Airbnb Is Screwing Over New York’s Vulnerable Neighborhoods

Everyone knows Airbnb is bad for the housing market. But it's starting to get worse.

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May 3 2018, 2:30pm

Image: Newyork10r/Wikipedia

Updated 5/3/2018, 2:25 pm: This piece has been updated to include comments from Airbnb.

David Wachsmuth does not mince words when he talks about the impact of Airbnb rentals: “They impose costs on every single other person in the city,” he told me.

Wachsmuth has spent years following the impact of Airbnb on New York City with his co-author and colleague, Alexander Weisler. Their new report, out of the McGill University School of Urban Planning, quantifies the burden that short term rentals have on vulnerable neighborhoods in this city. In the era of ruthless gentrification—where lower income families are displaced or priced out of their homes—Airbnb is an added stressor.

Here in New York, where the city cracked down on short term rentals more than a hundred years ago, renting out your home for less than 30 days is illegal as of October 2016. But many landlords continue to rent out entire homes to tourists and visitors—today, 12,200 units are available on Airbnb in New York City in total—allowing them to reap in an income that’s higher than what they could make from renting those same units long term. That causes gaps in the housing market. “If you’re a landlord, you face strong incentives to kick your out tenants,” Wachsmuth said.

In neighborhoods like Harlem and Bed-Stuy—comprised largely of Black and Hispanic residents—this can threaten entire communities. And in recent years, more tourists have started opting for these neighborhoods, rather than midtown Manhattan or the West Village, since they’re cheaper. But not only do tourists upend the cost of rent, they also change the spending patterns in the neighborhood. Local restaurants and bars might cater differently to new patrons, or a bodega might give way to fancy grocery store.

.An Airbnb gentrification vulnerability index (left) identifying neighbourhoods with closed rent gaps (“high current impact”), open rent gaps (“high risk of future impact”), and partially closed rent gaps (“both current impact and future risk”). The index’s juxtaposition with race (right) indicates that the likely next frontiers of Airbnb-induced gentrification in New York are racialized (and particularly African-American) neighbourhoods. Image: Wachsmuth and Weisler/McGill University

Airbnb’s reach only continues to creep further away from the city center. There are listings in disenfranchised neighborhoods like East New York, and parts of South Bronx, where tourists can pay lower fees. And white neighborhoods systematically bring in more money than non-white neighborhoods. This allows for gentrification without redevelopment, pitting the poorest people in New York against a superficial tourism market.

There’s also the issue of taxes. Airbnb is an easy way for hosts to make income without always paying taxes, since there are certain loopholes in the code. The New York Attorney General estimated that the city was missing $33 million in hotel room occupancy taxes from Airbnb rentals between 2010 and 2014, according to the report. That’s tax money that could have been invested back into city infrastructure, including public housing.

White neighborhoods systematically bring in more money than non-white neighborhoods

And while some hosts are families who benefit from the extra income, most Airbnb units are rented out by larger enterprises. Just 10 percent of the hosts earned half of the entire city’s revenue last year. “I think you have to restrict those big commercial operations,” Wachsmuth said.

City officials are also actively trying to regulate and control the company’s effect on the city. In response to the 2016 law—last year, 57 percent of Airbnb listings in New York were illegal—the city has inspected thousands of units and invested in enforcement. These protections actually put New York City neighborhoods in a less vulnerable spot than cities like New Orleans, where the precarious mix of tourism and poverty can have even worse outcomes.

Read More: Canada Is Looking to Airbnb to Help Fix Its Housing Crisis

“New York, in some sense, is sort of a good case academically” because of its relative wealth, Wachsmuth said. “We expect other cities will have much worse problems.”

Wachsmuth said there is a solution that doesn’t require the entire dismantling of Airbnb culture. If the service were limited to homesharing—in other words, people who actually live in the units rent their apartments out on weekends or holidays—the housing market would remain stable and people could still make money.

But Airbnb might be changing their strategy, too. A spokesperson told me that following New York legislation, the company enacted One Host One Home, a policy to that encourages individual homeowners, rather than commercial housing operators, to share their home. The company has removed more than 4,800 listings because of this policy, and hosts are barred from listing more than one active entire home listing within the five boroughs, with certain exceptions.

“Although inconvenient for this author's anti-home sharing bias, Airbnb supports legislation that would restrict home sharing to one single home, which would finally allow enforcement to focus on illegal hotel operators while protecting regular New Yorkers who are trying to make some extra money to live in a city that gets more expensive by the year," said Josh Meltzer, head of Northeast policy at the company.

According to Airbnb, they want the same thing. York City hosts say that hosting an Airbnb has actually helped them stay in their homes.