Short-term rental platforms such as Airbnb have been accused of exacerbating dire housing crises in places such as California. In response, Airbnb has argued that it provides homeowners and even renters with a way to make ends meet in an increasingly tough housing market in much of the US. They have even contended that they helped struggling tenants to withstand the 2008 recession. In recent years, cities with mounting housing crises have sought to regulate the practice of short term rentals. When San Francisco set up a requirement that hosts register with the city, Airbnb even sued the city saying the rule violated their free speech rights.
Housing prices and availability are becoming an increasingly serious problem in places like California, so the role that Airbnb plays is a weighty question with important implications. The company should work with jurisdictions to find policies that prevent misuse, rather than fighting regulations and misleading the public.
Housing availability is a statewide crisis in California, but perhaps nowhere exemplifies the dire nature of the problem like the San Francisco Bay area. According to the California Association of Realtors, the statewide median price of a single-family home rose 7.2 percent this year to $565,300, almost twice the national median price of $258,300. Across the nine counties of the Bay Area, however, prices increased 10.2 percent to $856,200, and in the city of San Francisco itself, the median price rose 9.7 percent to a whopping $1,380,000. Unsurprisingly, rents have also reached all-time highs and home ownership is at its lowest level since the 1940s. The crisis has even worsened greenhouse gas emissions, as employees at lower income levels are increasingly forced to live further and further from their place of work.
Of course, the root causes of this crisis go much deeper than Airbnb. At the heart of the problem is simply a lack of available housing that was allowed to reach epic proportions after decades of failing to keep up with population growth. Between 2003 and 2014, California projected it would need to build 1.5 million new homes to keep up, and ultimately failed to even build half that number. Legislators are finally beginning to act on this.
However, if Airbnb is contributing to a crisis that has made whole regions of California unlivable for working class families, further regulation is certainly in order. To what extent is this the case?
In her piece for the Guardian, Ruth Fowler discusses these issues from her perspective as an Airbnb host who is using homesharing to help pay rent.
Generally, Airbnb represents itself as an option for struggling tenants and owners to make it through difficult financial times. While this is certainly a Band-Aid for a bullet wound, it is not the core of the problem. The issue is the percentage of Airbnb’s revenue that comes from landlords or commercial property owners who own multiple properties as a business venture.
Short-term renting can be an extremely profitable option for property owners, enough so that some property owners choose to take units off of the housing market entirely. Fowler points out that even renting out a unit for just half a year (and leaving it vacant for the other half) can potentially bring in enough income to compete with a full-time tenant in high-demand areas, which are generally the same places that are in the midst of housing crises.
In some cases, individuals have even rented and furnished multiple properties only to offer them on Airbnb.
Some jurisdictions have already taken action to combat these practices. New York established a law making short-term rentals for longer than 30 days illegal, unless the owner is present to host the guests. Airbnb spent millions on a Super PAC to fight that plan, dropping their lawsuit only when the city agreed to prosecute hosts rather than Airbnb itself.
How much of Airbnb activity involves these owners or renters of multiple properties, and how much is genuine home-sharing? It’s hard to be certain. An independent report released last year showed that the company manipulated its public data on this question. According to the report, Airbnb had “misled the media and the public” by pulling 1000 listings from its New York City offerings on its website in November of 2015. The following December, the company released data indicating that 95 percent of hosts were following the city’s rules. It was not the first time the company had removed listings in response to accusations of illegal use.
However, one study by Pennsylvania State University’s hospitality school reported that in 2015, “full-time” hosts, or owners and renters running rental businesses, accounted for 22 percent of Airbnb revenue in San Francisco, totaling 44 million dollars. The study also found 1600 landlords were renting more than one property on Airbnb.
By taking actions that damage public trust in their data, Airbnb walks a dangerous line. Once that trust is lost, the company is more likely to face difficulties even when operating legitimately. Transparency is the only way forward to address the problem. Anything less ensures that these questions can’t be put to rest.
Ultimately, the problem with Airbnb is not the legitimate home-sharing, but rather the ways it can be taken advantage of by commercial interests and landlords. Instead of manipulating data, the company should work openly with policymakers to minimize this practice. In the long run, the company will benefit from preserving its reputation as having helped with the housing crisis, rather than having exacerbated it.