Is Airbnb worsening the housing crisis in major cities around the world?

Inside Airbnb
via Inside Airbnb

An increasing number of people are using vacation rental and accommodation sharing sites to find unique and relatively affordable places to stay. Sites like Airbnb and Flipkey style themselves as pioneers of the new sharing economy, allowing homeowners to earn a bit of extra income by renting out their spare room or cottage. But recent reports are suggesting a very different story: in cities like Vancouver, London and New York, sites like Airbnb are actually contributing to a growing housing crisis by diverting rental stock that could have been rented to local, long-term tenants instead.

One recent study done by Simon Fraser University grad student Karen Sawatzky found that more than two-thirds of Vancouver Airbnb listings were actually entire homes. With an extremely low rental vacancy rate hovering around 0.5 percent and an expensive real estate market, it is notoriously difficult to find an affordable rental apartment in Vancouver.

Even more troubling was that Sawatzky's study found that many of these listings were being rented out for more than 90 days -- thus operating illegally according to city bylaws. The study also found that there are many hosts with multiple listings, leading The Globe and Mail's Kerry Gold to point out that it may be feeding a vicious cycle of housing unaffordability:

It’s a significant finding, because it means that if the majority of Vancouver Airbnb hosts have entire apartments or houses to spare, then they’re not renting them out to full-time tenants. A significant chunk of the rental stock is lost. It means Airbnb’s popularity could be contributing to the critically low vacancy rate, which is, in turn, driving up rents.

Some long-time tenants are finding themselves evicted as landlords transform apartments into (illegal) full-time Airbnb rentals, a much more lucrative option.

Adding data to the debate

Companies like Airbnb are reluctant to provide detailed statistics that may shed light on these problems, so projects like Inside Airbnb have popped up, "adding data to the debate" by offering neighbourhood residents and policy makers an independent set of tools to analyze the numbers, revealing how Airbnb might be affecting the local housing market in dozens of cities around the world.

New York City based Murray Cox is the community activist and data analyst behind the non-commercial data project, which uses computer code to examine the data behind Airbnb's listings, to paint a more complete picture of how many local homes are being rented out to tourists instead of residents, how long they are being rented out, whether they are rooms or entire homes, and which hosts have multiple listings.

One can find data for cities like New York, London, Paris and Vancouver on Inside Airbnb. Across the board, and particularly in Vancouver, Cox explains on the CBC that the data points to a concerning trend, a far cry from the popular Airbnb image of ordinary people "occasionally" sharing their primary residences and earning a little extra income on the side:

This isn't people just going away for a couple of weeks and renting out their homes. These are people that are probably renting out apartments permanently. It seems to suggest that those apartments would be having an impact on your ability to find a long-term rental if you're a resident of Vancouver. That type of use would suggest that they might be commercial operators or commercial investors with multiple listings.

A need for more safety regulations

Besides possibly taking away rental inventory from local residents, Airbnb has been criticized for its inadequate handling of cases where Airbnb guests vandalize and steal from their hosts, or protecting guests when hosts misrepresent their rentals. Granted, the company has made improvements: it now offers insurance for hosts and has since set up a 24/7 hotline for disputes. But there's a long way to go, especially in the area of safety regulations and clearing up who is liable for what when things go horribly wrong, as journalist Zak Stone recounts in his story about how his father died in a freak accident during his stay at an Airbnb rental:

Startups that redefine social and economic relations pop up in an instant. Lawsuits and regulations lag behind. While my family may be the first guests to speak out about a wrongful death at an Airbnb rental, it shouldn’t exactly come as a surprise. Staying with a stranger or inviting one into your home is an inherently dicey proposition. Hotel rooms are standardized for safety, monitored by staff, and often quite expensive. Airbnb rentals, on the other hand, are unregulated, eclectic, and affordable, and the safety standards are only slowly materializing.

Airbnb HellAirbnb Hell/Screen capture

Not truly neutral

There's no doubt that new technologies will reshape how business is done in the future, but rapidly growing platforms like Airbnb and Uber are pushing beyond local governments' ability to keep pace in developing updated regulations for these new industries. While these companies may position their products as neutral platforms connecting demand with supply, in reality it's much more complex and certainly not neutral nor apolitical, and not above doctoring data to make it more palatable to lawmakers. It's an attitude in line with other big corporations, as Corin Faife emphasizes over at VICE:

For all the talk of its disruptive nature, Airbnb still looks a lot like capitalism 1.0: People with property, or those who have access to credit, find it easy to generate more and more of it; people with money to consume the product benefit from greater choice; and people with none of the above are squeezed out of the equation and collectively absorb the negative impact of higher rents and increasingly transient communities. Above it all stands Airbnb itself, a £17 billion [$25 billion] giant of a company, taking a cut of every pound, euro, or yen spent through the site.

For now, the shiny sheen of the so-called "sharing economy" looks (and smells) like something else; while it may bring in extra income for the little guy, overall, it's really benefitting only the privileged few. More over at The Globe And Mail, CBC and Matter.

Tags: Housing Industry


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