Just in time for vacation season, Airbnb was in the headlines last week when a New York City judge fined a man $2,400 for renting out part of his apartment using the site, finding him in violation of a law making it illegal to rent out your property for less than 29 days at a time.
I was not happy to see these headlines. I may or may not have had several Airbnb guests staying in my home at the time.
I wouldn't be the first Fast Company-ite to have run afoul of anti-Airbnb New York City landlords. But this ruling, which, the rental platform has hastened to point out, does not make Airbnb illegal in New York, has prompted a broader discussion about what effect the sharing economy is actually having on urban neighborhoods, the broader economy, and maybe even on innovation and growth.
The good side first. Being location-independent is a huge factor driving quality of life in the 21st century. We are living farther from our extended families. Work is gig-based and often global. It's been shown that too-high rates of home ownership are detrimental to a labor market and the rate of new business formation, because mortgage-holders are comparatively tied down, unable to migrate to better opportunities. Wouldn't it also follow that the ability to access just-in-time housing anywhere in the world can be a catalyst for growth?
This is over and above the economic boost that the sharing economy is so often claimed to bring through harnessing excess capacity. Airbnb touts the fact that a majority of hosts in New York—not to mention many homeowners elsewhere in the country—are using the site to earn enough extra income to stay in their homes. And they claim a multiplier effect through the fact that Airbnb guests stay longer and spend more money than traditional hotel guests, not to mention that they spread that largesse over a wider variety of urban neighborhoods rather than just traditional tourist districts.
But there are serious drawbacks, as well, to excess of short-term rentals, or what you might call a growing fungibility or liquidity of the housing market.
One is the spring breakers effect. It is not pleasant, even in the best-case scenario, to live next door or upstairs from a constant rotation of strangers on vacation, whether they are loud and drunk or loud and 2 years old. No matter how carefully Airbnb hosts vet their guests, issues are going to arise, and your neighbors have little recourse.
Another question is what the rise of ultra-short-term rentals does to the cost of housing, and to the fabric of a neighborhood.
Manhattan real estate, even more than in the past, is becoming a dark forest of ultraluxury ghost towers, a playground of pieds-a-terre for the international jet set. There's more and more tales like that of the Chinese mother who bought a 6.8-million-dollar apartment for her 2-year-old daughter, supposedly to live in when she attends college one day. On a recent vacation I chatted with a banker who had just moved with her husband to a luxury townhouse development in SoHo, only to find that most of her "neighbors" were either absentee owners, or their insanely rich college-kid scions smoking weed and throwing all-night parties.
Airbnb highlights the fact that 87% of New York City hosts list a home they live in—this is not primarily a platform for speculators. But the fact remains, you can make far more money by renting out a home or room by the night than by the week, the month, or the year. The tendency, then, might be to push the whole housing market in desirable urban areas toward the higher-end and shorter-term. It's like gentrification on steroids.
The ultimate irony here is that the success of Airbnb as a platform is based on building bonds of social connection and trust online between hosts and guests. But the success of short-term rentals, if taken too far, might have the opposite effect in the brick-and-mortar neighborhoods where people actually sleep.
[Image: Flickr user Dave Hamster]