Michelle Cohen discusses whether or not companies like Airbnb, which provide platforms for room and house-sharing aimed at travelers, impact a city's affordable housing market.
In a recent post on 6sqft, Michelle Cohen dissects the role of room-sharing companies like Airbnb in the affordable housing market. Airbnb, valued at $10 billion, is the largest network with over 800,000 listings worldwide. Despite launching in 2008, only recently cities such as New York City, San Francisco, and Portland have embraced this new hotelier and passed ordinances to ensure regulations and hotel tax collection.
However, according to a report1 produced by the New York State Attorney General’s office and released in October of 2014, "at least 4,600 units were booked in 2013 for at least three months. Of these, nearly 2,000 were booked for a cumulative total of over six months; the percentage of host revenue from units booked as short-term rentals for more than half the year increased steadily, accounting for 38% of the site’s revenue by 2013. The report summary cites this as evidence that 'short-term rentals are displacing long-term housing options.'" Indeed, during the study timespan, the top Airbnb commercial operator in NYC generate $6.8 million in revenue from 272 unique listings. The report illustrates how financially lucrative it is for entrepreneurs to buy residentially zoned properties, and rent them for higher rates on the short-term market.
- 1. By analyzing Airbnb bookings for private stays between January 1, 2010 and June 2, 2014, the report offers a never-before-seen snapshot of how Airbnb is used and by whom. Among the key findings are:
Up to 72% of Airbnb listings are illegal: Of the 35,354 private, short-term listings, data suggest that 25,532 of them violated either New York State’s Multiple Dwelling Law and/or New York City’s Administrative Code (zoning laws). Hosts generated approximately $304 million in revenue from these listings alone and, Airbnb itself earned almost $40 million from these transactions.
Commercial users run multimillion-dollar businesses: Over 100 users controlled more than 10 different apartments that were rented out regularly through Airbnb. Together, these hosts booked 47,103 reservations and earned $59.4 million in revenue. The most prolific user administered 272 unique listings, booked 3,024 reservations and made $6.8 million in revenue. Additionally, while only 6% of hosts ran large-scale operations on Airbnb, that same group dominated the platform, generating 36% of all rental transactions and collecting 37% of total revenue – or $168 million.
Numerous units appear to serve as illegal hostels: New York law prohibits commercial enterprises from operating hostels. In 2013, approximately 200 units were booked through Airbnb for more than 365 nights during the year, indicating that multiple, unrelated guests shared the same unit on the same night, as they would in a hostel. The 10 most-rented units were booked for an average of 1,900 nights in 2013, with one top listing average 13 reservations per unit per night.
Gentrified neighborhoods account for vast majority of Airbnb revenue: Bookings in just three Manhattan neighborhoods – Greenwich Village/SoHo, Chelsea/Hell’s Kitchen and Lower East Side/Chinatown – accounted for more than 40% of hosts’ revenue, or about $187 million. By contrast, all reservations in Queens, the Bronx and Staten Island combined brought in $12 million, less than 3% of the New York City total.
Short-term rentals are displacing long-term housing options: In 2013, more than 4,600 units were booked for at least three months of the year. Of these, nearly 2,000 were booked for a cumulative total of six months or more, rendering them largely unavailable for use by long-term residents. Notably, the share of host revenue from units booked as short-term rentals for more than half the year increased steadily, accounting for 38% of the site’s revenue by 2013.
REF: http://www.ag.ny.gov/press-release/ag-schneiderman-releases-report-documenting-widespread-illegality-across-airbnbs-nyc