occupy almost all of the public housing. Communities of color are often concentrated in low-income neighborhoods, which aren’t as likely to benefit from the short-term rental industry, Willett said.
“As you find yourself in lower quality rental properties… you would have fewer units taken off the market. At the same time, removing these lower quality options would have a bigger impact. This is where there are product shortages here and across the country, ”said Willett.
Harm to city income
Another harm described in the institute’s report is the effect that a lack of taxation can have on cities where Airbnb-type rentals are growing. Typically, cities impose fairly high taxes on hotel accommodation – the industry being shaken up by the rise of Airbnb. Taxpayer money is a way for cities to generate money from travelers who visit their city.
“If the device for collecting taxes from Airbnb or its hosts is less developed than the device for collecting taxes from traditional hotels, it could harm the city’s revenues,” the institute said in a statement.