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Tag airbnb

Long-term renters ARE short-term renters (maybe)

One reason local governments are often hostile to Airbnb and similar home-sharing websites is that politicians believe that the interests of short-term renters and long-term renters are opposed- that is, that Airbnb wastes housing units that could be used by long-term renters. This claim is of course based on the assumption that the interests of long-term renters are more important, because short-term renters are usually rich tourists with plenty of money to spend. If short-term rents were always as high as those of fancy hotels, this argument might make sense. But in fact, some Airbnb rents are comparable to rents in the long-term market, and some Airbnb landlords in fact will rent property for months. I discovered this while playing around with Airbnb listings in New York City. In particular, I looked at rentals for the entire month of August. I found rents as low as $827 per month (for a furnished room in Hollis, Queens). Even after limiting my search to full-fledged apartments (as opposed to sharing a room in someone’s house) I found some listings that were comparable to those in the long-term rental market. I found a listing for $1800 in Staten Island, and $1826 in Midwood (in southern Brooklyn) – far less than what I pay. The cheapest Manhattan listing (a walk-up in Murray Hill) was $2400, about what I paid before I got married. I did another search for 3-month tenacies (from Aug 1-Oct 1) and found comparable results: the cheapest fully private space rented for $1752 (in East New York) and the cheapest Manhattan listing rented for $2453. The cheapest roommate arrangement was $736- in Bensonhurst. In sum, it appears that if you can afford a traditional apartment, you can probably afford a low-end Airbnb listing- despite the regulatory obstacles that government uses against […]

Evidence that home-sharing doesn’t raise rents

A common argument against Airbnb and similar home-sharing companies is that they raise rents, because every apartment used for short-term rentals could be used for long-term rentals.  A recent paper by a Spanish Ph.D. candidate suggests otherwise. The paper focused on Santa Monica, California where, in 2015, the city adopted an ordinance restricting home-sharing.  This city’s ordinance was successful in reducing Airbnb listings- especially listings of complete apartments, which cities are most likely to regulate (as opposed to spare rooms in a residence used by an Airbnb host). If the anti-home sharing argument was valid, rents should have gone down.  Instead, rents rose in Santa Monica by the same amount as they rose in other Los Angeles suburbs that do not regulate home-sharing to the same extent.

The Attack on Airbnb

New York politicians’ attacks on Airbnb are now getting national press; they argue that because Airbnb units could be used for long-term rentals, Airbnb reduces the housing supply and thus raises rents. But just as a matter of principle, this claim leads to absurd results.  The logic underlying the claim is: a housing unit that is used for short-term rentals such as Airbnb could be easily used for long-term rentals.  Thus, Airbnb reduces the long-term housing supply. But this argument proves too much.  If you own a house, your house could also be used for long-term rentals.  If you have a spare room, you could rent out that spare room.  And even if you rent out every room in the house, your house sits on land that could be used for a much larger number of rental units.  Since there are far more single-family houses than there are Airbnb units, bulldozing every house in the city would increase housing supply to a much greater extent than would outlawing Airbnb. Does this mean the city should bulldoze your house to build more rental housing?  

Living Downtown: A Great Book for Market Urbanists

One long-forgotten housing option is residential hotels; a century ago, most renters lived in hotels and shared space with short-term tenants.  I just read a book, Living Downtown, about the rise and fall of residential hotels.  Rather than discuss them in detail I refer you to my amazon.com review. But here are two general thoughts: one reason Airbnb has been controversial is because it mixes long-term and short-term tenants.  But in the first half of the 20th century this was a common mixture. Until the 1920s, residential hotels were so unregulated that they included a wide range of places, from luxury hotels to vile flophouses where there was not even a mattress to sleep on.  But this mixture allowed even tramps to avoid sleeping on streets as they do now.

Airbnb Crowding Out Is A Symptom, Not A Cause Of Housing Shortages

  When journalists, NIMBYs, politicians, and activists make claims about Airbnb taking potential full-time housing stock and converting it to leisure space, they operate under the assumption that the housing supply must be fixed. This assumption is half true: By no means must the housing supply be fixed, just as the supply of laptops, shoes, or milk has no requirement to be fixed. In reality, though, the supply is, yes, somewhat fixed, but that is merely an option, chosen by NIMBY residents, politicians, and misguided housing activists* that force through restrictive construction policies that either largely inhibit or outright prohibit new housing development. Economists Ed Glaeser, Joseph Gyourko, and Raven Saks estimate that what they call the “zoning tax” accounts for, on average, more than 10 percent of the price of the average U.S. home. In cities with extreme restrictions like San Francisco, the zoning tax is as high as 50%! Here’s a thought exercise: Imagine the U.S. had very restrictive laws regarding smartphone production. If a new Apple factory wanted to produce more iPhones, each phone would have to go through a long, onerous, and costly approval process by the local government and regulatory agencies. In addition, nearby established phone factories or incumbent phone owners in many areas could successfully pressure the local government to prohibit the new factory from producing phones. Because of these burdens, the supply of phones rises only very slowly (far less than the growth in phone demand), and many people have to go about sharing a phone with family or friends or diverting huge portions of their monthly budget to owning/renting a scarce phone. In this alternative phone regulation reality, the criticism that “some tiny portion of phones are used for leisure like social media and games rather than important things like work or talking to […]

Home-Sharing and Housing Supply

One common argument against Airbnb and other home-sharing companies is that they reduce housing supply by taking housing units off the long-term market.* As I have written elsewhere, I don’t think home-sharing affects housing supply enough to matter.  But even leaving aside the empirical question of whether this will always be true, there’s a theoretical problem with the argument that if someone fails to use their land for long-term rental housing, government must step in. It seems to me that this argument, if applied with even a minimal degree of consistency, leads to absurd results.  For example, suppose that Grandma has a spare room in her house, and instead of renting it on Airbnb she allows the room to be unused.  Should Grandma be forced to rent out the room?  Of course not. A home-sharing critic might argue that an unused room is different from a room that is likely to be rented out to a long-term tenant.  Indeed it is- but in fact, Grandma’s failure to rent the room to anyone is more socially harmful than her renting the room on Airbnb.  In the latter situation, a traveler benefits (from a cheaper rate than a hotel, or at least for a different kind of experience) and Grandma benefits by getting money from the traveler.  By contrast, in the former situation, no one benefits. It could be argued that Grandma’s rights should be unimpeded, but that regulation should be targeted towards the amateur hotelier who seeks to rent out an entire building all-year round, rather than using the building for more traditional tenants. Even here, the argument based on housing scarcity leads to absurd results.  Suppose the evil landlord Snidely Whiplash decides, instead of renting out his building on Airbnb, to use the building for a vacation house one day a year […]

Does Home-sharing Create Negative Externalities?

  A decade or two ago, a traveler who wished to stay in a city temporarily had no alternative to a hotel. Even if the owner of a house or condominium wished to rent out a room for a short period of time, the costs of advertising in a newspaper would have at least partially canceled out the financial benefits from renting. But the Internet has made home-sharing much more economical, through websites like Airbnb.com.  At first glance, the home-sharing industry seems highly beneficial: guests get a cheaper and/or more exotic vacation, home-sharing hosts get extra money to pay off mortgages, and their neighborhoods benefit from tourist revenue. Nevertheless, NIMBYs have attacked home-sharing.  One major argument is that home-sharing creates negative externalities.  For example, a recent law review article(1)  notes that some neighborhood activists in Silver Lake (a trendy Los Angeles neighborhood) sought to exclude home-sharing from their neighborhood on the ground that shared homes are “hotel-like room rentals”  and such a “commercial use [causes] the noise and traffic levels of the area [to] increase as a result of people coming and going, and the transient nature of the establishment can increase the crime rate.” As a result of these problems, home-sharing “brings nuisances to residential areas, thereby lowering the value of all homes in the neighborhood.” In other words, the “externalities” argument rests on the following chain of logic: Assumption 1: Home-sharing, as a commercial use, is no different from hotels. Assumption 2: Commercial uses bring down property values. Conclusion: Home-sharing brings down property values. But none of these claims has significant factual support.  First,  home-sharing is somewhat different from a large hotel. An individual hotel might have hundreds or thousands of guests on one block.  By contrast, home-shares tend to be spread out over a much larger space, […]

To Know Home-Sharing Is To Support It

If you read elite commentary on the home-sharing industry (that is, Airbnb and its competitors), especially on the Left, you might think it is quite controversial.  However, a recent Pew survey suggests otherwise. According to Pew, very few people know very much about home-sharing.  Only 11 percent of Americans have used home-sharing services,  and 53 percent of all adults have never even heard of them.  Only 9 percent of Americans claim to have heard “a lot” about the homesharing debate, and 16 percent have heard “a little.”  Among people who have actually used home-sharing services, these numbers rise to 19 percent and 37 percent. But to the extent Americans are aware of home-sharing, they like the idea.  Only 4 percent of Americans think home-sharing should be illegal, and only 30 percent think it should be taxed.  52 percent think homesharing should be legal and untaxed.   Even among self-described liberals, only 38 percent think homesharing should be taxed.

Market Urbanism MUsings March 18, 2016

1. This week at Market Urbanism: Nolan Gray‘s latest post, Liberate the Garage!: Autonomous Cars and the American Dream At present, zoning laws effectively prohibit entrepreneurs from using their garages for business. In many Americans cities, hiring employees, hosting visitors, putting up signs, and altering your garage for business purposes are all outright banned. As urban planner Sonia Hirt notes in her most recent book, these regulations reflect American zoning’s dogmatic insistence on separating work from home. These restrictions effectively mandate sprawl by forcing commercial uses and residential uses into segregated districts. More troublingly, these regulations fall hardest on low-income entrepreneurs by significantly raising the cost of starting a business. The article was cited at streetsblog, and Nolan discussed the article on KCBS radio San Francisco Michael Lewyn wrote his first Market Urbanism article, Rent Control: A No-Win It therefore seems to me that pro-rent control municipalities are caught in a no-win situation: if they adopt strict rent controls, they limit housing supply by making housing a less attractive investment. But if they adopt temperate rent controls, they don’t really control rents. 2. Where’s Scott? Scott Beyer is leaving Oklahoma City tonight for Houston to see the rodeo. This week, he delved into foreign policy, writing in Forbes about The Case For Another Cuban Boatlift. Since 1980, Miami has been one of the fastest-growing metro areas by population, and has become one of the best for startup activity and upward mobility. Along with other Latin American immigrants, Cubans have bolstered this, making up over a third of the city’s population…Well into the 21st century, Cubans had among the highest median incomes and homeownership rates of U.S. Hispanic groups. 3. At the Market Urbanism Facebook Group: Michael Hamilton is happy to see good news for once:  Arizona Senate Votes to Ban Cities from Banning Airbnb, Couch-Surfing Nick […]

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