Measuring the Impact of Airbnb Rentals on New York City’s Housing Crisis

A new report commissioned and paid for by Housing Conservation Coordinators and MFY Legal Services purports to show to what degree Airbnb is contributing to New York City’s housing crisis.

For each of the top 20 neighborhoods for Airbnb listings in Manhattan and Brooklyn, average rent increases have nearly doubled the citywide average from 2011 to 2015. In 2015, the report estimates the city also lost more than 8,000 housing units to Airbnb, reducing access to affordable housing in the city by 10%.

The report, conducted by BJH Advisors, a real estate development and advisory firm, compiled data from a variety of independent sources, including Airdna, which provides analytics for sharing economy hosts.

Additionally, the study found the following:

• More than 55% (28,765 listings out of 51,397) of Airbnb NYC listings in 2015 violate the state’s short-term housing law (for entire apartment/home listings) and were rented for more than a third of a year;
• 30% of New York City’s Airbnb listings are operated by “commercial” operators (those who rented out multiple housing units or had listings available for more than six months a year);
• The revenue generated by these commercial operators was estimated at $317.5 million in 2015;
• More than 90% of Airbnb’s listings are concentrated in the boroughs of Manhattan (55%) and Brooklyn (36%), and;
• The average NYC Airbnb unit is rented 11 days per month, or 132 days per year. This means these units are unavailable for nearly 4.5 months for residents.

Airbnb’s Response

Airbnb said this latest report was “misleading.” Airbnb public affairs spokesperson Christopher Nulty said, “If the hotel lobby that funded this misleading study was serious about affordable housing, they would have urged politicians in Albany to act on real solutions like restarting the 421-a tax credit program. Instead, they made targeting middle-class people their top priority. We need to work together to find solutions that actually benefit middle class New Yorkers, including how to protect responsible home sharers, rather than protecting the interests of the well-connected hotel industry.”

The 421-a tax credit program referenced by Nulty refers to a long-time program established in 1971. It gave tax credits to developers who included affordable housing in their construction projects and also ensured stabilized rents for tenants of those buildings for a set period of time. The program, however, expired earlier this year. A replacement bill was suggested just a few weeks ago, but it has not been passed by the legislature.

Airbnb has also been vocal about addressing claims that an increasing number of its hosts are commercial operators, especially in New York City.

In December 2015, the company reported 95 percent of entire home hosts in New York City share only one listing; 99 percent of all entire home properties listed on the platform are shared by hosts with one or two listings (95% share one listing, 4% share two listings); and that 90 percent of its hosts have indicated the property they list is their permanent home. This information followed a public release of New York City data in November 2015 that the company later admitted was essentially scrubbed to remove listings from commercial operators. In February, an article in Bloomberg showed that many of those New York City-based bad actors who were removed from the site were already back on the platform, listing multiple units.

This report is also not the only report to demonstrate the increasing popularity of the Airbnb platform among commercial operators, including a study backed by the American Hotel & Lodging Association (AH&LA), a known foe of Airbnb. AH&LA’s report said that from September 2014 to 2015, 909 hosts in New York City were commercial operators, contributing 24% of all of Airbnb’s revenue for that period in the city.

Impact Listings

The BJH Advisors report also closely examined the preponderance of “impact listings,” referring to units that are most likely to contribute to the city’s housing crisis by reducing residential units, compounding low vacancy rates and rising rents. In the report, these listings were defined as entire apartments/homes, rented by commercial hosts who either rented out multiple units for at least three months per year, or had a single listing rented for at least six months per year.

According to the report, New York City had 8,058 such listings in 2015, impacting Mayor Bill de Blasio’s goal of creating or preserving 20,000 affordable housing units over the next 10 years. All together, these listings generated $302.9 million in annual revenue.

The authors of the report wrote, “If the 8,058 units defined as Impact Listings were made available on the rental market, the number of vacant rental units citywide would increase by 10 percent and the vacancy rate would rise to 4 percent.”

Airbnb noted U.S. Census data estimates a total of 200,000 vacant units in New York City and that if these 8,058 Impact Listings units were purely commercial and without permanent residents, they would amount to just 3.8 percent of all vacant housing units in the city. Compared to the more than 3 million housing units available in New York City, however, that amount makes up just 0.26 percent of the overall housing stock.

However, it appears the census data Airbnb cites refers to all types of housing, and not just rental units, as defined in the report. This would include one- or two-family homes and co-op buildings/apartments, which are exempt from the state’s multiple dwelling laws regarding short-term rentals.

The Rent in NYC Is too Damn High

The report also looked at whether Airbnb’s growth in New York City was having an impact on rental prices and it found a direct correlation (.93 out of a 1.0 scale) between the concentration of Airbnb listings in a particular area and the median rental price. In these areas of the city, the number of Impact Listings and rental prices are both increasing at similar rates.

The report also looked at data from Zillow Research showing that the average rent for housing units in the top 20 Airbnb neighborhoods increased by 17% from 2011 to 2015, compared to a citywide average of 10%.

“Contrary to the company’s claims, the report makes clear that Airbnb is the reason your rent is so damn high,” said New York State Assemblymember Linda B. Rosenthal. “The report proves what we have known all along, that Airbnb has been lying to all of us while it makes record profits by exploiting our precious affordable housing, destabilizing our communities and breaking our laws.”

Rosenthal is the same politician who co-sponsored a bill which would fine hosts who advertise what are considered to be illegal listings on Airbnb and other short-term rental platforms. “It is crucial that my bill to bring the hammer down on illegal hotels be signed into law now so that we can stop the loss of affordable housing,” she added in a statement. That bill is currently awaiting the governor’s signature.

Five New York City neighborhoods, in particular, with a particularly large proportion of impact listings, are: East Village/Lower East Side; Chelsea/Hell’s Kitchen; West Village/Greenwich Village/SoHo; Williamsburg/Greenpoint/Bushwick; and Bedford-Stuyvesant/Crown Heights. Together, these five areas make up 53% of all of Airbnb’s listings in New York City.

Next-Gen Gentrification?

“As Crown Heights gentrifies, the long-term tenants we work with suffer from increased speculation and harassment to leave their homes,” said Kerri White, director of organizing and policy at the Urban Homesteading Assistance Board and Crown Heights Tenant Union, about the report. “Landlords will displace long-term families, only to operate illegal rentals or hotels. Today’s report proves what we know from our experience in the neighborhood to be true: Airbnb is contributing to gentrification, serious displacement and a housing shortage in Crown Heights.”

In April, Airbnb released a report, “Airbnb and Economic Opportunity in New York City’s Predominantly Black Neighborhoods,” which said that in the 30 New York City ZIP codes with the largest black populations by percentage, Bedford-Stuyvesant included, the number of Airbnb guests grew 78% year over year, versus 51% citywide. One in seven Airbnb guests who stayed in an Airbnb in New York City in 2015 stayed with a host in these neighborhoods, Airbnb reported, generally in a private room or shared space. The economic impact of this, Airbnb said, amounted to more than $43 million for those hosts in 2015.

This report, however, was met with sharp criticism from New York City lawmakers and housing advocates, who said it was further proof that Airbnb is only adding to gentrification woes in certain city neighborhoods like Bedford-Stuyvesant.

Inside Airbnb’s Murray Cox also pointed out that in Bedford-Stuyvesant, for example, white hosts had a significant presence in that particular neighborhood in 2014, even though they only make up 10% of the population according to 2010 U.S. Census data. The census also noted the white population in the neighborhood grew by 633% from 2000 to 2010. Because the white population and rental rates continue to rise in Bedford-Stuyvesant, Airbnb’s benefits to black residents is arguably low, Cox told The Independent.

“The fight over short-term rentals isn’t about tech, it’s about housing – and that’s what Housing Conservation Coordinators and MFY Legal Services have demonstrated with this report,” said Manhattan borough president Gale A. Brewer. “With the average Airbnb unit rented out to transient visitors for 4.5 months a year, it’s obvious that this business model isn’t about empowering everyday New Yorkers – it’s about misusing housing as hotel rooms, and it’s making our affordable housing crisis worse.”

“This report is the most damning yet for Airbnb,” said New York state senator Liz Kreuger. “It demonstrates unequivocally that illegal short-term rentals on Airbnb have a significant negative impact on housing in New York City, taking affordable units off the market and driving up rents for everyone else. In my district on the Upper East Side, illegal “impact” listings take up 17% percent of available rental housing. That means that while those apartments are funneling profits to Airbnb, they are not available for regular New Yorkers to live in. Once again we see that Airbnb’s greed is making our housing crisis worse, and hurting the working families they claim to champion.”