The winners and losers from Airbnb

Overall, renters in New York City suffer a loss of $178mm per annum, as the losses from the rent channel dominate the gains from the host channel. I find that the increased rent burden falls most heavily on high-income, educated, and white renters, because they prefer housing and location amenities most desirable to tourists. Moreover, there is a divergence between the median and the tail, where a few enterprising low-income households obtain substantial gains from home-sharing, especially during demand peaks.

That is from the job market paper of Sophie Calder-Wang of Harvard.  You will note there still are likely net gains once you count tourist demand, but of course this helps explain why Airbnb rentals are unpopular in some cities.

Comments

Yes, long term renters suffers; and communities suffer from the absence of long term rentals (where will, you know, the working class live who work in the community?). One cost often overlooked is the deterioration of the neighborhood. I can drive through a neighborhood in Charleston and identify the airbnbs: they are not maintained like owner-occupied dwellings. They have that "nobody lives there" look. The same in my low country community. Airbnb is just another short term way to make money in our short term culture in our short term economy. Nobody lives here anymore.

Are you sure about that? The few AirBNB units I've seen are decorated and maintained dramatically better than the average rental unit.

My sample size is small, but it also makes intuitive sense that they would be maintained better as they depend on visual appearance for income (and as this viewpoint predicts, hotels are generally nicer than apartment buildings).

Maybe owner-occupied buildings can beat AirBnBs, but is that the right comparison?

Agree! Perhaps the OP has his heuristic backward.

Eh, airbnb and rentals in general maybe, airbnb and rentals in desirable zips, maybe not. Airbnbs may look more depersonalized as well, though that's not exactly ray's claim (deterioration).

From what I've seen people can get twice as much as they could with rent, without all the regulatory hassle. It may be higher in some places. People are buying properties for this purpose, where they wouldn't if they were depending on rentals. I did work for a guy who works for the Canadian coast guard, four weeks on, four weeks off. He was renting via airbnb for the time he was gone. Worked very well.

If it is a problem it is exposing the catastrophic failure of municipal housing regulatory structures. So far few municipalities have responded well to the humiliation.

"I find that the increased rent burden falls most heavily on high-income, educated, and white renters..."

They keep using this word 'educated'. I don't think it means what these people think it means. If you mean 'went to school' then by all means. If you mean 'smart'...stop using it.

These 'high-income, educated, and white...' people being referred to are the same people that are paying $5-6 extra for grubhub or doordash and cook a meal maybe once a month. They're people who mire themselves in debt to get 'educated'. They're people who have said burden 'fall on them heavily' because they want the amenities they could've had staying at a nicer hotel + room service.

'high-income, educated, and white' retards. As Gordon Gecko said, "a fool and his money are lucky enough to get together in the first place." These people literally pay for the high-income privilege of being retarded. And btw I say this as one of these 'high-income' people.

Stop using that word.

Ok, I suspect the author means level of education by the word education, which seems reasonable. How are you feeling now?

How about highly credentialed?

Just call them cucks. It's what I do.

Its hard not to prefer tourists to inner city renters. Who wouldn't welcome a guest for a few nights or weeks who simply wants to take a break and see something new, or do a little short term business? Its hard to see preferring a bunch of unrooted medium term intruders who drive out the local working class on price, live in a hedonistic whirl of sensation (bars, clubs, restaurants, theatre, music), fully intending to decamp to a cheap suburb or provincial town once they tire of it. (Gentrification is not the term for it; not actually aspiring to form a multi-generation gentry at all).

Why do you think the author is using it to mean anything other than "got an education"? Everyone knows it doesn't mean smart.

Actually, I know that because I am an educated person.

I am educated, I want one of those Air Brushes and Baths.

Someone do continue to count ALL the costs, per favore.

Recent media accounts informed us of an Airbnb shoot-out at some California mansion (presumably, one not served by PG&E). At least five were killed, last I saw of the revised death count.

How many fatalities have occurred over the course of Airbnb's service career?

How do these user fatalities compare with those sustained by Uber and/or Lyft?

(KEEP counting all those relevant costs, O Academic Economists.)

LOL, good troll, though I don't usually associate trolling with your nym.

Bonus trivia: short-term housing in northern VA USA is in shortage, as I found out when I tried to get an Airbnb rental for a friend. The same is true for Manila, PH (also had a hard time finding an Airbnb). In both cases after a couple of weeks of frantic searching, housing was found, but it was not easy. Long live Airbnb! As a slumlord in the USA I don't mind, since it doesn't really compete against my properties. I also have rental properties in GR and PH, where in the former you can get a 1000 sq. ft marble floor, brick interior wall apartment, deluxe, for about 550 USD/month in a tony neighborhood in Athens. In the latter, you can get a livable 500 sq. ft concrete apartment in Caloocan (the slums of Manila) for about $100 a month. Location x3!

Why are you comparing ABNB to Uber of Lyft when the comparison we would be interested in is how many fatalities are at an Air BnBn vice at a normal hotel?

How many fatalities are at an Air BnB vice from Uber doesn't tell us anything about the 'social costs' of either of those services.

The chief social cost I considered was the number of fatalities resulting from use of these comparable services (the gig economy for transport, the gig economy for short-term bed/bath rentals).

Actual costs concerning security, police and medical emergencies, etc., seem legitimately incurred when patrons of either service wind up deceased as a consequence of using (or even aspiring to use) such a service.

What rates of homicide pertain to "the gig economy" writ large? Is security no concern whatsoever for all parties concerned? (I mean, before any violence breaks out.)

How do insurers deal with such lethal outcomes? (property insurers, health insurers, travel insurers)

But in respect to whether or not the gig economy is worse than what existed prior - which is what your thesis seems to be - you would need to compare it to the prior existing things that these gig economy companies are competing with.

AirBnB competes with hotels. So the useful question is 'how lethal is AirBnB compared to hotels'. And you'd want to break that down by type as fleabag 'rent-for-the-hour' hotels are more dangerous than 5 star resorts so you'd want to compare equivalent gig rentals.

If you tell me that AirBnB has . . . I don't know, 1 fatality for every 1000 units and that Uber has a fatality for every 1000 miles driven - those numbers aren't even similar enough to compare to each other and they don't tell you anything about how dangerous this alternative is compared to the status quo.

What we want to know is how dangerous ABnB is compared to hotels, how dangerous Uber is compared to taxis (or buses). Then we can tell if this alternative is worth the trade-offs. Not how dangerous ABnB is compared to Uber. Because those are for different purposes and there are different assumptions of risk involved.

"Is security no concern whatsoever for all parties concerned?"

I've never noticed security being a big concern at hotels either. No security guards, one clerk on duty overnight.

"How do insurers deal with such lethal outcomes?"

An interesting question, to be sure, but not a social issue. Not a social cost. That's a textbook definition of everything being contained between seller (insurer) and buyer(insuree). *You're* not being asked to subsidize anything in that particular relationship - even if there are other externalities associated with ABnB rentals that you have to deal with.

So Airbnb is basically a progressive tax?

I laughed.

Airbnb is basically a progressive tax. The issue is that it functions at the margins. The margins focus exclusively on cleaning and real estate law, and since revenue is the name of the game, go ahead and tax regressively.

+1. Their ad campaign can be: Stay with Airbnb and help combat white privilege!

The fact that tourist demand isn't reflected in local elections might be a problem. There could be 100 tourists living in one Airbnb rental over the course of a year, but the owner of the building still only gets one vote. The tourists are mostly not from the state and can't vote in local election.

Of course, that's precisely why rental cars and hotels are taxed so heavily. The people paying the tax aren't generally voters.

President Captain? Beware of geeks bearing gifs! I think President Captain Bolsanaro is a Trojan horse for Brazil.

No, he is not. He is the Odysseus who has outwitted the communist hordes which threatened to destroy Brazil

I think he is the Alcibiades of Brazil; a decadent military leader who wants to rule the country as a tyrant, and will eagerly sell out his countrymen to their enemies if he doesn't get his way.

Not at all. He is the Lycurgus of Brazil; a wise and noble leader who taught his people the ways of glory and who doesn't want power for power's sake.

All very odd: We are used to counting costs and benefits for government projects, we have so far not done so for private projects, leaving the net cost or benefit to the entrepreneur.

No, we leave the net cost or benefit to be decided by those who have the opportunity to patronize the entrepreneur and do so - or fail to do so.

References to the Eurypontid kings are apparently censored on this blog. Maybe he is more of a Pleistoanax.

I can assure you he is more of a Agiad king, like Leonidas I.

The article seems to assume that AirBnBs are from the same stock of housing that could be rented out long term. But a lot of AirBnbs are simply extra rooms or basements that would never be rented out long term. And there are entire apartments or houses that it is profitable to rent out via AirBnb but not long term.

The post posits a competition between two classes of renters.

But I wonder if there is a market for tourist Airbnb housing on urban campuses during the summer.

A college dorm, otherwise empty, full of tourists. Surely there must be empty dorms on college campuses during the summer.

Correct. And shrewd Universities build “conference “ and “convention” centres around these.

Two classes of tourist, really.

How about the costs associated with having a mass shooting at a halloween party for non-locals?

I, for one, look forward to serving our hyphenated overlords.

"I find that the increased rent burden falls most heavily on high-income, educated, and white renters, because they prefer housing and location amenities most desirable to tourists."

So, gentrification - episode 2? After old buildings have been renovated, it makes more sense to rent them to tourists than higher income locals.

Good observation! But we need a new word for this phenomenon of next-stage gentrification. A word for what happens when the gentry get pushed out by well-heeled temporary visitors. Cancunification?

Cancunification? Middle income Cancun fits well =) It's not expected that tourists will pay higher rent than locals in desirable locations of London or Zürich.

However, Cancun is a ~40 year old development. The rich just build new things as far away as possible from the urban center. No one is gentrifying lower income neighborhoods.

This seems like asking how much "loss" single renters "suffer" when roommates share an apartment or how much car owners "suffer" when bus riders bid against them for gasoline. How much do non-cyclists suffer when corporations "divert" resources towards producing bicycles to capture more profit? Who knew that gay couples imposed "losses" on straight couples by competing for wedding resources?

I didn't realize that I suffered losses every time anyone allocated resources towards serving some customer other than me.

I too found the explanation odd. There is a total amount of benefit (or loss?) from ABB compared to what? That benefit/loss is then shared among owners and users of ABB properties, taxpayers, and other owners and users of other properties. But how? It certainly does not explain why ABB is not popular in cities where it exists.

What does "mm" mean in "$178mm per annum"?

There are many reasons why rents are high in New York City.

One is geography: four of its five boroughs are islands, or are on islands, and this restricts transportation from outer areas.

But there's also the high regulatory burden in tearing down an existing, small building to build a new, larger one on the same site and, in general, a high and costly regulatory burden to build just about anything. Plus the high cost of construction in this union-friendly city.

When I think of Airbnb being a burden on others I tend to think of the nuisance value of living next to an Airbnb party house, but, if we're looking at monetized costs, how do these compare with the other contributors toward high rents in NYC?

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