Airbnb, New York and Housing

Update: Following the publication of the Comptroller’s report, AirDNA — the data provider that the Comptroller used to conduct his analysis — rejected the Comptroller’s findings. In the statement, AirDNA asserts that the Comptroller came “to flawed conclusions at great cost to the thousands of Airbnb hosts that rely on the platform to make ends meet.” They also emphasized that the Comptroller did not contact them to “ask for guidance or our professional expertise on how to read the data, leading to several crucial errors in his interpretation of the numbers.”

Today, New York City Comptroller Scott Stringer released a report regarding Airbnb in New York City. We take our responsibility to work with elected representatives very seriously, and we have collaborated with leaders in hundreds of communities around the world.

Unfortunately, this report is wrong on the facts, falsely asserting that middle class New Yorkers who share their space are responsible for the rising cost of housing in New York. This could not be further from the truth.

  1. 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.
  2. Blaming rent increases on everyday New Yorkers who are sharing their home on Airbnb defies logic. After all, anyone who lives in New York knows that the City has had a declared housing emergency since the end of World War II and that prices have been rising for decades. In fact, home prices in New York City were soaring long before Airbnb was even founded, increasing by 124% from 1996 to 2006 alone.
  3. Rents in many neighborhoods are also now falling, in part due to a long-awaited increase in the housing supply after years of post-recession stagnation. Manhattan rents fell 3.8% in March — the most since 2011 — and Brooklyn rents are down for four straight months, with concessions offered in 48 percent of new leases — a record high.

In this report, our hardworking host community is once again faulted for an affordability crisis that they have no part in — and one that they themselves face every day. It is home sharing that has empowered these tens of thousands of New Yorkers with more than $6,700 in extra income each year — all without spending a single taxpayer dollar.

Pandering to the powerful by attacking middle class families won’t do a thing to make New York more affordable. It’s time to stop the scapegoating and work with us on a solution.

And that’s why we are correcting the record.

We have found a number of substantive issues with the methodology employed by Comptroller Stringer to make his inaccurate conclusions. These flaws include:

  • Inaccurately counting Airbnb listings as removing permanent housing. The study wrongly assumes that every Airbnb listing represents permanent housing that is removed from the long-term housing market. This assumption is false. In fact, the vast majority of Airbnb hosts share their primary residence and 95 percent of Airbnb hosts who list an entire home in New York City have a single listing. The typical entire home listing is rented for just 60 nights a year. These hosts are not taking housing off the market — they are sharing the home in which they live.

It is worth noting that researchers from the NYU Furman Center for Real Estate and Urban Policy recently found that “short-term rental use is neither as extensive nor as profitable in New York City as many assume.” In fact, they concluded that the “break-even” point for landlords to earn as much on the short-term rental market as they would on the long-term rental market is 216 nights a year in New York City. This is a conservative estimate that doesn’t even take into account transaction costs associated with short-term rentals, such as managing guest reservations and cleaning a listing between bookings. As a result, the researchers concluded that it is, “unlikely that Airbnb is currently having a major effect on the affordability of rental housing in New York City.”

  • Ignoring falling rents and attributing rent increases to Airbnb activity. The Comptroller’s analysis asserts that Airbnb is responsible for a significant portion of rent increases faced by New Yorkers in neighborhoods throughout the City. This mistakes correlation for causation, and it is deeply problematic.

The truth is that rents in some New York neighborhoods are rising because certain neighborhoods are more attractive to for a range of reasons. Ignoring the various changes that have made this so — from the development of local businesses and the expansion of green space to the construction (or temporary closure) of new subway lines and the bulldozing of permanent housing to make way for luxury hotels — and instead blaming all increases on Airbnb is not an accurate way to assess the housing market in a dynamic city.

In other neighborhoods, rents are falling, a fact that is obscured or ignored by the report. This is in part due to the acceleration of efforts to increase the supply of housing in recent years. As the NY Building Congress has reported, the number of residential permits plunged in 2009 and only reached pre-recession levels in a single year– 2015. Notably, the construction that began in earnest in 2015 has been coming online in 2017-2018, with significant impacts on rental prices. In fact, rents have gone down in Manhattan and Brooklyn, with concessions ever more present.

 

Source: U.S. Census Bureau

In addition, the Comptroller’s choice of 2009 — the heart of the biggest financial crash since the Great Depression — as the starting point for his analysis fundamentally alters his findings. According to MNS monthly reports, the average 1-bedroom in Williamsburg in January 2011– after the depths of the recession, but when Airbnb was still in its infancy — cost $2,979 a month. In March 2018 (the latest month for which there is data), the figure was $2,947, a decrease during the period of Airbnb’s greatest growth in NYC.

A separate, recent study out of UCLA found that Airbnb has “a precisely estimated zero effect on rental rates,” and that even in areas where Airbnb does have a modest impact on rents, that impact is muted where there are a high percentage of owner-occupied home sharers. As a result, the researchers concluded that any regulation should not “discourag[e] the use of home-sharing by owner-occupiers.”

  • Holding 0.8% of the housing in New York responsible for rent increases. Of the 3,463,870 housing units in NYC (ACS, 2016), entire home listings on Airbnb represent 0.8% of these units (April 2018 OHOH report), with only 0.14% of housing units in New York City on Airbnb for more than half the year. The notion that less than 1% of housing stock — much of which is only occasionally shared with short-term renters — is the sole source of New York’s housing affordability challenge is simply not credible.

History also shows the fallacy of blaming housing price increases on one factor alone. As the NYU Furman Center for Real Estate and Urban Policy found, home prices in New York City were soaring long before Airbnb was even founded, increasing by 250% from 1974 to 2006, and 124% from 1996 to 2006 alone.

  • Ignoring history to search for scapegoats. While the Comptroller’s study extensively relies on a discussion of supply and demand, the record shows that the Comptroller has repeatedly opposed efforts to increase the supply of housing. In recent years, Comptroller Stringer:
    • Opposed permanent affordable housing for seniors in Chinatown.
    • Opposed a project in Inwood that would have delivered over 175 units of affordable housing and opposed proposed rezoning of Inwood that would create at least 1,300 permanently affordable units.
    • Opposed a residential apartment building that would have replaced a shopping center in Coney Island.
    • Opposed a dormitory as part of NYU expansion that would have housed hundreds of students who instead had to compete with New Yorkers to find rental housing.
    • Opposed rezoning of East New York that would add thousands of new units to the market, saying that it would be “an engine for displacement.” The rezoning has led to over 1,300 new units being added to the pipeline in 2017 alone, with most “heavy on the affordable housing.”
  • Using inaccurate and “scraped” data: The Comptroller relies on “scraped” data from a website called AirDNA, which is not affiliated with Airbnb and does not have access to proprietary information about Airbnb’s listings/booking activity. This data cannot tell the difference between a listing that is booked with a visitor and a listing that is unavailable because it is occupied by the resident and not available for rent. As a result, while the vast majority of New York City hosts occasionally rent their place and maintain their calendar by blocking nights, the scraper generally counts these blocked nights as booked nights.

Perhaps most importantly, this study ignores the benefits of Airbnb for hosts and local businesses: Even if the Comptroller’s methodology for determining the impact of Airbnb on long-term rents was sound — which it is not — his failure to consider the clear, objective benefits of home sharing for middle class New Yorkers is a significant error in analysis and judgement.

Today, there are more than 53,000 Airbnb hosts in New York, who welcomed 2.6 million guests in 2017. From simply sharing their space just a few days every month, the typical Airbnb host brought home more than $6,700 last year, which they have used to weather economic downturns, provide for their children’s education, save for retirement — and most importantly, keep a home that they love. In fact, 77 percent of New York Airbnb hosts say that they used the money they earn from home sharing to stay in their home, with 28 percent of hosts reporting that home sharing has helped them avoid eviction and 18 percent saying they avoided foreclosure.

In communities of color, home sharing generated nearly $60 million for hosts in predominantly-Hispanic neighborhoods in 2016 and more than $70 million for hosts in predominantly-Black neighborhoods last year — the latter of which is up by 63 percent from 2016. And in New York City’s predominantly Chinese-American neighborhoods, nearly 1,600 hosts generated $20 million in supplemental income by welcoming 67,000 inbound guests.

Senior citizen hosts are the fastest growing community in New York City, rising 60 percent in the past year. While many older New Yorkers face economic hardship, home sharing has emerged as a way for New Yorkers to “age with dignity”, which the Comptroller himself has supported.

Millennials represent the largest segment of New York City’s host community. The Comptroller has recognized that Millennials “bore the brunt of a modern economic disaster”. It comes as no surprise that many of them are turning to home sharing to pay record student debt, secure additional training for the modern workforce, and afford their share of the rent.

Antiquated laws and policies that restrict the ability of everyday, hardworking New Yorkers to engage in innovative, entrepreneurial activity like home sharing so that they can keep a foothold in the City that Never Sleeps are not the answer. Instead, we need new rules that stop bad actors and help those who share their space to make ends meet.

Since 2016, Airbnb has taken aggressive steps to root out hosts who do not meet the standards we’ve set for our community through a policy we call “One Host, One Home” (OHOH). Under OHOH, we have removed 4,993 listings that appeared to be shared by hosts with multiple listings that could impact long term housing availability.

We also support legislation in Albany (A-7520/S-7182) that would codify One Host, One Home into law, extending it to all home-sharing platforms. This bill would also ensure the simple, mandatory registration of hosts and establish protections for affordable housing — all while ensuring that home sharing will remain a lifeline for the responsible families who rely on it. It would even provide for statewide tax collection and remittance, which would generate an estimated $100 million from Airbnb in the first year alone.

We stand ready to work with all of New York City’s elected officials to implement common sense home sharing regulations because we believe that there is a path forward to both address their concerns and support the right of New Yorkers to share their space.