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New York: How has Airbnb changed the housing market?

The lodging and tourism company is distorting the housing market in the capital of the world

New York: How has Airbnb changed the housing market?

Leer en español: Nueva York: ¿Cómo Airbnb ha cambiado el mercado de vivienda?

According to a recent study, Airbnb is making rent prices rise and housing availability in New York decreases. A research group at McGill University in Canada analyzed Airbnb's activity in the world capital between 2014 and 2017, and the results are not favorable for New Yorkers.

According to the research findings, Airbnb has eliminated between 7,000 and 13,500 housing units from the long-term rental market in New York. As a result of the reduction in housing supply, the average long-term rental price has increased by 1.4% over the past three years, which implies an increase of $380 for the average tenant who rents an apartment this year.

In addition, the report states that two-thirds of Airbnb's revenues are likely to come from illegal ads. Since in most buildings in the city it is technically illegal to rent a full home for less than 30 days (according to New York State regulations), the researchers estimate that 45% of the Airbnb reserves in the state capital were illegally last year, which is equivalent to 66% of the profits generated through the platform.

On the other hand, the report indicates that there are 4,700 advertisements of private rooms that actually correspond to "ghost hotels", that is, units or complete buildings that become multiple advertisements of individual rooms. Although there may be different reasons to handle rent in this way, this is a new tactic used by commercial operators to avoid compliance with regulations and legal requirements.

In fact, commercial operators who control multiple listings of complete homes or large portfolios of private rooms for rent, account for about 12% of hosts on Airbnb, but obtain more than 28% of the profits in New York City.

In its beginnings, the concept of "sharing the house" (home sharing), was associated with the idea of ​​a family that occasionally rents an extra room or that perhaps rents his whole house while he is traveling. However, these types of practices do not necessarily correspond to the most significant proportion of rentals through Airbnb, nor are they the ones that generate the highest profits, according to figures provided by the New York study.

The researchers also found that the average owner of an apartment or house that is rented frequently on Airbnb earned 55% more than the average owner who rents long term in the same neighborhood last year.

Although the results are not generalizable, it is likely that in the long term Airbnb will produce similar effects in other capitals and cities of the world. According to information published by Bloomberg, Latin America was the fastest growing market for Airbnb in 2017. Some of the places where reserves have increased dramatically are the Brazilian cities of Matinhos (209%), Guarapari (205%) and Ubatuba (181%).

Another Airbnb market in Latin America that is growing rapidly is the Mexican one. In this case, what is most striking are the measures the company has taken to avoid problems that it has faced in other places such as New York. According to Bloomberg, Airbnb agreed to provide 3% of the revenue generated by their hosts' reservations in Mexico City to the city government. In addition, it has been said that the company would be negotiating similar agreements with the governments of Buenos Aires and Sao Paulo.

The problems Airbnb faces are similar to the disputes that have arisen in relation to Uber. While these platforms receive great attention by being leaders in their respective sectors, this business model is proliferating and governments need to establish effective legal frameworks.

 

Latin American Post | Paula Bautista

Translated from "Nueva York: ¿Cómo Airbnb ha cambiado el mercado de vivienda?"

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