Preparing for the worst could save your life
In a study of Airbnb’s effects in Amsterdam, Milena Almagro and Tomás Domínguez-Iino of the University of Chicago Booth School of Business discovered that the company had nuanced effects on inequality, and could even lessen it.
Researchers are diving into the dynamics of housing prices, population movements, and inequality. A study by Chicago Booth’s Veronica Guerrieri, the Federal Reserve Bank of Chicago’s Daniel Hartley, and Chicago Booth’s Eric Hurst reveals that poor neighborhoods bordering affluent areas are hardest hit by gentrification.
Researchers are also exploring how short-term rentals fit into the mix of commercial offerings and residents' preferences. Some neighborhoods cater to families, while others attract young professionals. By lumping these characteristics into a single dimension, valuable information is lost.
In their analysis of how tourism doubling and Airbnb's dramatic expansion reshaped Amsterdam, the researchers gathered data from 2008 to 2018 on rental prices, household demographics, and residential histories, as well as neighborhood-level information like tourism rates and local amenities.
The growth of short-term rentals in Amsterdam has reshaped local businesses, affecting residents in various ways. For instance, bars flourished in neighborhoods with older homeowners and children. Meanwhile, nurseries declined in areas popular with young families and restaurants emerged in spots favored by singles.
The researchers found that as tourism and Airbnb listings increased, so did housing costs. However, some residents, like singles and young families, benefited from the new amenities that tourism brought, which helped offset the higher housing prices.
Older families often moved away from Airbnb-influenced and tourism-heavy areas, partly due to their dislike of new businesses. But this demographic shift could actually help reduce urban inequality, as people relocating to neighborhoods with preferred amenities eases pressure on housing inventory and rental prices.
Researchers also explored the impact of taxing Airbnb short-term rentals versus touristic amenities. Their findings suggest that taxing short-term rentals benefits all residents—older and younger families, as well as individuals—by slowing the rise in housing costs as fewer short-term rentals enter the market.
At the same time, taxing touristic amenities negatively impacts younger families and singles, who benefit from these amenities in their neighborhoods. As Almagro notes, "Heterogeneity matters when it comes to how people choose where to live in a city and what benefits they get from those choices."
In recent years, many landlords realized they could earn more by listing their properties on Airbnb rather than renting to long-term tenants. Meanwhile, prospective property buyers snapped up homes and condos with the sole intention of turning them into lucrative Airbnb rentals.
Consequently, Airbnb's removal of rentals from the market means fewer options for renters, driving up rates. Similarly, the wealthy buying multiple properties for short-term rentals pushes home values higher, pricing out the majority of people.
While there's nothing inherently wrong with short-term rentals, local governments all over the world seem to struggle to control their numbers. The overwhelming presence of Airbnbs simply makes it challenging to provide sufficient housing for permanent residents.
Beyond preventing new people from buying or renting homes, some scholars connect short-term rentals (STRs) with gentrification, suggesting that the financial incentives for landlords drive the displacement of low-income residents in favor of tourists, especially in most popular touristic cities.
The Chicago Booth study concludes that the issue with short-term rental guests is that they're not part of the community and may not adhere to the usual rules of polite coexistence. While most rentals run smoothly, there are numerous instances of Airbnbs disrupting neighborhoods.
Several countries and cities are pushing back against Airbnb and other short-term rental platforms due to their impacts on local communities and housing costs.
Since 2016, Berlin has enforced restrictions on short-term rentals on platforms like Airbnb. Landlords must acquire a special permit if they wish to rent out 50% or more of their main residence as a short-term rental, which is a legislation welcomed by the local communities.
In 2021, Edinburgh introduced a licensing scheme allowing councils to regulate "holiday-style" rentals if they believe they're beneficial for local communities. Additionally, in "control areas" landlords need planning permission before converting an entire property for short-term rentals.
In New York City, where there may now be more Airbnb listings than available rentals, Airbnb hosts are required to register their properties with the city and provide proof of residency. Non-compliance could result in fines ranging from US$1,000 to $5,000. The city aims to reduce the number of Airbnbs by at least 10,000.
A common reason for using Airbnb is that it's cheaper than hotels, motels, and traditional bed and breakfasts. That might have been true in the past, especially when people mainly rented out single rooms in their own homes for extra income. However, it seems that may no longer be the case.
Despite its humble beginnings that initially brought so many low-budget travelers to the platform, Airbnb now largely benefits already-wealthy property owners who use it as a lucrative business. It increasingly enriches a small group of people, while becoming more expensive than other accommodation options.
Many factors contributed to the housing crisis, including the COVID-19 pandemic and builders' difficulties in securing building supplies. However, it's hard to deny the role Airbnb and its smaller competitors played.
Airbnb offers over six million rental listings in more than 100,000 cities worldwide. Property owners, known as "hosts," can earn significantly more by renting to short-term visitors compared to traditional long-term renters.
Real estate investment firms have been snapping up properties to capitalize on the Airbnb craze. According to the watchdog group Inside Airbnb, these firms have contributed significantly to Airbnb's expansion; about one-quarter of hosts on the platform own nearly two-thirds of the listings.
Airbnb CEO Brian Chesky has acknowledged the "tens of thousands" of complaints on social media about the platform's increasing costliness. The company understands that hosts' expenses, including home insurance, property taxes, and costs for cleaning and maintenance, have all risen during a period of high inflation.
Despite predictions of its collapse due to direct involvement in global housing crisis and the undeniable erosion of communities, Airbnb is more profitable than ever. However, the platform still faces a reckoning—an existential questioning of its offerings and its future direction.
The US national housing shortage has intensified scrutiny of Airbnb as short-term rentals reduce the housing supply available for residents. Studies have demonstrated that Airbnbs raise home values and rents, with the impact being more significant in densely populated areas where the housing shortage is most severe.
Housing expert Lance Lambert, editor of real estate analytics site ResiClub, puts it succinctly: "When Airbnb rolled out, everybody thought it was going to kill hotels. And it really just became hotels."
Objectively, Airbnb may just be the tip of the iceberg. The real issue lies in the ever-changing rules of the market amidst global migrations, as well as the government's inability to fulfill their house-building promises. These underlying problems prop up Airbnb as the easily targeted, visible culprit.
Sources: (The University of Chicago Booth School of Business) (Forbes) (The Maple) (The Guardian) (Vox)
With over seven million listings in 100,000 cities across 220 countries, San Francisco-based Airbnb has lofty goals: one billion guests annually by 2028. Loved for its diverse holiday rentals, from single rooms to entire properties, Airbnb undoubtedly offers a unique experience distinct from traditional hotels. The company became a phenomenon in the short-term rental market, but it's also under fire for its potential role in the global housing crisis. The so-called 'Airbnb effect' is becoming a major worry, as it impacts housing stock, prices, and communities. Despite the company's denials, cities around the world are scrambling to curtail the impact of short-term rentals; Barcelona and New York are already clamping down on vacation rental giants such as Airbnb to protect their housing markets.
But even if Airbnb is harming local housing markets and communities, can anyone really stop this massively popular, multi-billion-dollar powerhouse? Click through to find out.
Is Airbnb causing the global housing crisis?
Understanding the impact of the world’s largest holiday platform
TRAVEL Tourism
With over seven million listings in 100,000 cities across 220 countries, San Francisco-based Airbnb has lofty goals: one billion guests annually by 2028. Loved for its diverse holiday rentals, from single rooms to entire properties, Airbnb undoubtedly offers a unique experience distinct from traditional hotels. The company became a phenomenon in the short-term rental market, but it's also under fire for its potential role in the global housing crisis. The so-called 'Airbnb effect' is becoming a major worry, as it impacts housing stock, prices, and communities. Despite the company's denials, cities around the world are scrambling to curtail the impact of short-term rentals; Barcelona and New York are already clamping down on vacation rental giants such as Airbnb to protect their housing markets.
But even if Airbnb is harming local housing markets and communities, can anyone really stop this massively popular, multi-billion-dollar powerhouse? Click through to find out.