The economics of home-sharing in New York City
It is no secret that renting a home in New York City is expensive.
However, the question that Bill de Blasio and his team is asking is this: Is home-sharing adding to the space-crunch in the Big Apple? In fact, many of the city’s council members believe it is.
As a result, the New York City Council has unanimously voted recently to “significantly restrict” Airbnb and other online home rental services.
According to local media, a City Hall spokeswoman has indicated that the new restrictions have the support of the mayor, who has made affordable housing one of his priorities. He is expected to sign the bill into law soon.
Data suggests that New York City is Airbnb’s largest domestic market.
And although it is illegal for an apartment to be rented out for less than 30 days unless the permanent tenant is residing in the apartment at the same time according to state law, home-sharing sites like Airbnb and HomeAway make it possible.
New disclosure requirements in the proposed bill will make it much easier for the city to enforce the state law.
According to experts, this could lead to many of the 50,000 units rented through Airbnb in the city coming off the market.
New York City has been suffering through an affordable housing crisis for years. Between 2011 and 2017, it lost nearly 183,000 affordable units of housing renting for less than US$1,000 – larger than the entire public housing stock.
According to data, affordable housing is increasingly hard to find, with vacancy rates for apartments renting for less than US$1,000 at 1.54 percent.
In fact, homelessness stands at a record high at this moment in time, with over 60,000 homeless people sleeping in shelters every night. Meanwhile, wages are stagnant and rents continue to climb in all five boroughs.
“The rising popularity of home-sharing websites such as Airbnb is adding to the problem. The trendy replacement for hotels and hostels in effect removes housing units from the overall supply – units that might otherwise be available to rent to New Yorkers looking to rent an apartment,” said a report by New York City Comptroller Scott M. Stringer.
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Does Airbnb need to play by the rules?
The most basic concept in the field of economics – supply and demand – says that, all else being equal, lowering supply will raise prices. And that’s what at play in New York.
However, Airbnb opposes the bill. It says that enacting it will hurt everyday New Yorkers who rent spare rooms in their apartments to make ends meet.
The truth is, if the bill is passed, hotels will benefit, tourists will suffer, and residents will suddenly have a better choice of apartments to rent from.