A report by the Urban Politics and Governance research group from the School of Urban Planning at McGill University, The High Cost of Short-Term Rentals in New York City, examines the impacts of Airbnb on the rental market in New York City and the surrounding region over the past three years. The report finds that Airbnb activity takes rental housing off the long-term rental market, driving up annual median rent by $384 in New York City and contributing to racialized gentrification.
Airbnb markets itself as a home-sharing platform where individuals can earn additional income by renting out a spare room or their home for a few days when they are on vacation. The report challenges the notion that Airbnb is simply for home-sharing. Entire-home or entire-apartment listings accounted for 75% of Airbnb’s total revenue and 51% of total listings in New York City. In addition, the top 10% of Airbnb hosts earned 48% of Airbnb’s total revenue.
Under New York State’s Multiple Dwelling Law, an entire-apartment rental of fewer than 30 days is illegal in buildings with three or more rental units, unless the owner is present. The report estimates that 45% of all reservations since 2016, accounting for 66% of Airbnb revenue in New York City, have likely been illegal under the Multiple Dwelling Law.
The report finds that Airbnb caused the removal of up to 13,500 housing units from New York City’s long-term rental market. These units are used for short-term rentals through Airbnb but would have otherwise been available to tenants as long-term rental. Last year, Airbnb hosts earned 55% more from Airbnb than the median long-term rent of their neighborhoods, making operating Airbnb more profitable than long-term rentals. The removal of these units has driven up the median long-term rent in New York City by 1.4% over the past three years. The average renter looking for an apartment can expect to pay $384 more per year due to Airbnb’s recent growth. In some neighborhoods in Manhattan, the annual increase is more than $700.
According to the report, Airbnb listings in predominantly white neighborhoods earned more revenue than those located in predominantly African American neighborhoods. Neighborhoods with the fastest growing Airbnb presence, however, were disproportionately African American. The report considers these neighborhoods to be at high risk of Airbnb-induced gentrification. In these neighborhoods, the Airbnb host population is 74% white, while the resident population is only 14% white. The report suggests that Airbnb’s presence in New York City is increasing gentrification as it removes long-term rentals from the market in predominantly African American neighborhoods.
The report utilized Airbnb data collected by AirDNA, a private consulting firm that “scrapes” data from Airbnb’s public website, and demographic and housing market data from the 2015 American Community Survey’s five-year estimates at the census-tract level.
The High Cost of Short-Term Rentals in New York City is available at: http://bit.ly/2Gb4qyS