Overhype

by Mike Masnick


Filed Under:
home sharing, rent, short term rentals

Companies:
airbnb



Calm Down, People: Data Shows Airbnb Isn't Really Driving Up Rent

from the not-that-bad dept

Last year, we did an episode of the Techdirt podcast discussing whether or not Airbnb was good or bad for cities, and afterwards I heard from a few people insisting that we were too quick to dismiss the concerns of the anti-Airbnb crowd. It seemed to us that the problem, if there was one, was in the overall housing stock of cities, rather than Airbnb having a legitimate impact. Yes, certainly there are some people who just use some homes/apartments/condos for doing short-term rentals, but it was difficult to see how (even at Airbnb's scale) it was enough to significantly impact housing prices.

And now there's some data to back that up. FiveThirtyEight did an analysis going through the data from a consulting firm, Airdna, that obviously collects a ton of Airbnb data, and it found little evidence that it's impacting housing prices in any significant way. The analysis does note that while such "commercial" listings (i.e., places that are only used to rent out on Airbnb, rather than for someone's actual residence) make up only about 10% of the site's total listings, they do make up about 1/3 of its revenue. That also shouldn't be that surprising. Of course places that rent out continuously are going to make more revenue. But, either way, there really just aren't that many such listings:
The revenue numbers alone don’t necessarily mean Airbnb is having much effect on rents in the cities where it operates. That is because the raw number of commercial units in most cities remains low, under 1,000 in all but the biggest cities. Even in New York, Airbnb’s biggest U.S. market, the service had only about 2,500 commercial listings, a sliver of the city’s roughly 2.2 million total rental apartments.
The 538 report keeps hedging this conclusion by saying "but, well, the rate of commercial listings is growing..." but it's still not clear that it's having a major impact on housing prices. And, again, if it is then that seems to be a sign that the focus should be on increasing overall housing stock, as things like Airbnb can provide plenty of other benefits for residents as well -- from alternative revenue sources for homeowners to more tourist dollars coming in to cities. But, overall, it seems like the rush to blame Airbnb for rising rental prices and costs for housing is overblown.

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  • icon
    Whatever (profile), 8 Sep 2016 @ 11:39pm

    You can play around with the numbers a bit and make them say anything you want.

    If the units are removed from the rental marketplace equally (high price, low price, etc), then the initial effects are negligible. However, the question is the long term effects.

    In the long run, if property owners can make more money renting out a unit on AirBNB for a couple of weekend a month and have less hassle for things like collecting rent and doing maintenance, then more of them are likely to head that way.

    In cities like New York where new reasonable price rental stock isn't coming to market (mostly higher end stuff) the potential issues of even a few thousand units out of the rental market can be significant. Rental prices may not be affected only because those who can no longer afford just move away, and the remaining market remains steady with slightly less demand to match the slightly less offered property. Think of it as digital era gentrification.

    In a property market there are many drivers, and it will always be hard to attribute any change in price to any one thing. It is overblown to blame them singularly, but they may be a long term tipping point in the overall functioning of the rental market.

    "Airbnb can provide plenty of other benefits for residents as well -- from alternative revenue sources for homeowners to more tourist dollars coming in to cities."

    This is true, but at the same time you have to remember that the tourism business generates a lot of low end jobs, baggage handlers, wait staff, hotel clerks, and so on. They are often WalMart level income jobs which do little to bring prosperity to the community. Tourism is good business for property owners, hotel owners, and the like, but there isn't quite as much trickle down as people would like to think.

    reply to this | link to this | view in chronology ]

    • icon
      PaulT (profile), 9 Sep 2016 @ 2:43am

      Re:

      Yet again, you have little to really say in your blather, but this is the one that's totally confusing:

      "This is true, but at the same time you have to remember that the tourism business generates a lot of low end jobs, baggage handlers, wait staff, hotel clerks, and so on. They are often WalMart level income jobs which do little to bring prosperity to the community Tourism is good business for property owners, hotel owners, and the like, but there isn't quite as much trickle down as people would like to think."

      I mean, what the hell are you even trying to say here? Are you trying to say that tourism is bad because the jobs it creates are lower end jobs? If so, which jobs do you think these communities are going to have if tourism goes away? Is tourism causing the neighbourhood to be less prosperous somehow or is increased foot traffic going to lower their standard of living?

      The only real point you have there is that the business owners who profit from increased spending might not pass it on to their minimum wage workers, but this is hardly something unique to the tourism industry and not relevant to the discussion at hand.

      You've gone from merely trying to distract from the article or confuse the issue with falsehoods to outright stating nonsense.

      reply to this | link to this | view in chronology ]

      • icon
        Whatever (profile), 9 Sep 2016 @ 3:21am

        Re: Re:

        "I mean, what the hell are you even trying to say here? Are you trying to say that tourism is bad because the jobs it creates are lower end jobs? "

        The point is that low end jobs aren't useful if the costs of living go way up. Business owners raise prices, commercial real estate goes up (for all those tourist t-shirt places) and the money flows out of the economy and off to the owners of Real Estate Investment Trusts and the like.

        Most tourist only destination aren't rich places.

        "You've gone from merely trying to distract from the article or confuse the issue with falsehoods to outright stating nonsense."

        Unlike you, I have real work experience beyond avoiding taxes and bitching about people not speaking your language. Perhaps one day you will grow up and start thinking for yourself, but today clearly is not that day.

        reply to this | link to this | view in chronology ]

        • icon
          PaulT (profile), 9 Sep 2016 @ 3:48am

          Re: Re: Re:

          "The point is that low end jobs aren't useful if the costs of living go way up."

          Well, that is a point you could have stated much more clearly. It took you numerous paragraphs to wind your way to a poorly stated truth that's only tangentially related to the issue at hand, but well done for stating a fact for once.

          Now, the next question - if there's only tourist jobs available in an area, why are you so focused on AirBnB's involvement when the area clearly has more important problems that force them to be so dependant on one industry for much of their population to begin with?

          "Most tourist only destination aren't rich places."

          Some are. Perhaps instead of writing paragraphs of nonsensical rambling, you could consider why the differences exist.

          "Unlike you, I have real work experience beyond avoiding taxes and bitching about people not speaking your language."

          As ever, lying about me doesn't help your image as anything but an obsessive idiot. An image you regularly prove correct.

          reply to this | link to this | view in chronology ]

          • icon
            Whatever (profile), 9 Sep 2016 @ 6:25am

            Re: Re: Re: Re:

            Paul, you only have to look at countries in your area (like say Greece, south of France, Spain, etc) in areas that depend on tourism. It's seasonable, it's generally low paying, and it only drives revenues to the bosses and owners who can live well over the off season. The employees often end up on the dole for half the year... so sad!

            " lying about me doesn't help your image"

            Only telling as much as the truth that is known...expats commonly flee the UK to avoid crippling taxes.

            reply to this | link to this | view in chronology ]

            • identicon
              Wendy Cockcroft, 12 Sep 2016 @ 7:26am

              Re: Re: Re: Re: Re:

              We don't have crippling taxes in the UK.

              reply to this | link to this | view in chronology ]

              • icon
                PaulT (profile), 12 Sep 2016 @ 7:59am

                Re: Re: Re: Re: Re: Re:

                He's probably thinking of the celebrities who whine that they have to pay back too much of their millions. I wish I was so well off that such taxes even entered my thought process when I moved.

                reply to this | link to this | view in chronology ]

            • icon
              PaulT (profile), 12 Sep 2016 @ 7:56am

              Re: Re: Re: Re: Re:

              "Only telling as much as the truth that is known...expats commonly flee the UK to avoid crippling taxes."

              Rich people, perhaps. I'm far from that. Just because you read about musicians and sportsmen who leave to avoid their tax burden, but you can't honestly think that the ordinary people who choose to emigrate do so for tax reasons? In fact, I don't believe my tax burden changed significantly (I'm not sure since it wasn't part of my decision to move).

              It's just another fiction you pull out of your arse instead of gathering the truth. I moved largely for personal and climate reasons. I just prefer the lifestyle here and appreciate the fact that I'm still wearing shorts to the office and that the climate helps ease a medical condition I've had since I was 15. I took a fairly sizeable pay cut to do this, and I pay full income and other taxes on both sides of the border. I'm just one of thousands of people who cross the border every day, from cleaners to technicians, builders to shop workers. Every one of them a tax exile according to your fevered imagination.

              But, believe the bullshit you made up about me in your own head instead, it's much more convenient than addressing reality. Your usual tactic, of course - why address a complicated reality when you can lie about the situation and pretend to be on top? Or, at least, you're unable to understand the differences between millionaires who choose to be tax exiles and those of us merely looking for a better life. So, typical Whatever blather - why deal with the complicated truth when you can construct a simplistic half-truth?

              reply to this | link to this | view in chronology ]

        • identicon
          Anonymous Coward, 9 Sep 2016 @ 5:26am

          Re: Re: Re:

          "The point is that low end jobs aren't useful if the costs of living go way up."

          and .. if an employer does not pay a living wage said employer can not expect to find willing and able employees.

          reply to this | link to this | view in chronology ]

          • identicon
            Wendy Cockcroft, 12 Sep 2016 @ 7:28am

            Re: Re: Re: Re:

            Unless the government is willing and able to prop up the aforementioned business by supplementing the worker's income with food stamps — which is already a problem. See Walmart for details.

            reply to this | link to this | view in chronology ]

        • identicon
          Anonymous Coward, 22 Sep 2016 @ 1:22am

          Re: Re: Re:

          No, sir, you clearly don't have an obsession for PaulT.

          Unfortunately for you, it doesn't look like he identifies as a copyrightsexual.

          reply to this | link to this | view in chronology ]

    • icon
      Ninja (profile), 9 Sep 2016 @ 9:36am

      Re:

      It's kind of hard to understand your reasoning but really, even if the jobs aren't 'high end' jobs they are still opportunities. Ask any person that's suffering with unemployment for months and you'll get this answer.

      And you seem to be troubled by the fact that some units are removed from the rental market but either you aren't aware or you are ignoring the huge amount of units that are simply collecting dust because of real estate speculation. This is so bad in bigger cities that there are talks of the Govt taking ownership of units that remain unused for an extended period of time here in my country. The city needs thousands of housing units to supply the demand and yet it has a vacancy rate of over 20% considering only units fit for living (there are plenty in the commercial offerings too). Airbnb isn't going to cause more damage than speculation hasn't caused already.

      reply to this | link to this | view in chronology ]

  • icon
    Narcissus (profile), 9 Sep 2016 @ 12:49am

    Rent hikes are not new are they?

    As far as I know rents have always been rising. It's simple economics caused by inflation and the fact that most people want to live in the same places (The old real estate mantra: Location, Location, Location). Living space in New York, for example, will always be desirable and scarce.

    It stands to reason that Airbnb is not helping reduce the prices but the economy is growing so it's logical the rent goes up anyway. If you want to point the finger at Airbnb as the main factor you would need to have some really hard data to back that up, especially since their "inventory" is fairly limited.

    Look at London. Real estate prices are sky-rocketing because rich oil-sheiks and Russion oligarchs are buying everything that comes on the market at ridiculous prices. That will for sure impact the rental market as well.

    Of course it's always nice to point at something to blame but it's rarely that simple.

    reply to this | link to this | view in chronology ]

    • icon
      Mason Wheeler (profile), 9 Sep 2016 @ 8:14am

      Re: Rent hikes are not new are they?

      Living space in New York, for example, will always be desirable

      Yeah, maybe if you're a sardine. By and large, people living in NYC live there by necessity, or because they were born there and don't have any easy way to leave. In all my life I've known a grand total of one person who wanted to move there, and she was crazy. (No, literally. She suffered, quite severely at times, from bipolar disorder and paranoid schizophrenia.)

      reply to this | link to this | view in chronology ]

      • icon
        Toestubber (profile), 9 Sep 2016 @ 8:44am

        Re: Re: Rent hikes are not new are they?

        It's one thing to dislike New York City, a sentiment common among those who don't live there, but it's another to deny that the metropolis remains one of the world's most desired places to live.

        Despite the godawful rent and other negatives, people (who are neither sardines nor especially mentally ill) continue to spend lots of money to relocate there. In fact, the resulting explosion of living cost, and loss of NYC culture, from this massive influx is why so much of the old guard has fled over the past two decades. I doubt Airbnb has much to do with it.

        reply to this | link to this | view in chronology ]

        • icon
          Mike Masnick (profile), 9 Sep 2016 @ 1:13pm

          Re: Re: Re: Rent hikes are not new are they?

          Yeah, maybe if you're a sardine. By and large, people living in NYC live there by necessity, or because they were born there and don't have any easy way to leave. In all my life I've known a grand total of one person who wanted to move there, and she was crazy.

          I know a ridiculously high number of people who absolutely want to live in NYC (and many people who live there because they wanted to). Having grown up right outside of NYC, I still frequently think about moving there and I love every time I visit. The idea that people don't like it there seems completely wrong to me.

          reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 9 Sep 2016 @ 8:48am

    Vancouver, Canada has a 0.6% vacancy rate, and 5000 short term rental listings (~85% which are AirBnB).

    Housing prices are skyrocketing here from a lot of factors, but tying limited stock up in commercial venture does not help the situation in the slightest.

    reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 11 Sep 2016 @ 6:07am

    Not true everywhere

    As with everything, there are outliers, and Berlin, Germany is one of them. There is a law that was supposed to go into effect last month banning unlicensed AirBNB rentals in the province (unlicensed meaning people were renting without reporting the income), but it was temporarily stayed by a court. The law was enacted because data was presented showing that from the mid-90s until the later 2000s, rent prices increased at a steady rate. Then when flat-sharing sites came around, rent prices increased dramatically, all while the cost of living and income remained steadily the same in Berlin. Nothing else accounted for this sudden shift except for the loss of some tens of thousands of apartments on the market.

    The data may show that, overall, AirBNB doesn't drive up rent, but in Berlin it certainly did.

    reply to this | link to this | view in chronology ]


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