June 18, 2019

The High-Cost "Airbnb Effect"

“D.C. is restricting it. Florida might stop investing in it. New Orleans is trying to ban it completely. Across the country, legislators are not happy with Airbnb.

Since it was founded in 2008, the short-term rental platform has been the subject of several critical research papers that have blamed it for raising housing prices, changing employment dynamics, and taking chunks out of city tax revenue. A new analysis from the Economic Policy Institute attempts to more comprehensively catalog these local impacts—and measure what, if anything, cities get out of the deal. To better align the costs and benefits, the study’s author Josh Bivens argues, cities need to start treating Airbnb like any other hotel business, and regulate it accordingly.

“It becomes a straight conflict between whose interests you care more about: long-term residents of the city, or those that visit it,” Bivens said.

What renters lose
Since Airbnb helps homeowners take existing housing stock and turns some of it into short-term units, its biggest measured effect so far has been on housing prices—by repurposing units that might otherwise be long-term housing, it’s straining an already supply-short market. Rents rise in the process. The cities researchers have analyzed happen to be already-pricy coastal metros, meaning Airbnb is just one of many factors at play. But, researchers say it’s a powerful one. “I was surprised at how early in the process of Airbnb expanding into cities that it has measurable impacts on housing costs,” said Bivens.”

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