10 ms·

NYC Renters Paid Extra $616M Thanks to Airbnb, Study Says

108 points by pulisse 8y ago

TAForObvReasons 8y ago
> For each 1 percent of all residential units in a neighborhood listed on Airbnb, rents in that neighborhood went up 1.58 percent, Stringer said. The estimated $616 million impact is for 2016 alone.
- lend000 8y ago
  I doubt these factors are statistically independent -- the most popular neighborhoods for tourists and yuppies have always seen prices grow faster relative to the overall metro, and more popular/high-growth/expensive neighborhoods will naturally attract more Airbnb hosts to take advantage of their location. In any case, assuming people travel the same amount, it is zero-sum (Airbnb saved NYC visitors 616 million dollars and also transferred some percentage of tourism income from hotels to a broader collection of residents). However, I think Airbnb enables people to travel more (I certainly travel more with the incentives of cheap, reliable Airbnb lodging), so we need more data to determine whether the lower prices actually incentivize a sufficiently high increase in tourism to be a net positive for tourist-mecca economies. Even if it comes out to a net negative to tourism-based economies and it increases costs for local residents, I'm curious what the Airbnb witch-hunt crowd is proposing. Limit tourism / make it harder and more expensive to travel? Reinstate the hotel cartels?
  - alonmower 8y ago
    Don't 'limit' tourism but yes, don't allow tourists to get price breaks at the expense of residents that rent in a city. As it stands property owners and tourists are coming out on top. Property owners can now easily make more money renting short term than long term, this raises property prices (because, hey, i can buy that house and make a bunch of money renting it on AirBnB) while also reducing the rental housing stock (because houses that would have been rented to long term renters are now on AirBnB). So now, as a renter, I pay more for rent because I'm competing for fewer houses AND it's going to cost me more money to get into my first house. So I save less money per month because more goes to rent and I have to save up more money to put a down payment down on a house. Now, sure, how big this effect is is up for debate but I think it's naive to assume it doesn't exist. I expect cities with housing crises that also don't rely too heavily on tourist revenue to start regulating short term rentals aggressively to combat this effect (this has already happened in many places). Sure, if you're a tourist town and most properties are second/vacation homes then this is less of an issue but in growing cities where renters are already barely getting by this is going to continue coming to a head. Alas, homeowners are more likely to get out and vote and have more directly measurable skin in the game vs a renter who might be more transient and less aware of the effects that are conspiring to squeeze them out.
    - zip1234 8y ago
      Where would those tourists stay if they didn't use AirBnB? I can see where the residents may get priced out of a certain area because short term rental drives up the price, but the increase demand and higher prices should stimulate new construction. Now, if height restrictions are causing no new construction to be built, then perhaps the city should ease those so more housing can be built, driving the prices down. The 'character' of Manhattan isn't going to be ruined by higher building heights.
      - alonmower 8y ago
        In hotels? Further away? It'd be more expensive or more inconvenient so fewer would come, but residents wouldn't be bearing the negative externalities as much as they are today. I live in SF so while I wholeheartedly agree that more building should help solve the problem the reality (here at least) is that existing homeowners have strong incentives to oppose rezoning and new development as it might hurt their home's values. Many people have overextended to be able to buy here that anything that could cause dips in prices is vehemently opposed. I'll admit SF has a broader set of issues at play here but AirBnB just further strains an already strained situation.
    - lend000 8y ago
      There's certainly an argument to be made that such freedom benefits all but the poorest (those who neither travel nor own real estate), but is restricting this convenient, popular, voluntary service a reasonable way to approach the much broader income inequality problems? That's a stretch. Seems to me like it's a natural consequence of a more connected world, and like you mentioned in another comment, there are more significant issues such as zoning and nimbyism that should be ground-zero for real estate prices in most cities. In fact, I'd go so far as to say that Airbnb increases equality by democratizing travel for the lower middle class in a way that was inaccessible before, at the biggest expense to hotel owners. I'd also like to see numbers on real estate usage in NY (defined as the percentage of each unit occupied per unit time) before and after Airbnb -- I would wager that living quarters are being used more efficiently as a result. And of course how much people travel now vs. before (which I think could be considered a quality-of-life metric).
piinbinary 8y ago
I'm sure that number is dwarfed by how much extra renters paid due to actions of the city (e.g. height restrictions).
- bdcravens 8y ago
  Which would be true regardless of AirBnB's presence, right? So the "AirBnB inflation" is still a thing.
  - ribosometronome 8y ago
    As is "hotel inflation" and "car inflation" and "park inflation".
  - PurpleBoxDragon 8y ago
    But what about the things that aren't true because of AirBnB's presence? Maybe prices for short term stays went down, tourism went up, and there is more tax revenue that can be used to improve the city for the renters. If we only look at one part of the picture we may miss that an overall trend is different. Is it really beneficial to talk about how many died because they were wearing a seat belt without also considering how many who lived for the same reason?
    - dragonwriter 8y ago
      > Maybe prices for short term stays went down Sure, allowing residential property to be used for short-term rental drives regular residential rents up and short-term rents down (forcing, over time, more residential proerties to be used for short-term rental to the extent possible), narrowing the gap between short-term and long-term rentals. It makes things less expensive for travellers and more expensive for non-travellers.
      - lazerpants 8y ago
        Perhaps the problem then, is that the city slaps a huge tax burden on travelers who choose to stay in hotels? Last time I stayed in a hotel in NYC, taxes were about 25% of the total cost.
loceng 8y ago
'Airbnb Inc. disputed the study’s findings, calling them “wrong on the facts” and containing “substantive issues with the methodology.”' Did Airbnb publish what these wrong facts and substantive issues are?
- smsm42 8y ago
  https://www.airbnbcitizen.com/airbnb-new-york-and-housing/ https://www.airbnbcitizen.com/airbnb-new-york-and-housing/
  - CodeWriter23 8y ago
    From that: < The majority of our hosts are sharing the home in which they live, not removing permanent housing from the market. In fact, as NYU researchers recently found, in order for someone to make as much money from an Airbnb guest as from a long-term tenant, they would have to share a home for 216 nights a year in New York City — more than triple the number of nights that a typical listing is shared. > They do not address the possibility that the atypical minority (which presumably is apartments used exclusively for AirBNB and not otherwise occupied by a tenant) might cause the $626M rent increase illustrated by the study. This paragraph seems to be a diversionary tactic, "No, look only at these facts".
    - gautamnarula 8y ago
      > They do not address the possibility that the atypical minority (which presumably is apartments used exclusively for AirBNB and not otherwise occupied by a tenant) might cause the $626M rent increase illustrated by the study. This paragraph seems to be a diversionary tactic, "No, look only at these facts". IIRC, NYC passed a law against this and Airbnb has bee cracking down on those types of listings. I think SF has a similar law as well. I also wonder if NYC now charges any occupancy taxes in Airbnb like SF does. If so, the revenue collected should also be weighed against any increases in rent. I also wish the article had actual calculated how much of a per month rent increase the $600m figure resulted in. In a city as big as NYC, I don't know if 600m is a big deal or not.
sigfubar 8y ago
So, I'm paying an extra $68/month because of Airbnb. Alright.
- evanlivingston 8y ago
  $68 a month is easily 5% of income afters taxes for many people. In a country where we already spend an absurdly high percentage of our income on rent, this doesn't seem trivial.
  - mancerayder 8y ago
    This is NYC in the report. That's about $1360 post-tax which is about 32K a year which is a bit above minimum wage in NYC (around 12-13/hr). I respectfully suggest not living in the most expensive neighborhoods in New York City if minimum wage jobs are what you're forced to endure.
  - loeg 8y ago
    The $68/mo figure is off by a factor of 7.5, as far as I can tell. It's actually ~$109/year per resident.
  - noirbot 8y ago
    It's only 5% if you have an average yearly after-tax income of ~16,000 if I did my math right. The median income for NYC is ~50,000. I would also imagine that most of the people for whom $68/month is a lot of money also don't generally live in neighborhoods that are ones with lots of Airbnb rentals, and are probably some of the least effected by this.
  - sigfubar 8y ago
    Numerically you're right, but you're showing a distinction without a difference. In the kinds of neighborhoods where Airbnb has a foothold (gentrified, desirable, centrally located) rents are already so high that an extra $68 doesn't make a damn bit of difference. I live in one of these neighborhoods, and I speak for absolutely everyone who can afford to pay the rent I'm paying: we don't care about the additional $68. Those for whom $68 really is 5% of net monthly income don't live in Airbnb-infested neighborhoods, and thus are even less affected by the impact Airbnb has on rental prices. I don't mean to sound insensitive to the plight of those for whom NYC is too expensive. I think such people need to be helped, but spending even an iota of thought on Airbnb is a waste of time: its impact is concentrated in neighborhoods that are already too far out of the reach of rent-challenged New Yorkers. And this isn't the case because of Airbnb.
pravda 8y ago
Sounds like the PR firm for the hotel industry has been busy!
- nacho2sweet 8y ago
  Eat shit.
pyrophane 8y ago
For anyone interested, here is the full text of the study: https://www.dropbox.com/s/u4s1fcync2gseyl/AirBnB_Report%20FINAL.docx?dl=0 https://www.dropbox.com/s/u4s1fcync2gseyl/AirBnB_Report%20FI... A brief description of how they attempted to control for other factors: > We also control for demographic and economic changes in neighborhood level by including average household income (in log form), population (in log form), and the shares of college-educated and employed residents in the neighborhood. We also included year and neighborhood-level fixed effects (dummy) variables to control for otherwise uncontrolled-for trends and neighborhood characteristics.
- kolbe 8y ago
  I can't dl the report, but based on your quote, I'd say there's nothing about this 'study' supports their conclusion. It's fine that they control for some stuff, but it's absurd attribute the remaining price effects to AirBnB.
- nnm 8y ago
  Any place to download the data used for the regression model?
JohnStudio 8y ago
People wanted disruption ... well that's what you get. Economics of capitalism at work.
- crawfordcomeaux 8y ago
  Be careful what you wish for, especially if wishing for profit over anyone's well being or if wishing for disruption over sustainability. I hypothesize an antidote to capitalism could be collaboratively learning how to sustainably contribute to all life's needs together through science, art, and love. I'm very interested in picking apart this hypothesis. If you (the person reading this) disagree, would you be willing to specify the words you disagree with and/or specific examples explaining why you disagree? Same for if you agree <3
  - briandear 8y ago
    Profit creates well-being. Without profit, the economy stops.
    - crawfordcomeaux 8y ago
      I'm fairly certain well-being comes from needs being met. Life has no need for profit or money. Those are constructs that require believing what you said in order to be true.
api_or_ipa 8y ago
Anyone have access to the report? I don't have readily available access to a terminal but I'd love to read the study. Any kind of analysis such as this one relies heavily on _ceteris_ _paribus_ --assume everything else is the same. Of course that's a poor assumption to make, so most studies fiddle with the assumption and try to tease out the effects of one market (short-term rentals, a la AirBnB) on another (resident friendly long-term rentals).
- throwawayjava 8y ago
  https://comptroller.nyc.gov/reports/the-impact-of-airbnb-on-nyc-rents/ https://comptroller.nyc.gov/reports/the-impact-of-airbnb-on-... > Any kind of analysis such as this one relies heavily on _ceteris_ _paribus_ --assume everything else is the same That's not the assumption made by this report. Of course, predicting alternate futures when humans are in play is always a non-trivial task, but they did put some effort toward controlling for the obvious stuff: "A summary of the regression results is presented in Table 1. We find that as the share of units listed on Airbnb goes up by one percentage point, rental rates in the neighborhood go up by 1.58 percent, after controlling for neighborhood level demographic and economic changes. The result is statistically significant at the 1-percent level. Coefficients of other control variables including household income, population and share of college graduates are positive and statistically significant at 1-percent level. Employment rate is not statistically different from zero."
dumbneurologist 8y ago
This just a PR-driven article that states an obvious fact (demand influences the market) in order to advance an agenda.
DubiousPusher 8y ago
The finding is somewhat interesting on its own but I don't really see why it matters all that much. No one likes paying higher rent and I can see rent increases as being particularly hard on the poor, so that's bad. But I'm not sure interfering with these micro-leases is the best solution. It makes more sense to me to focus on how we can expedite construction of safe, quality, affordable housing. That would help address the AirBnB inflation problem as well as the basic housing crisis. What's more, we'd retain the benefits of micro-leasing.
- michaelmrose 8y ago
  We can totally crush people turning rental properties into unsanctioned hotels while allowing people to occasionally rent out a bedroom and work on other solutions to affordable housing. Just fine renter and airbnb 100x what they are liable to earn in the former case and shockingly such a case will trivially go away. Those caught with their pants down because they invested a bunch of money in illegal hotels can sell and roll that money into another illegal enterprise of their choosing that is less trivial to regulate out of existence.
josephorjoe 8y ago
Is there really much evidence that the majority of Airbnb properties would otherwise be traditional "12 month lease" rental apartments if it were not for Airbnb. I mean, I'm sure there are a few, but if I'm a landlord, why would I give up having a stable tenant paying market rate rent for 12 months at a time for essentially managing a hotel room? Sure, the 'rent per day' is going to be a lot better with the hotel room model, but it seems like an entirely different business to manage say 30-100 property rentals per year rather than 1. People have always subletted their apartments when they are out of town -- I'm guessing a lot of the Airbnb rentals are just those traditional sublets showing up in an easy to quantify form. I'm open minded to the possibility I'm wrong -- I don't have the data on the history of the properties showing up on Airbnb -- but it seems like the profile for the landlord/apartment that ends up on Airbnb is a bit different from the ones that show up on StreetEasy with 12 month leases.
- jedberg 8y ago
  > but if I'm a landlord, why would I give up having a stable tenant paying market rate rent for 12 months at a time for essentially managing a hotel room. As of today, there is a lot less paperwork involved, and also the tenant has fewer rights. If you rent for 12 months, and they stop paying you, it could take you many months to get rid of that person, and you'd never get the money back. You also have to find renters and negotiate leases yourself. With AirBnB, they take care of the finding and negotiating part, and if you manage to get a popular spot, you'll make far more money with the short term rentals, even accounting for AirBnBs cut and any service providers you might need to maintain the place.
  - josephorjoe 8y ago
    Fair enough, although there are plenty of realtors happy to help landlords vet and negotiate w tenants for 12 month leases (and then charge the tenant a fee for their services). I still see more risk/work in the AirBnb model, but I can see where some landlords (esp. local ones w small numbers of apartments) could find it worth it.
- dfxm12 8y ago
pithymaxim 8y ago
Maybe, but the regression they use to argue this is pretty bonkers...they need to assume that once they control for income, population, education, and employment, the coefficient on the Airbnb share captures the causal effect of Airbnb on prices. But obviously AirBnB share will be correlated with many other things that make a neighborhood nice, which will also be correlated with prices. So this just says that desirable neighborhoods are desirable.
- wikiwawa 8y ago
  Note that the regression is on the differences, y_t - y_t-1 not the levels, just y_t. So the argument is more subtle, that the "change" in AirBnB share is correlated with changes in rents. So level effects such as being a nice neighborhood are accounted for. Having said that, a large change in AirBnB share is probably still related to unobservables related to factors that would increase rent. E.g changes in hipness of a neighborhood unaccounted for by changes in demographics. Therefore the $616M figure is biased upwards, though I bet in reality still a large number.
hungerstrike 8y ago
Are AirBnb competitors contributing to this as well? Companies such as Tripping.com, FlipKey, HomeAway, etc.
peterjmag 8y ago
Strange, I'm getting a 404. If anyone else is having the same problem, here's Google's cached version: https://goo.gl/BmbnJ2 https://goo.gl/BmbnJ2
loeg 8y ago
$616M / (⅔ * 8.5M) (Edit: was 8M) residents = about $109 (was: $77) per resident renter in 2016.
- kazinator 8y ago
  Residents are not renters. The number of renters in NYC was evidently around 5.4 million in 2016. Even so, not every renter is a separate rental unit; dividing the figure by the number of rental units would be more useful since it would indicate the impact on the price of rent.
  - loeg 8y ago
    Do you think there are a substantial number of property owners? https://www.citylab.com/equity/2015/06/new-york-is-a-city-of-renters-at-every-age-level/396509/ https://www.citylab.com/equity/2015/06/new-york-is-a-city-of... https://www1.nyc.gov/site/planning/data-maps/nyc-population/population-facts.page https://www1.nyc.gov/site/planning/data-maps/nyc-population/... > Approximately two-thirds of dwelling units in New York are renter-occupied, over twice the national average. Ok, not insignificant, but the order of magnitude is roughly correct. I'll update the computed figure.
    - kazinator 8y ago
      The problem is still that your $109 is per renting person. A family of five in one dwelling is five renters: but they are not paying 5 x $109 more on their rent because of AirBNB! The denominator has to be the number of rental dwellings; then we have a better idea what the impact is on rental prices, on average. Still, it must be dependent on area, and the size of the place and rent amount. Not everyone pays some sort of "flat AirBNB tax" across the board.
      - loeg 8y ago
        The more specific we try and make the $616M figure, the less accurate a predictor it becomes :-). I didn't want to go too far in that direction.
briandear 8y ago
I am curious, doesn’t the legality of roommates also drive up rents? It seems like if roommates weren’t a thing, it would drive rents down simply because people wouldn’t be able to afford apartments in many cases without a roommate. I am not suggesting a ban on roommates of course, but it does seem like there are a large number of variables that affect rent prices. We could argue that AirBnB constricts long term housing supply while roommates constrict long term housing supply for single or family renters as well. If a one bedroom goes for $4000 and there are two roommates, that means the price the market would support for a single person is $2000. So without roommates, the market would have to adjust to the price people were able to pay: $2000. But then again, that could also restrict supply since there are more people competing for a finite supply. My point is that while it’s convenient to blame AirBnB — the truth is far more complex. We also have to consider the effects of the extra income earned by owners — that income goes to buying things or investing, which, it could be argued, benefits the economy. There is also the question of how many visitors to New York actually can now afford to visit New York because of wider housing availability — if we drive up lodging rates, that’s less money coming into the city. If I have to spend $250 for a hotel vs. $150 for an AirBnB, that means I can buy more pizza, thus putting more money into pizza shops and supporting those workers. Additionally, if a hotel is $250, maybe I don’t visit at all, which would result in 0 economic benefit to the city. The economics of this aren’t as sound-byte friendly as many might think. If we want to be fair, we should also address how much additional rent New Yorkers pay due to rent-control and the housing illiquidity that promotes. If the hotel industry is so concerned, then perhaps they ought to reevaluate their efficiency and pricing and reconsider their years and years of charging $10 for a bottle of water. Perhaps the city could also reconsider the occupancy taxes, sales taxes and all the other fees cities love to stick tourists with. Tourists already pay sales taxes when they buy a meal. They buy products and experiences which generate significant economic activity, jobs and all the tax revenue that creates. But for some reason, cities see tourists as a piggy bank rather than the engine of economic activity they are.
- cimmanom 8y ago
  Prohibiting roommates would drive the rent per person up and the rent per unit down. That would make the city less affordable to both renters and landlords. The problem with AirBnB is that it benefits landlords and tourists at the expense of renters by driving the rent per unit up, the short term rent per person down and the long-term rent per unit up.
49bc 8y ago
Wait a second. The entire population of New York state is 20 million. How could they possibly have paid an extra $616 million? Each person in New York paid an extra $30 million?
- icebraining 8y ago
  616M/20M is not 30 million - you have to take out the million :)
travisp 8y ago
If a few thousand airbnb units cost renters that much money, imagine how much renters would save if more and taller buildings were allowed to be built!
- icebraining 8y ago
  Does NYC impose heavy restrictions on the height of buildings? I've never been there, but they seem tall to me.
  - travisp 8y ago
    Yes, much of the city is limited to four or five stories or otherwise restricted [1]. Keep in mind also that much of NYC is not just the financial district of Manhattan. In addition to actual height restrictions, neighborhood associations also fight tooth and nail to prevent new development and to limit the height of new development when they can't. [1] https://www1.nyc.gov/site/planning/zoning/districts-tools/residence-districts-r1-r10.page https://www1.nyc.gov/site/planning/zoning/districts-tools/re...
    - ch4s3 8y ago
      Yeah, my neighborhood in Brooklyn is mostly 2 to 3 story building. Many of them were multi-family homes until the 1980's, and are now single family homes.
  - ch4s3 8y ago
    There are height caps based on FAR(floor area ratio) that vary by zoning. The super talls are quite new and due to some changes to FAR restriction and trading of air rights.
  - cimmanom 8y ago
    Not heavy restrictions. There are a few historic districts (read: well-off NIMBYs) such as Park Slope where height is strictly capped. In Manhattan the caps are generally designed to ensure that at least some light and air still reaches the street (before they were imposed, buildings were build to their full height to the edges of lots, and contributed to the city being very dark. Much of Manhattan is actually somewhat low-rise (3-5 stories). In those areas, developers can buy "air rights" from neighboring low-rise buildings if they want to build taller on a nearby lot.
zjaffee 8y ago
It's important to look under the surface of what this is saying. This boils down to an extra 77 dollars per person per year, so basically this amounts to an extra 10 dollars per month for any given unit.
- murph-almighty 8y ago
  Just curious but what's your math here? If you divide by number of people in Manhattan (8.538 million) you get roughly $72.14 per person, but this isn't really accurate since not everyone in Manhattan rents- maybe you're a kid, or you own a co-op, or you're homeless. You'd really need to divide the value by the number of rented units in NYC to figure out the average raise in rents per apartment, and even then that won't draw a perfect picture because many people live with roommates who contribute to rent. I started picking out values from here: https://www1.nyc.gov/assets/rentguidelinesboard/pdf/17HSR.pdf https://www1.nyc.gov/assets/rentguidelinesboard/pdf/17HSR.pd... I don't know the nature of rent control that well in NYC so I'm just going to take a few approaches: If we assume only unregulated apartments picked up the burden, the cost per unit is 725.80. If we toss in the "other regulated" apartments, 546.42. If we toss in all rent-stabilized (pre and post 46), it's 368.96. All rented units together? $363.
  - cimmanom 8y ago
    There are under 2 million residents of Manhattan. 8.5 million people living in NYC, tho. NYC is all 5 boroughs, not just Manhattan.
charlottetrvm 8y ago
The exact same true is for hotels, only worse. ANYTHING that uses up space that is not used for housing is by definition increasing rent for everyone. Hotels have a much bigger effect than Airnb because you'll find hotels in all of the most expensive and densely populated cities. If you replaced all hotels with regular rental units, think about how much rents would go down. To be more accurate, the report should say: NYC Renters paid extra thanks to ANYTHING that takes up space that is not a rental unit, especially hotels.
- iamcasen 8y ago
  Exactly. I wonder too if they are accounting for increased tax revenue due to more travelers visiting the city thanks to AirBnb. Honestly I've been able to travel a lot more because of AirBnb, and how affordable it is compared to a hotel. At this point, prices are starting to stabilize with hotels in some of the bigger cities like NYC and SF, but still. I prefer the idea of freeing up under-utilized space for dynamic purposes as opposed to a fixed number of hotel location.
- cimmanom 8y ago
  Hotels are taxed differently. They also tend to be somewhat denser than apartments, since they typically include only bedroom and bathroom, not kitchen or living room. And people are often willing to put up with a smaller hotel room than bedroom, since they only need space for a few days' worth of stuff there.
hb3b 8y ago
Unfortunately, Airbnb is probably the only way a middle-class family can earn money on investment properties. No one in their right mind would rent a $1,000,000 condo for (1% rule) $10,000.
- ng-user 8y ago
  Are you referring to NYC in general? Because certainly it's possible to earn money (or at least increase equity) with investment properties.
- enervate 8y ago
  what about REITs?
- jedberg 8y ago
  What is the 1% rule? As a landlord I usually assume 0.5% per year. So a million dollar condo would be 50K a year, or about $4200/mo, which is exactly in line with current nyc rents.
  - sidlls 8y ago
    The rule is a residential rental is only worth the risk or has a good return if the property can be rented at about 1% of the value per month or more (e.g. a $100k home should rent for $1k/mo). I generally try to get an annual cap rate of 9% or more (1%/mo less expenses).
    - jedberg 8y ago
      Wow. That rule must only apply in smaller cities. I can't think of a single residential property in the Bay Area that would even come close to that. On the other hand, all the properties I manage do 0.5% per year and have all been profitable, not even including the appreciation on the property.
      - sidlls 8y ago
        Not smaller, just different areas. It's fairly easy to achieve that in the Midwest and larger urban areas in the southeast. I typically got ~0.8%/mo or more. I'd go so far as to say that if single family residential is your strategy it's better to take the multi-million dollar investment in a single home in the Bay and make one in 5-7 (or more) homes elsewhere. The appreciation is drastically lower but the cap rates are amazing (much higher cash flow) and the risk is spread out. Of course, with that kind of investment it's better to go multi-family or commercial anyway.
nnm 8y ago
"For each 1 percent of all residential units in a neighborhood listed on Airbnb, rents in that neighborhood went up 1.58 percent, Stringer said." Correlation does not imply causation[1]. Looks to me this is one of the studies that I would label as "shallow" or "problematic". https://en.wikipedia.org/wiki/Correlation_does_not_imply_causation https://en.wikipedia.org/wiki/Correlation_does_not_imply_cau...
- timr 8y ago
  http://xkcd2.com/552/ http://xkcd2.com/552/ Repeating this cliche is not a counterargument to a regression analysis. If you have specific covariants that you think better explain their results, present them. Otherwise, "correlation does not imply cause" is little more than a lowbrow dismissal dressed in a labcoat.
- cuchoi 8y ago
  Yes, they calculate using a simple regression with some controls (fixed-effects model): https://comptroller.nyc.gov/reports/the-impact-of-airbnb-on-nyc-rents/ https://comptroller.nyc.gov/reports/the-impact-of-airbnb-on-....
ynniv 8y ago
1.58% doesn't get as many clicks as $616M
rubyn00bie 8y ago
This article is totally worthless without some way to gauge what $616M actually is... I have a VERY hard time believing in NYC that's anything but "piss in the wind" compared to total amount spent on rent. Too many articles come out with a "shocking number" that doesn't mean anything except to those who don't know the scale. This is mostly a click-bait article and study.
- tribune 8y ago
  According to [1], there are 2,146,892 occupied rental apartments in NYC. So this works out to an average of $287 per rental per year. Hardly "piss in the wind". [1] - https://www.nakedapartments.com/guides/nyc/renting-in-new-york-city/high-demand-low-supply https://www.nakedapartments.com/guides/nyc/renting-in-new-yo...
  - jeremyis 8y ago
    that would be a bump of $24 per month of rent on average....
  - rubyn00bie 8y ago
    Absolutely piss in the wind. Are you kidding me? Again numbers and scale throw people off... The average rent for an NYC apartment per month is $3375 (https://www.rentjungle.com/average-rent-in-new-york-rent-trends/ https://www.rentjungle.com/average-rent-in-new-york-rent-tre...) totaling: $40,500 per year. So that $287 increase is less than 0.7% per year.
erdojo 8y ago
This is such propaganda. Not even worth discussing. I mourn the loss of factual journalism and critical thought.
- asdsa5325 8y ago
  Honestly, your comment sounds like propaganda more than the article...
  - erdojo 8y ago
    Honestly? Did literally and unfortunately have a baby, or are you in the habit of dishonesty and needed to clarify your intent to tell the truth?
tvchurch 8y ago
How much extra do NYC renters pay from not building enough new supply? Or from rent control stifling the development of new supply?
- busterarm 8y ago
  Yes, the 0.7% of "rent controlled" units of NYC's available inventory that's shrinking by 2.5%/yr is totally stifling new supply. Feel free to tell us about how the rent stabilized units, which do compromise 1/3 of the inventory but in 3/4 of cases are within spitting distance (10%, and see 4% rent increases every 2 years) of market rate are keeping down supply though. Tell us about about how luxury condos in places like East New York, Edenwald, Brownsville, Morrisania & Crotona, and Hunts Point are going to increase affordable housing in NYC. I am very interested in learning about this.
  - busterarm 8y ago
    Or instead, how about I tell you about my time working for a real estate tax certiorari firm in NYC and how landlords with multiple properties will deliberately underutilize their buildings for tax advantages. Occupancy maximums of 90% and one or multiple buildings deliberately at 0% occupancy (usually the primary residence of the landlords' extended family members for undeclared income) is the norm.
    - bogomipz 8y ago
      >"Or instead, how about I tell you about my time working for a real estate tax certiorari firm in NYC and how landlords with multiple properties will deliberately underutilize their buildings for tax advantages." When in the 1980s? Was Ed Koch the mayor? Market rate on a modest(500 sq foot plus) apartment is worth close to $3K a month or 36K a year. Please provide a citation this tax break which is worth more than 36K a year in 2018 for leaving a unit unoccupied?
      - busterarm 8y ago
        2000 and 2001.
joelrunyon 8y ago
Now do it for San Diego. The last 2 years, the prices have gone absolutely bonkers and landlords have ridiculous demands based on inflated airbnb prices they can charge to out of towners. I really like Airbnb, but these effects are real and they suck.
- moate 8y ago
  Not to be difficult, but what do you like about AirBnB? There are benefits to it, but you also seem to understand the problems specific to it. Why do you feel the benefits outweigh the problems created?

108 points by pulisse 8y ago

> For each 1 percent of all residential units in a neighborhood listed on Airbnb, rents in that neighborhood went up 1.58 percent, Stringer said. The estimated $616 million impact is for 2016 alone.

lend000 8y ago
I doubt these factors are statistically independent -- the most popular neighborhoods for tourists and yuppies have always seen prices grow faster relative to the overall metro, and more popular/high-growth/expensive neighborhoods will naturally attract more Airbnb hosts to take advantage of their location. In any case, assuming people travel the same amount, it is zero-sum (Airbnb saved NYC visitors 616 million dollars and also transferred some percentage of tourism income from hotels to a broader collection of residents). However, I think Airbnb enables people to travel more (I certainly travel more with the incentives of cheap, reliable Airbnb lodging), so we need more data to determine whether the lower prices actually incentivize a sufficiently high increase in tourism to be a net positive for tourist-mecca economies. Even if it comes out to a net negative to tourism-based economies and it increases costs for local residents, I'm curious what the Airbnb witch-hunt crowd is proposing. Limit tourism / make it harder and more expensive to travel? Reinstate the hotel cartels?
- alonmower 8y ago
  Don't 'limit' tourism but yes, don't allow tourists to get price breaks at the expense of residents that rent in a city. As it stands property owners and tourists are coming out on top. Property owners can now easily make more money renting short term than long term, this raises property prices (because, hey, i can buy that house and make a bunch of money renting it on AirBnB) while also reducing the rental housing stock (because houses that would have been rented to long term renters are now on AirBnB). So now, as a renter, I pay more for rent because I'm competing for fewer houses AND it's going to cost me more money to get into my first house. So I save less money per month because more goes to rent and I have to save up more money to put a down payment down on a house. Now, sure, how big this effect is is up for debate but I think it's naive to assume it doesn't exist. I expect cities with housing crises that also don't rely too heavily on tourist revenue to start regulating short term rentals aggressively to combat this effect (this has already happened in many places). Sure, if you're a tourist town and most properties are second/vacation homes then this is less of an issue but in growing cities where renters are already barely getting by this is going to continue coming to a head. Alas, homeowners are more likely to get out and vote and have more directly measurable skin in the game vs a renter who might be more transient and less aware of the effects that are conspiring to squeeze them out.
  - zip1234 8y ago
    Where would those tourists stay if they didn't use AirBnB? I can see where the residents may get priced out of a certain area because short term rental drives up the price, but the increase demand and higher prices should stimulate new construction. Now, if height restrictions are causing no new construction to be built, then perhaps the city should ease those so more housing can be built, driving the prices down. The 'character' of Manhattan isn't going to be ruined by higher building heights.
    - alonmower 8y ago
      In hotels? Further away? It'd be more expensive or more inconvenient so fewer would come, but residents wouldn't be bearing the negative externalities as much as they are today. I live in SF so while I wholeheartedly agree that more building should help solve the problem the reality (here at least) is that existing homeowners have strong incentives to oppose rezoning and new development as it might hurt their home's values. Many people have overextended to be able to buy here that anything that could cause dips in prices is vehemently opposed. I'll admit SF has a broader set of issues at play here but AirBnB just further strains an already strained situation.
  - lend000 8y ago
    There's certainly an argument to be made that such freedom benefits all but the poorest (those who neither travel nor own real estate), but is restricting this convenient, popular, voluntary service a reasonable way to approach the much broader income inequality problems? That's a stretch. Seems to me like it's a natural consequence of a more connected world, and like you mentioned in another comment, there are more significant issues such as zoning and nimbyism that should be ground-zero for real estate prices in most cities. In fact, I'd go so far as to say that Airbnb increases equality by democratizing travel for the lower middle class in a way that was inaccessible before, at the biggest expense to hotel owners. I'd also like to see numbers on real estate usage in NY (defined as the percentage of each unit occupied per unit time) before and after Airbnb -- I would wager that living quarters are being used more efficiently as a result. And of course how much people travel now vs. before (which I think could be considered a quality-of-life metric).

piinbinary 8y ago

I'm sure that number is dwarfed by how much extra renters paid due to actions of the city (e.g. height restrictions).

bdcravens 8y ago
Which would be true regardless of AirBnB's presence, right? So the "AirBnB inflation" is still a thing.
- ribosometronome 8y ago
  As is "hotel inflation" and "car inflation" and "park inflation".
- PurpleBoxDragon 8y ago
  But what about the things that aren't true because of AirBnB's presence? Maybe prices for short term stays went down, tourism went up, and there is more tax revenue that can be used to improve the city for the renters. If we only look at one part of the picture we may miss that an overall trend is different. Is it really beneficial to talk about how many died because they were wearing a seat belt without also considering how many who lived for the same reason?
  - dragonwriter 8y ago
    > Maybe prices for short term stays went down Sure, allowing residential property to be used for short-term rental drives regular residential rents up and short-term rents down (forcing, over time, more residential proerties to be used for short-term rental to the extent possible), narrowing the gap between short-term and long-term rentals. It makes things less expensive for travellers and more expensive for non-travellers.
    - lazerpants 8y ago
      Perhaps the problem then, is that the city slaps a huge tax burden on travelers who choose to stay in hotels? Last time I stayed in a hotel in NYC, taxes were about 25% of the total cost.

loceng 8y ago

'Airbnb Inc. disputed the study’s findings, calling them “wrong on the facts” and containing “substantive issues with the methodology.”' Did Airbnb publish what these wrong facts and substantive issues are?

smsm42 8y ago
https://www.airbnbcitizen.com/airbnb-new-york-and-housing/ https://www.airbnbcitizen.com/airbnb-new-york-and-housing/
- CodeWriter23 8y ago
  From that: < The majority of our hosts are sharing the home in which they live, not removing permanent housing from the market. In fact, as NYU researchers recently found, in order for someone to make as much money from an Airbnb guest as from a long-term tenant, they would have to share a home for 216 nights a year in New York City — more than triple the number of nights that a typical listing is shared. > They do not address the possibility that the atypical minority (which presumably is apartments used exclusively for AirBNB and not otherwise occupied by a tenant) might cause the $626M rent increase illustrated by the study. This paragraph seems to be a diversionary tactic, "No, look only at these facts".
  - gautamnarula 8y ago
    > They do not address the possibility that the atypical minority (which presumably is apartments used exclusively for AirBNB and not otherwise occupied by a tenant) might cause the $626M rent increase illustrated by the study. This paragraph seems to be a diversionary tactic, "No, look only at these facts". IIRC, NYC passed a law against this and Airbnb has bee cracking down on those types of listings. I think SF has a similar law as well. I also wonder if NYC now charges any occupancy taxes in Airbnb like SF does. If so, the revenue collected should also be weighed against any increases in rent. I also wish the article had actual calculated how much of a per month rent increase the $600m figure resulted in. In a city as big as NYC, I don't know if 600m is a big deal or not.

sigfubar 8y ago

So, I'm paying an extra $68/month because of Airbnb. Alright.

evanlivingston 8y ago
$68 a month is easily 5% of income afters taxes for many people. In a country where we already spend an absurdly high percentage of our income on rent, this doesn't seem trivial.
- mancerayder 8y ago
  This is NYC in the report. That's about $1360 post-tax which is about 32K a year which is a bit above minimum wage in NYC (around 12-13/hr). I respectfully suggest not living in the most expensive neighborhoods in New York City if minimum wage jobs are what you're forced to endure.
- loeg 8y ago
  The $68/mo figure is off by a factor of 7.5, as far as I can tell. It's actually ~$109/year per resident.
- noirbot 8y ago
  It's only 5% if you have an average yearly after-tax income of ~16,000 if I did my math right. The median income for NYC is ~50,000. I would also imagine that most of the people for whom $68/month is a lot of money also don't generally live in neighborhoods that are ones with lots of Airbnb rentals, and are probably some of the least effected by this.
- sigfubar 8y ago
  Numerically you're right, but you're showing a distinction without a difference. In the kinds of neighborhoods where Airbnb has a foothold (gentrified, desirable, centrally located) rents are already so high that an extra $68 doesn't make a damn bit of difference. I live in one of these neighborhoods, and I speak for absolutely everyone who can afford to pay the rent I'm paying: we don't care about the additional $68. Those for whom $68 really is 5% of net monthly income don't live in Airbnb-infested neighborhoods, and thus are even less affected by the impact Airbnb has on rental prices. I don't mean to sound insensitive to the plight of those for whom NYC is too expensive. I think such people need to be helped, but spending even an iota of thought on Airbnb is a waste of time: its impact is concentrated in neighborhoods that are already too far out of the reach of rent-challenged New Yorkers. And this isn't the case because of Airbnb.

pravda 8y ago

Sounds like the PR firm for the hotel industry has been busy!

nacho2sweet 8y ago
Eat shit.

pyrophane 8y ago

For anyone interested, here is the full text of the study: https://www.dropbox.com/s/u4s1fcync2gseyl/AirBnB_Report%20FINAL.docx?dl=0 https://www.dropbox.com/s/u4s1fcync2gseyl/AirBnB_Report%20FI... A brief description of how they attempted to control for other factors: > We also control for demographic and economic changes in neighborhood level by including average household income (in log form), population (in log form), and the shares of college-educated and employed residents in the neighborhood. We also included year and neighborhood-level fixed effects (dummy) variables to control for otherwise uncontrolled-for trends and neighborhood characteristics.

kolbe 8y ago
I can't dl the report, but based on your quote, I'd say there's nothing about this 'study' supports their conclusion. It's fine that they control for some stuff, but it's absurd attribute the remaining price effects to AirBnB.
nnm 8y ago
Any place to download the data used for the regression model?

JohnStudio 8y ago

People wanted disruption ... well that's what you get. Economics of capitalism at work.

crawfordcomeaux 8y ago
Be careful what you wish for, especially if wishing for profit over anyone's well being or if wishing for disruption over sustainability. I hypothesize an antidote to capitalism could be collaboratively learning how to sustainably contribute to all life's needs together through science, art, and love. I'm very interested in picking apart this hypothesis. If you (the person reading this) disagree, would you be willing to specify the words you disagree with and/or specific examples explaining why you disagree? Same for if you agree <3
- briandear 8y ago
  Profit creates well-being. Without profit, the economy stops.
  - crawfordcomeaux 8y ago
    I'm fairly certain well-being comes from needs being met. Life has no need for profit or money. Those are constructs that require believing what you said in order to be true.

api_or_ipa 8y ago

Anyone have access to the report? I don't have readily available access to a terminal but I'd love to read the study. Any kind of analysis such as this one relies heavily on _ceteris_ _paribus_ --assume everything else is the same. Of course that's a poor assumption to make, so most studies fiddle with the assumption and try to tease out the effects of one market (short-term rentals, a la AirBnB) on another (resident friendly long-term rentals).

throwawayjava 8y ago
https://comptroller.nyc.gov/reports/the-impact-of-airbnb-on-nyc-rents/ https://comptroller.nyc.gov/reports/the-impact-of-airbnb-on-... > Any kind of analysis such as this one relies heavily on _ceteris_ _paribus_ --assume everything else is the same That's not the assumption made by this report. Of course, predicting alternate futures when humans are in play is always a non-trivial task, but they did put some effort toward controlling for the obvious stuff: "A summary of the regression results is presented in Table 1. We find that as the share of units listed on Airbnb goes up by one percentage point, rental rates in the neighborhood go up by 1.58 percent, after controlling for neighborhood level demographic and economic changes. The result is statistically significant at the 1-percent level. Coefficients of other control variables including household income, population and share of college graduates are positive and statistically significant at 1-percent level. Employment rate is not statistically different from zero."

dumbneurologist 8y ago

This just a PR-driven article that states an obvious fact (demand influences the market) in order to advance an agenda.

DubiousPusher 8y ago

The finding is somewhat interesting on its own but I don't really see why it matters all that much. No one likes paying higher rent and I can see rent increases as being particularly hard on the poor, so that's bad. But I'm not sure interfering with these micro-leases is the best solution. It makes more sense to me to focus on how we can expedite construction of safe, quality, affordable housing. That would help address the AirBnB inflation problem as well as the basic housing crisis. What's more, we'd retain the benefits of micro-leasing.

michaelmrose 8y ago
We can totally crush people turning rental properties into unsanctioned hotels while allowing people to occasionally rent out a bedroom and work on other solutions to affordable housing. Just fine renter and airbnb 100x what they are liable to earn in the former case and shockingly such a case will trivially go away. Those caught with their pants down because they invested a bunch of money in illegal hotels can sell and roll that money into another illegal enterprise of their choosing that is less trivial to regulate out of existence.

josephorjoe 8y ago

Is there really much evidence that the majority of Airbnb properties would otherwise be traditional "12 month lease" rental apartments if it were not for Airbnb. I mean, I'm sure there are a few, but if I'm a landlord, why would I give up having a stable tenant paying market rate rent for 12 months at a time for essentially managing a hotel room? Sure, the 'rent per day' is going to be a lot better with the hotel room model, but it seems like an entirely different business to manage say 30-100 property rentals per year rather than 1. People have always subletted their apartments when they are out of town -- I'm guessing a lot of the Airbnb rentals are just those traditional sublets showing up in an easy to quantify form. I'm open minded to the possibility I'm wrong -- I don't have the data on the history of the properties showing up on Airbnb -- but it seems like the profile for the landlord/apartment that ends up on Airbnb is a bit different from the ones that show up on StreetEasy with 12 month leases.

jedberg 8y ago
> but if I'm a landlord, why would I give up having a stable tenant paying market rate rent for 12 months at a time for essentially managing a hotel room. As of today, there is a lot less paperwork involved, and also the tenant has fewer rights. If you rent for 12 months, and they stop paying you, it could take you many months to get rid of that person, and you'd never get the money back. You also have to find renters and negotiate leases yourself. With AirBnB, they take care of the finding and negotiating part, and if you manage to get a popular spot, you'll make far more money with the short term rentals, even accounting for AirBnBs cut and any service providers you might need to maintain the place.
- josephorjoe 8y ago
  Fair enough, although there are plenty of realtors happy to help landlords vet and negotiate w tenants for 12 month leases (and then charge the tenant a fee for their services). I still see more risk/work in the AirBnb model, but I can see where some landlords (esp. local ones w small numbers of apartments) could find it worth it.
dfxm12 8y ago

pithymaxim 8y ago

Maybe, but the regression they use to argue this is pretty bonkers...they need to assume that once they control for income, population, education, and employment, the coefficient on the Airbnb share captures the causal effect of Airbnb on prices. But obviously AirBnB share will be correlated with many other things that make a neighborhood nice, which will also be correlated with prices. So this just says that desirable neighborhoods are desirable.

wikiwawa 8y ago
Note that the regression is on the differences, y_t - y_t-1 not the levels, just y_t. So the argument is more subtle, that the "change" in AirBnB share is correlated with changes in rents. So level effects such as being a nice neighborhood are accounted for. Having said that, a large change in AirBnB share is probably still related to unobservables related to factors that would increase rent. E.g changes in hipness of a neighborhood unaccounted for by changes in demographics. Therefore the $616M figure is biased upwards, though I bet in reality still a large number.

hungerstrike 8y ago

Are AirBnb competitors contributing to this as well? Companies such as Tripping.com, FlipKey, HomeAway, etc.

peterjmag 8y ago

Strange, I'm getting a 404. If anyone else is having the same problem, here's Google's cached version: https://goo.gl/BmbnJ2 https://goo.gl/BmbnJ2

loeg 8y ago

$616M / (⅔ * 8.5M) (Edit: was 8M) residents = about $109 (was: $77) per resident renter in 2016.

kazinator 8y ago
Residents are not renters. The number of renters in NYC was evidently around 5.4 million in 2016. Even so, not every renter is a separate rental unit; dividing the figure by the number of rental units would be more useful since it would indicate the impact on the price of rent.
- loeg 8y ago
  Do you think there are a substantial number of property owners? https://www.citylab.com/equity/2015/06/new-york-is-a-city-of-renters-at-every-age-level/396509/ https://www.citylab.com/equity/2015/06/new-york-is-a-city-of... https://www1.nyc.gov/site/planning/data-maps/nyc-population/population-facts.page https://www1.nyc.gov/site/planning/data-maps/nyc-population/... > Approximately two-thirds of dwelling units in New York are renter-occupied, over twice the national average. Ok, not insignificant, but the order of magnitude is roughly correct. I'll update the computed figure.
  - kazinator 8y ago
    The problem is still that your $109 is per renting person. A family of five in one dwelling is five renters: but they are not paying 5 x $109 more on their rent because of AirBNB! The denominator has to be the number of rental dwellings; then we have a better idea what the impact is on rental prices, on average. Still, it must be dependent on area, and the size of the place and rent amount. Not everyone pays some sort of "flat AirBNB tax" across the board.
    - loeg 8y ago
      The more specific we try and make the $616M figure, the less accurate a predictor it becomes :-). I didn't want to go too far in that direction.

briandear 8y ago

I am curious, doesn’t the legality of roommates also drive up rents? It seems like if roommates weren’t a thing, it would drive rents down simply because people wouldn’t be able to afford apartments in many cases without a roommate. I am not suggesting a ban on roommates of course, but it does seem like there are a large number of variables that affect rent prices. We could argue that AirBnB constricts long term housing supply while roommates constrict long term housing supply for single or family renters as well. If a one bedroom goes for $4000 and there are two roommates, that means the price the market would support for a single person is $2000. So without roommates, the market would have to adjust to the price people were able to pay: $2000. But then again, that could also restrict supply since there are more people competing for a finite supply. My point is that while it’s convenient to blame AirBnB — the truth is far more complex. We also have to consider the effects of the extra income earned by owners — that income goes to buying things or investing, which, it could be argued, benefits the economy. There is also the question of how many visitors to New York actually can now afford to visit New York because of wider housing availability — if we drive up lodging rates, that’s less money coming into the city. If I have to spend $250 for a hotel vs. $150 for an AirBnB, that means I can buy more pizza, thus putting more money into pizza shops and supporting those workers. Additionally, if a hotel is $250, maybe I don’t visit at all, which would result in 0 economic benefit to the city. The economics of this aren’t as sound-byte friendly as many might think. If we want to be fair, we should also address how much additional rent New Yorkers pay due to rent-control and the housing illiquidity that promotes. If the hotel industry is so concerned, then perhaps they ought to reevaluate their efficiency and pricing and reconsider their years and years of charging $10 for a bottle of water. Perhaps the city could also reconsider the occupancy taxes, sales taxes and all the other fees cities love to stick tourists with. Tourists already pay sales taxes when they buy a meal. They buy products and experiences which generate significant economic activity, jobs and all the tax revenue that creates. But for some reason, cities see tourists as a piggy bank rather than the engine of economic activity they are.

cimmanom 8y ago
Prohibiting roommates would drive the rent per person up and the rent per unit down. That would make the city less affordable to both renters and landlords. The problem with AirBnB is that it benefits landlords and tourists at the expense of renters by driving the rent per unit up, the short term rent per person down and the long-term rent per unit up.

49bc 8y ago

Wait a second. The entire population of New York state is 20 million. How could they possibly have paid an extra $616 million? Each person in New York paid an extra $30 million?

icebraining 8y ago
616M/20M is not 30 million - you have to take out the million :)

travisp 8y ago

If a few thousand airbnb units cost renters that much money, imagine how much renters would save if more and taller buildings were allowed to be built!

icebraining 8y ago
Does NYC impose heavy restrictions on the height of buildings? I've never been there, but they seem tall to me.
- travisp 8y ago
  Yes, much of the city is limited to four or five stories or otherwise restricted [1]. Keep in mind also that much of NYC is not just the financial district of Manhattan. In addition to actual height restrictions, neighborhood associations also fight tooth and nail to prevent new development and to limit the height of new development when they can't. [1] https://www1.nyc.gov/site/planning/zoning/districts-tools/residence-districts-r1-r10.page https://www1.nyc.gov/site/planning/zoning/districts-tools/re...
  - ch4s3 8y ago
    Yeah, my neighborhood in Brooklyn is mostly 2 to 3 story building. Many of them were multi-family homes until the 1980's, and are now single family homes.
- ch4s3 8y ago
  There are height caps based on FAR(floor area ratio) that vary by zoning. The super talls are quite new and due to some changes to FAR restriction and trading of air rights.
- cimmanom 8y ago
  Not heavy restrictions. There are a few historic districts (read: well-off NIMBYs) such as Park Slope where height is strictly capped. In Manhattan the caps are generally designed to ensure that at least some light and air still reaches the street (before they were imposed, buildings were build to their full height to the edges of lots, and contributed to the city being very dark. Much of Manhattan is actually somewhat low-rise (3-5 stories). In those areas, developers can buy "air rights" from neighboring low-rise buildings if they want to build taller on a nearby lot.

zjaffee 8y ago

It's important to look under the surface of what this is saying. This boils down to an extra 77 dollars per person per year, so basically this amounts to an extra 10 dollars per month for any given unit.

murph-almighty 8y ago
Just curious but what's your math here? If you divide by number of people in Manhattan (8.538 million) you get roughly $72.14 per person, but this isn't really accurate since not everyone in Manhattan rents- maybe you're a kid, or you own a co-op, or you're homeless. You'd really need to divide the value by the number of rented units in NYC to figure out the average raise in rents per apartment, and even then that won't draw a perfect picture because many people live with roommates who contribute to rent. I started picking out values from here: https://www1.nyc.gov/assets/rentguidelinesboard/pdf/17HSR.pdf https://www1.nyc.gov/assets/rentguidelinesboard/pdf/17HSR.pd... I don't know the nature of rent control that well in NYC so I'm just going to take a few approaches: If we assume only unregulated apartments picked up the burden, the cost per unit is 725.80. If we toss in the "other regulated" apartments, 546.42. If we toss in all rent-stabilized (pre and post 46), it's 368.96. All rented units together? $363.
- cimmanom 8y ago
  There are under 2 million residents of Manhattan. 8.5 million people living in NYC, tho. NYC is all 5 boroughs, not just Manhattan.

charlottetrvm 8y ago

The exact same true is for hotels, only worse. ANYTHING that uses up space that is not used for housing is by definition increasing rent for everyone. Hotels have a much bigger effect than Airnb because you'll find hotels in all of the most expensive and densely populated cities. If you replaced all hotels with regular rental units, think about how much rents would go down. To be more accurate, the report should say: NYC Renters paid extra thanks to ANYTHING that takes up space that is not a rental unit, especially hotels.

iamcasen 8y ago
Exactly. I wonder too if they are accounting for increased tax revenue due to more travelers visiting the city thanks to AirBnb. Honestly I've been able to travel a lot more because of AirBnb, and how affordable it is compared to a hotel. At this point, prices are starting to stabilize with hotels in some of the bigger cities like NYC and SF, but still. I prefer the idea of freeing up under-utilized space for dynamic purposes as opposed to a fixed number of hotel location.
cimmanom 8y ago
Hotels are taxed differently. They also tend to be somewhat denser than apartments, since they typically include only bedroom and bathroom, not kitchen or living room. And people are often willing to put up with a smaller hotel room than bedroom, since they only need space for a few days' worth of stuff there.

hb3b 8y ago

Unfortunately, Airbnb is probably the only way a middle-class family can earn money on investment properties. No one in their right mind would rent a $1,000,000 condo for (1% rule) $10,000.

ng-user 8y ago
Are you referring to NYC in general? Because certainly it's possible to earn money (or at least increase equity) with investment properties.
enervate 8y ago
what about REITs?
jedberg 8y ago
What is the 1% rule? As a landlord I usually assume 0.5% per year. So a million dollar condo would be 50K a year, or about $4200/mo, which is exactly in line with current nyc rents.
- sidlls 8y ago
  The rule is a residential rental is only worth the risk or has a good return if the property can be rented at about 1% of the value per month or more (e.g. a $100k home should rent for $1k/mo). I generally try to get an annual cap rate of 9% or more (1%/mo less expenses).
  - jedberg 8y ago
    Wow. That rule must only apply in smaller cities. I can't think of a single residential property in the Bay Area that would even come close to that. On the other hand, all the properties I manage do 0.5% per year and have all been profitable, not even including the appreciation on the property.
    - sidlls 8y ago
      Not smaller, just different areas. It's fairly easy to achieve that in the Midwest and larger urban areas in the southeast. I typically got ~0.8%/mo or more. I'd go so far as to say that if single family residential is your strategy it's better to take the multi-million dollar investment in a single home in the Bay and make one in 5-7 (or more) homes elsewhere. The appreciation is drastically lower but the cap rates are amazing (much higher cash flow) and the risk is spread out. Of course, with that kind of investment it's better to go multi-family or commercial anyway.

nnm 8y ago

"For each 1 percent of all residential units in a neighborhood listed on Airbnb, rents in that neighborhood went up 1.58 percent, Stringer said." Correlation does not imply causation[1]. Looks to me this is one of the studies that I would label as "shallow" or "problematic". https://en.wikipedia.org/wiki/Correlation_does_not_imply_causation https://en.wikipedia.org/wiki/Correlation_does_not_imply_cau...

timr 8y ago
http://xkcd2.com/552/ http://xkcd2.com/552/ Repeating this cliche is not a counterargument to a regression analysis. If you have specific covariants that you think better explain their results, present them. Otherwise, "correlation does not imply cause" is little more than a lowbrow dismissal dressed in a labcoat.
cuchoi 8y ago
Yes, they calculate using a simple regression with some controls (fixed-effects model): https://comptroller.nyc.gov/reports/the-impact-of-airbnb-on-nyc-rents/ https://comptroller.nyc.gov/reports/the-impact-of-airbnb-on-....

ynniv 8y ago

1.58% doesn't get as many clicks as $616M

rubyn00bie 8y ago

This article is totally worthless without some way to gauge what $616M actually is... I have a VERY hard time believing in NYC that's anything but "piss in the wind" compared to total amount spent on rent. Too many articles come out with a "shocking number" that doesn't mean anything except to those who don't know the scale. This is mostly a click-bait article and study.

tribune 8y ago
According to [1], there are 2,146,892 occupied rental apartments in NYC. So this works out to an average of $287 per rental per year. Hardly "piss in the wind". [1] - https://www.nakedapartments.com/guides/nyc/renting-in-new-york-city/high-demand-low-supply https://www.nakedapartments.com/guides/nyc/renting-in-new-yo...
- jeremyis 8y ago
  that would be a bump of $24 per month of rent on average....
- rubyn00bie 8y ago
  Absolutely piss in the wind. Are you kidding me? Again numbers and scale throw people off... The average rent for an NYC apartment per month is $3375 (https://www.rentjungle.com/average-rent-in-new-york-rent-trends/ https://www.rentjungle.com/average-rent-in-new-york-rent-tre...) totaling: $40,500 per year. So that $287 increase is less than 0.7% per year.

erdojo 8y ago

This is such propaganda. Not even worth discussing. I mourn the loss of factual journalism and critical thought.

asdsa5325 8y ago
Honestly, your comment sounds like propaganda more than the article...
- erdojo 8y ago
  Honestly? Did literally and unfortunately have a baby, or are you in the habit of dishonesty and needed to clarify your intent to tell the truth?

tvchurch 8y ago

How much extra do NYC renters pay from not building enough new supply? Or from rent control stifling the development of new supply?

busterarm 8y ago
Yes, the 0.7% of "rent controlled" units of NYC's available inventory that's shrinking by 2.5%/yr is totally stifling new supply. Feel free to tell us about how the rent stabilized units, which do compromise 1/3 of the inventory but in 3/4 of cases are within spitting distance (10%, and see 4% rent increases every 2 years) of market rate are keeping down supply though. Tell us about about how luxury condos in places like East New York, Edenwald, Brownsville, Morrisania & Crotona, and Hunts Point are going to increase affordable housing in NYC. I am very interested in learning about this.
- busterarm 8y ago
  Or instead, how about I tell you about my time working for a real estate tax certiorari firm in NYC and how landlords with multiple properties will deliberately underutilize their buildings for tax advantages. Occupancy maximums of 90% and one or multiple buildings deliberately at 0% occupancy (usually the primary residence of the landlords' extended family members for undeclared income) is the norm.
  - bogomipz 8y ago
    >"Or instead, how about I tell you about my time working for a real estate tax certiorari firm in NYC and how landlords with multiple properties will deliberately underutilize their buildings for tax advantages." When in the 1980s? Was Ed Koch the mayor? Market rate on a modest(500 sq foot plus) apartment is worth close to $3K a month or 36K a year. Please provide a citation this tax break which is worth more than 36K a year in 2018 for leaving a unit unoccupied?
    - busterarm 8y ago
      2000 and 2001.

joelrunyon 8y ago

Now do it for San Diego. The last 2 years, the prices have gone absolutely bonkers and landlords have ridiculous demands based on inflated airbnb prices they can charge to out of towners. I really like Airbnb, but these effects are real and they suck.

moate 8y ago
Not to be difficult, but what do you like about AirBnB? There are benefits to it, but you also seem to understand the problems specific to it. Why do you feel the benefits outweigh the problems created?