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Airbnb’s Fight With NYC Is Getting Nastier As Regulation Looms

Is it really possible to determine whether Airbnb is causing a rise in rents? The devil may be in the data, which we just don’t have.

Airbnb’s Fight With NYC Is Getting Nastier As Regulation Looms
[Photo: Flickr user Jörg Schubert]

Airbnb is trying to make nice with cities, but a new report from New York City’s comptroller’s office has put good relations on ice. The office released a contentious analysis last week that correlates a portion of the city’s rising rents to Airbnb. Now the company is launching an ad campaign, attacking the Stringer report and accusing the comptroller of using home sharing as a scapegoat for a housing affordability crisis.

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Stringer’s report found that the home-sharing platform contributed 9.2% to New York City rent increases between 2009 and 2016. Since it was released last week, Airbnb has held two separate press conferences, decrying the methodology and calling the findings “bogus.” 

It’s not the only one making such claims: Third-party data firm AirDNA, whose data was used as part of the comptroller’s research, castigated the comptroller for misrepresenting its data. AirDNA says the report assumes that every listing ever uploaded is equal to the total number of active listings, and that Airbnb rentals that are used once a year have the same impact on area rents as a listing that’s rented full-time and professionally managed.

Chris Lehane [Phoot: courtesy of Airbnb]
Chris Lehane, Airbnb’s head of global policy, said it was a “great irony” that AirDNA has been one of the report’s loudest critics. “Historically, Airbnb and AirDNA have not necessarily gotten along,” he said. AirDNA scrapes data from Airbnb’s platform, and Airbnb has previously called into question the accuracy of AirDNA’s data.

Despite the criticism, the comptroller’s office has continued to hit back, saying it used AirDNA’s data the way anyone else would by signing up for a free account online. The only additional data it used was from the U.S. Census Bureau. “What we measured was the average effect of Airbnb listings, without respect to duration or type,” the office said in a statement.

The analysis controlled for certain variables, including household income, population, education level, and employment. As to Airbnb’s claims that the office’s study should have taken into account types of listings (i.e., entire home versus private room, or single-listing host versus multiple-listing host), the comptroller’s office says Airbnb keeps that data private. “If Airbnb wants to make the argument that this is a relevant factor, they should hand over the data so that their claims can be independently reviewed.”

[Photo: Flickr user Pelle Sten]

The Proof Is In The Data—Or Is It?

Stringer’s report no doubt emerged out of a frustration with the lack of insight into Airbnb’s effect on cities. Researchers, government officials, and residents want to know how home-sharing platforms are changing cities, and Airbnb has shared its data on a limited basis. Even when the company has given up information, as in the case of a 2017 study titled, “Airbnb​ ​Usage​ ​Across​ ​New​ ​York​ ​City​ ​Neighborhoods” out of New York University, the results have failed to answer questions city officials most want answered.

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For example, the NYU study implies that Airbnb probably doesn’t have a major effect on rental pricing because there isn’t enough financial incentive to convert long-term housing to short term.  

“You’ll find that only a very small fraction of current Airbnb listings could potentially be units that have been taken off the market,” says Arun Sundararajan, professor at NYU’s Stern Business School and one of the researchers on the study. “They’re not going to take over large swaths of long-term housing because there’s just not enough demand for that.”

However, Sundarajan’s study does not directly tackle the question of Airbnb’s impact on rents. Instead it calls for further research. In lieu of actionable information, researchers have made various attempts to fill the gap, but the problem with doing so is twofold. On the one hand, there are concerns that certain reports are skewed to satisfy specific agendas. Consider a McGill University study from January, which found that, between 2014 and 2017, Airbnb was responsible for a 1.4% rise in median long-term rents around New York City. The study was commissioned by the Hotel Trades Council and the AFL-CIO, leading to accusations that certain biases were baked into it.

But even studies not funded by the hotel industry have determined that the platform is responsible for at least some movement in rents. For example, researchers Keren Horn and Mark Merante at the University of Massachusetts Boston found that “one standard deviation increase in Airbnb listings is associated with an increase in asking rents of 0.4%” in the city. Another study, this one from MIT, found a 1% increase in Airbnb listings leads to a 0.018% increase in U.S. rents.

Sundararajan says that while the MIT study does establish a possible relationship between a rise in Airbnb listings and an increase in rents, it doesn’t prove causation. “To prove cause you need to look at situations where the effect was absent, and then it was present, and let’s sort of compare the two,” he says.

This brings us to the second problem. Proving that Airbnb is causing rents to go up is incredibly difficult. Sundararajan says there are so many contributing variables (changes in crime, air pollution, landscaping, subway availability) that it would be nearly impossible to run a study that controls for all of them. The best way to understand the impacts of Airbnb, he says, would be to look at a city where Airbnb was in full swing and then suddenly removed. Barring a ban, this is not an easy environment to conjure up.

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[Photo: Flickr user Pelle Sten]

The Specter Of Regulation

In the background of this whole debate are attempts by city officials to regulate Airbnb. There are presently two bills on the table in Albany that aim to bring more oversight to home sharing in New York. One, sponsored by state assembly member Linda B. Rosenthal (D), calls for anyone renting property on Airbnb to register with the city. The bill proposes a framework that would require Airbnb hosts to submit information about the exact location of the listed property, whether it’s rent stabilized or rent controlled, what kind of building it’s in, and whether the listing is for the whole unit or just a room. It then offers tiers of fines ranging from $1,000 to $7,500 for violators.

A second bill, one that Airbnb helped work on with state assembly member Joseph Lentol (D), also calls for a registry—and a mechanism for fining violators—but it creates a pathway for letting New Yorkers rent out apartments or rooms for fewer than 30 days, which is currently illegal in the state. In the end, this regulatory battle may be at the heart of the bickering between a private company and city officials.

In the meantime, Airbnb’s biggest critics have not wasted time capitalizing on Stringer’s report. Share Better, an organization made up of elected officials, housing advocates, and hotel industry members, launched an attack ad yesterday, called “The Airbnb Tax,” which is already airing on local television.

Airbnb has been working with several different cities on regulation to give municipalities more control over the platform’s impacts. Through appealing to legislators, the company has won them over in Barcelona, San Francisco, London, and Berlin as it tries to cement its platform as a component of global local economies. But some cities are not so easily wooed. In April, Paris sued Airbnb for failing to remove listings that hadn’t registered with the city. 

“We need a robust regulatory structure,” says Sundararajan—one that perhaps puts limits on Airbnb activity. That could mean capping the number of days a person can rent out a room or apartment per year, or restricting the number of units within a neighborhood that can be rented on Airbnb. 

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About the author

Ruth Reader is a writer for Fast Company. She covers the intersection of real estate, technology, and the future of work.

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