> For each 1 percent of all residential units in a neighborhood listed on Airbnb, rents in that neighborhood went up 1.58 percent, Stringer said. The estimated $616 million impact is for 2016 alone.
I doubt these factors are statistically independent -- the most popular neighborhoods for tourists and yuppies have always seen prices grow faster relative to the overall metro, and more popular/high-growth/expensive neighborhoods will naturally attract more Airbnb hosts to take advantage of their location.
In any case, assuming people travel the same amount, it is zero-sum (Airbnb saved NYC visitors 616 million dollars and also transferred some percentage of tourism income from hotels to a broader collection of residents). However, I think Airbnb enables people to travel more (I certainly travel more with the incentives of cheap, reliable Airbnb lodging), so we need more data to determine whether the lower prices actually incentivize a sufficiently high increase in tourism to be a net positive for tourist-mecca economies.
Even if it comes out to a net negative to tourism-based economies and it increases costs for local residents, I'm curious what the Airbnb witch-hunt crowd is proposing. Limit tourism / make it harder and more expensive to travel? Reinstate the hotel cartels?
Don't 'limit' tourism but yes, don't allow tourists to get price breaks at the expense of residents that rent in a city.
As it stands property owners and tourists are coming out on top. Property owners can now easily make more money renting short term than long term, this raises property prices (because, hey, i can buy that house and make a bunch of money renting it on AirBnB) while also reducing the rental housing stock (because houses that would have been rented to long term renters are now on AirBnB). So now, as a renter, I pay more for rent because I'm competing for fewer houses AND it's going to cost me more money to get into my first house. So I save less money per month because more goes to rent and I have to save up more money to put a down payment down on a house.
Now, sure, how big this effect is is up for debate but I think it's naive to assume it doesn't exist. I expect cities with housing crises that also don't rely too heavily on tourist revenue to start regulating short term rentals aggressively to combat this effect (this has already happened in many places).
Sure, if you're a tourist town and most properties are second/vacation homes then this is less of an issue but in growing cities where renters are already barely getting by this is going to continue coming to a head. Alas, homeowners are more likely to get out and vote and have more directly measurable skin in the game vs a renter who might be more transient and less aware of the effects that are conspiring to squeeze them out.
Where would those tourists stay if they didn't use AirBnB? I can see where the residents may get priced out of a certain area because short term rental drives up the price, but the increase demand and higher prices should stimulate new construction. Now, if height restrictions are causing no new construction to be built, then perhaps the city should ease those so more housing can be built, driving the prices down. The 'character' of Manhattan isn't going to be ruined by higher building heights.
In hotels? Further away? It'd be more expensive or more inconvenient so fewer would come, but residents wouldn't be bearing the negative externalities as much as they are today.
I live in SF so while I wholeheartedly agree that more building should help solve the problem the reality (here at least) is that existing homeowners have strong incentives to oppose rezoning and new development as it might hurt their home's values. Many people have overextended to be able to buy here that anything that could cause dips in prices is vehemently opposed. I'll admit SF has a broader set of issues at play here but AirBnB just further strains an already strained situation.
There's certainly an argument to be made that such freedom benefits all but the poorest (those who neither travel nor own real estate), but is restricting this convenient, popular, voluntary service a reasonable way to approach the much broader income inequality problems? That's a stretch. Seems to me like it's a natural consequence of a more connected world, and like you mentioned in another comment, there are more significant issues such as zoning and nimbyism that should be ground-zero for real estate prices in most cities.
In fact, I'd go so far as to say that Airbnb increases equality by democratizing travel for the lower middle class in a way that was inaccessible before, at the biggest expense to hotel owners. I'd also like to see numbers on real estate usage in NY (defined as the percentage of each unit occupied per unit time) before and after Airbnb -- I would wager that living quarters are being used more efficiently as a result. And of course how much people travel now vs. before (which I think could be considered a quality-of-life metric).
But what about the things that aren't true because of AirBnB's presence? Maybe prices for short term stays went down, tourism went up, and there is more tax revenue that can be used to improve the city for the renters.
If we only look at one part of the picture we may miss that an overall trend is different. Is it really beneficial to talk about how many died because they were wearing a seat belt without also considering how many who lived for the same reason?
Sure, allowing residential property to be used for short-term rental drives regular residential rents up and short-term rents down (forcing, over time, more residential proerties to be used for short-term rental to the extent possible), narrowing the gap between short-term and long-term rentals. It makes things less expensive for travellers and more expensive for non-travellers.
Perhaps the problem then, is that the city slaps a huge tax burden on travelers who choose to stay in hotels? Last time I stayed in a hotel in NYC, taxes were about 25% of the total cost.
I'm only one datapoint, but every AirBnB I've stayed in merely reduced my expenses while traveling. It didn't encourage me to change my habits while I was there. If anything, it just kept more money in my pocket for discretionary spending once I got home.
But if it is cheaper, more people will do it. And since you still spent the same amount of taxable money, you didn't contribute to a loss. So if it is cheaper, how many more will travel?
From that: < The majority of our hosts are sharing the home in which they live, not removing permanent housing from the market. In fact, as NYU researchers recently found, in order for someone to make as much money from an Airbnb guest as from a long-term tenant, they would have to share a home for 216 nights a year in New York City — more than triple the number of nights that a typical listing is shared. >
They do not address the possibility that the atypical minority (which presumably is apartments used exclusively for AirBNB and not otherwise occupied by a tenant) might cause the $626M rent increase illustrated by the study. This paragraph seems to be a diversionary tactic, "No, look only at these facts".
> They do not address the possibility that the atypical minority (which presumably is apartments used exclusively for AirBNB and not otherwise occupied by a tenant) might cause the $626M rent increase illustrated by the study. This paragraph seems to be a diversionary tactic, "No, look only at these facts".
IIRC, NYC passed a law against this and Airbnb has bee cracking down on those types of listings. I think SF has a similar law as well.
I also wonder if NYC now charges any occupancy taxes in Airbnb like SF does. If so, the revenue collected should also be weighed against any increases in rent. I also wish the article had actual calculated how much of a per month rent increase the $600m figure resulted in. In a city as big as NYC, I don't know if 600m is a big deal or not.
Unfortunately, this law is only marginally enforceable without AirBnB's wholehearted collaboration, and it's not in AirBnB's interest to do much more than pay lip service to enforcement.
I agree that there'd need to be an independent research body to get into more depth, otherwise everyone will be sharing based on biased perspectives or shallow data.
The odd thing is that AirBnB’s entire value proposition to hosts is that it increases realizable income from the property they control and make available through AirBnB; if true, especially in the presence of supply constraints, this has to increase market clearing prices.
They are in a position where what they need hosts to believe is directly at odds with what they want policymakers (including people voting directly on policy or for politicians) to believe.
The spin is preposterous. They should just say that that's a natural outcome of better real estate utilization and that the city needs to figure out how to build more affordable housing.
Easy there with terms like “better real estate utilization”, which could be conflated with “more efficient rent seeking at the expense of housing consumers”.
The end goal is not always maximum profit extraction. NYC is served best by balancing the needs of both long term and short term renters, while ensuring investors reasonable compensation/rates of return on capital invested for services provided.
This is not what people traditionally think of as "rent-seeking." Rent-seeking behavior is doing something to get more money without providing any corresponding value. AirBnb hosts do provide value -- just not to the people who live in the neighborhood. But it is fine to argue that, based on their willingness to pay more, out of town visitors provide better utilization of the housing resource.
TL;DR: Extracting rents from things you own by providing economic value to a customer is not "rent-seeking."
Exactly. Banning people from renting out their place on Airbnb is actually what's rent-seeking.
It means you get to enjoy lower rent, but at the expense of the unit's full economic potential being utilized.
In economic terms, if a unit can fetch a higher rent being rented short term, then it provides more economic value as a short term rental, and laws preventing that reduce economic utility.
Short-term, <90 day accomodations are not "housing", and never have been considered as such. That's why they're in a completely different regulatory category and always have been.
In a democracy it makes sense that a city would prioritize the needs of the citizens who live and vote there over short-termers and people looking to make a quick buck.
No, that is not the definition of rent seeking. The definition of rent seeking is:
"In economics and in public-choice theory, rent-seeking involves seeking to increase one's share of existing wealth without creating new wealth."
An example of rent-seeking would be lobbying against the construction of new housing to inflate the value of one's own home. A non-example of rent-seeking would be renting your house out to someone else. More from Wikipedia/economics 101:
"Rent-seeking is distinguished in theory from profit-seeking, in which entities seek to extract value by engaging in mutually beneficial transactions . . ." such as a transaction between a property owner and someone seeking to rent that property for temporary use.
There's more than one definition of the term. I do agree that the definition and examples you are using are common.
"In economics and in public-choice theory, rent-seeking involves seeking to increase one's share of existing wealth without creating new wealth." - Wikipedia
I would say that applies to making a profit off of property one owns by charging people to use it.
I would consider all passive investing rent seeking. Or at the very least a kind of rent.
Just a quote from an article that sort of illustrates the attitude I have towards it:
> One disturbing implication of Thomas Piketty’s new book, Capital, is that the American economy is slipping into a form of “rentier” capitalism, in which passive income from wealth, increasingly in the form of inherited fortunes, is supplanting dynamism, hard work and innovation. - https://qz.com/196575/to-get-rich-forget-entrepreneurship-an...
There's also some links there. I do use passive investing, but I do consider it a kind of rent and I think society might be better off with less of it.
The Landlord Rental Complex dictates that non-rental properties will be bought and turned into rentals, and they will constantly test increases in price - putting a constant negative pressure on the quality of life of everyone else; this leads to urban sprawl as well, passing a time cost over to people who need to travel further distances. E.g. Building more affordable housing isn't really as deep as the conversation needs to go.
So I have never seen anyone address the flip side of why there is a shortage of hotel space (hence airBNB).
The reality of the situation is that hotels make terrible neighbors, particularly terrible hallway neighbors. Most people do not want to live next to temporary accommodations, and if they were going to they would rather have a separate building designated for the purpose. It is completely valid for a city to be in favor of its citizens, and not for a few short-term visitors and someone looking to make a quick buck on their apartment.
I ponder, are there more rooms getting listed that weren’t before (increasing supply and dropping price) or are existing rooms on the market becoming more marketable (increasing price directly with a fixed supply as you suggest). “Both” yes but ponder more with me
> I ponder, are there more rooms getting listed that weren’t before
Certainly, for short-term rentals.
Not for residential, long-term habitation. AirBnB drives long-term and short-term rental prices closer together, which is good for travellers and bad for non-travellers.
Likewise, something to wonder, is many reviews will - at least in the past - would reference that they never met the "owner" of the listing. I know some cities are trying to crack down on this, however how hard is it to setup a company that has a structure where a real person gets listed as owner (and perhaps gets paid $100 a month for using their identity) and the company manages everything, acting as "real person?"
> AirBnB arguably increases supply of people in beds through more efficient utilization.
That's not supply (which is a measure of what is on offer to be sold), it's market clearing quantity. And, yes, AirBnB increases the supply and market clearing quantity (and decreases average price) of short-term occupancy by transferring units already purchased or rented in the long-term market to be rented the short-term market (which drives up demand and market clearing price in the long-term market.)
Yes, but it will also increase occupants and the experience of occupants.
If you put a fancy restaurant that sells gourmet popcorn, you raise the price of popcorn in general, and you can also increase the amount of people that eat popcorn.
They are radically different. Corn is the textbook example of a commodity while land is the textbook example of a positional good.
You could sell any realistic amount of gourmet popcorn without affecting the supply of corn nor the price of other popcorn products, while selling housing affects the supply of land and the desirability of that housing stock.
It will increase mobility of occupants, but it probably won't increase occupants (which is equivalent to decreasing homelessness) much, though the decrease in short-term rental pricing could reduce transitional homelessness (but the increase in long-term residential prices could also increase the more durable kind of homelessness)
> increase occupants (which is equivalent to decreasing homelessness)
I will not increase permanent local occupants, it will increase number of occupants in general. Thats because airbnb's are out of towners using under-utilized housing stock.
Airbnb's increase homelessness, but its not about market efficiency, its about use of land. Any office building will also increase homelessness.
Two problems mentioned in the rebuttal: the study counts every Airbnb unit as a rental taken permanently off the market, and the dataset counts every blocked-off calendar date as a night the unit was booked. Both of those are obvious over-counting. A study that doesn't even try to account for those is pretty obviously political.
Airbnb should have posted estimates of how much this over-counting could distort the data, because it sounds like a lot. $616M is one of those numbers that sounds high but in context probably isn't, so it wouldn't surprise me if those two distortions wiped out the number, or at least cut it to below headline worthy.
On the surface you can't assume either way if a listing on Airbnb means the unit is permanently off the market or not, likewise with counting or not counting every blocked-off calendar date: if it's not a period of 4-8-12 months blocked off, then it's likely not being rented to a long-term renter; the lister perhaps even perhaps booked those block-off calendar dates through a different service, or did the transaction not through/off of Airbnb.
Whether it's $100MM or $616M - it's a sign that there are external costs that that city and society must shoulder because of the higher prices people can charge with shorter-term rentals, primarily to non-locals who may or may not be staying or moving to the city.
Of course you can't assume either way, which is exactly what they did, which means they over-counted, inflating the numbers in the direction of their conclusion.
$68 a month is easily 5% of income afters taxes for many people. In a country where we already spend an absurdly high percentage of our income on rent, this doesn't seem trivial.
This is NYC in the report. That's about $1360 post-tax which is about 32K a year which is a bit above minimum wage in NYC (around 12-13/hr). I respectfully suggest not living in the most expensive neighborhoods in New York City if minimum wage jobs are what you're forced to endure.
It's only 5% if you have an average yearly after-tax income of ~16,000 if I did my math right. The median income for NYC is ~50,000.
I would also imagine that most of the people for whom $68/month is a lot of money also don't generally live in neighborhoods that are ones with lots of Airbnb rentals, and are probably some of the least effected by this.
Numerically you're right, but you're showing a distinction without a difference. In the kinds of neighborhoods where Airbnb has a foothold (gentrified, desirable, centrally located) rents are already so high that an extra $68 doesn't make a damn bit of difference. I live in one of these neighborhoods, and I speak for absolutely everyone who can afford to pay the rent I'm paying: we don't care about the additional $68.
Those for whom $68 really is 5% of net monthly income don't live in Airbnb-infested neighborhoods, and thus are even less affected by the impact Airbnb has on rental prices.
I don't mean to sound insensitive to the plight of those for whom NYC is too expensive. I think such people need to be helped, but spending even an iota of thought on Airbnb is a waste of time: its impact is concentrated in neighborhoods that are already too far out of the reach of rent-challenged New Yorkers. And this isn't the case because of Airbnb.
You are insisting on the $68 a month figure based on dividing the total prchange in prices over all rentals then insisting the effect is actually almost entirely concentrated in a small segment of neighborhoods which means that we ought not logically to divide it between all parties but insisting on using the smaller figure derived from doing so.
This is bad math based on already uncertain math.
In a pathological case where we have a rich neighborhood consisting of 3 owners and 7 renters transformed into 3 owners 3 renters and 4 airbnbs not only would the price increase presumably by much more than 68 for the remaining renters the other renters would seek rent elsewhere increasing demand and therefore price. Given more buyers than sellers they would push someone out presumably to a still less desirable neighborhood where they would displace someone else.
Your neighborhood isn't a market unto itself and you can't pretend changes their don't have pervasive effects on the rest of the market and decreasing supply MUST increase price throughout the market.
Ah, I didn't realize OP was arguing the $68/mo was insignificant. My mistake.
I see $68/mo as a decent chunk of change (that's enough to pay for a new computer every two years or so) so that's probably where the confusion stems from.
Some quick googling says that the average apartment rent in Manhattan is ~$4000/month, so at that sort of rate, $64 is only about a 2% increase. The 100/year is barely noticeable to most people when you're already paying nearly 50,000/year.
It's a tangible amount, but if you're paid enough to live in that area, it's likely not a huge burden. And again, this is an change that is likely disproportionately raising rents in desirable and trendy neighborhoods that are more expensive than that already and likely seeing natural rent growth of more than $68.
A brief description of how they attempted to control for other factors:
> We also control for demographic and economic changes in neighborhood level by including average household income (in log form), population (in log form), and the shares of college-educated and employed residents in the neighborhood. We also included year and neighborhood-level fixed effects (dummy) variables to control for otherwise uncontrolled-for trends and neighborhood characteristics.
I can't dl the report, but based on your quote, I'd say there's nothing about this 'study' supports their conclusion. It's fine that they control for some stuff, but it's absurd attribute the remaining price effects to AirBnB.
Be careful what you wish for, especially if wishing for profit over anyone's well being or if wishing for disruption over sustainability.
I hypothesize an antidote to capitalism could be collaboratively learning how to sustainably contribute to all life's needs together through science, art, and love.
I'm very interested in picking apart this hypothesis. If you (the person reading this) disagree, would you be willing to specify the words you disagree with and/or specific examples explaining why you disagree? Same for if you agree <3
I'm fairly certain well-being comes from needs being met. Life has no need for profit or money. Those are constructs that require believing what you said in order to be true.
Anyone have access to the report? I don't have readily available access to a terminal but I'd love to read the study. Any kind of analysis such as this one relies heavily on _ceteris_ _paribus_ --assume everything else is the same. Of course that's a poor assumption to make, so most studies fiddle with the assumption and try to tease out the effects of one market (short-term rentals, a la AirBnB) on another (resident friendly long-term rentals).
> Any kind of analysis such as this one relies heavily on _ceteris_ _paribus_ --assume everything else is the same
That's not the assumption made by this report.
Of course, predicting alternate futures when humans are in play is always a non-trivial task, but they did put some effort toward controlling for the obvious stuff:
"A summary of the regression results is presented in Table 1. We find that as the share of units listed on Airbnb goes up by one percentage point, rental rates in the neighborhood go up by 1.58 percent, after controlling for neighborhood level demographic and economic changes. The result is statistically significant at the 1-percent level. Coefficients of other control variables including household income, population and share of college graduates are positive and statistically significant at 1-percent level. Employment rate is not statistically different from zero."
The finding is somewhat interesting on its own but I don't really see why it matters all that much. No one likes paying higher rent and I can see rent increases as being particularly hard on the poor, so that's bad. But I'm not sure interfering with these micro-leases is the best solution. It makes more sense to me to focus on how we can expedite construction of safe, quality, affordable housing. That would help address the AirBnB inflation problem as well as the basic housing crisis. What's more, we'd retain the benefits of micro-leasing.
We can totally crush people turning rental properties into unsanctioned hotels while allowing people to occasionally rent out a bedroom and work on other solutions to affordable housing.
Just fine renter and airbnb 100x what they are liable to earn in the former case and shockingly such a case will trivially go away.
Those caught with their pants down because they invested a bunch of money in illegal hotels can sell and roll that money into another illegal enterprise of their choosing that is less trivial to regulate out of existence.
Is there really much evidence that the majority of Airbnb properties would otherwise be traditional "12 month lease" rental apartments if it were not for Airbnb.
I mean, I'm sure there are a few, but if I'm a landlord, why would I give up having a stable tenant paying market rate rent for 12 months at a time for essentially managing a hotel room?
Sure, the 'rent per day' is going to be a lot better with the hotel room model, but it seems like an entirely different business to manage say 30-100 property rentals per year rather than 1.
People have always subletted their apartments when they are out of town -- I'm guessing a lot of the Airbnb rentals are just those traditional sublets showing up in an easy to quantify form.
I'm open minded to the possibility I'm wrong -- I don't have the data on the history of the properties showing up on Airbnb -- but it seems like the profile for the landlord/apartment that ends up on Airbnb is a bit different from the ones that show up on StreetEasy with 12 month leases.
> but if I'm a landlord, why would I give up having a stable tenant paying market rate rent for 12 months at a time for essentially managing a hotel room.
As of today, there is a lot less paperwork involved, and also the tenant has fewer rights. If you rent for 12 months, and they stop paying you, it could take you many months to get rid of that person, and you'd never get the money back. You also have to find renters and negotiate leases yourself.
With AirBnB, they take care of the finding and negotiating part, and if you manage to get a popular spot, you'll make far more money with the short term rentals, even accounting for AirBnBs cut and any service providers you might need to maintain the place.
Fair enough, although there are plenty of realtors happy to help landlords vet and negotiate w tenants for 12 month leases (and then charge the tenant a fee for their services).
I still see more risk/work in the AirBnb model, but I can see where some landlords (esp. local ones w small numbers of apartments) could find it worth it.
I'm guessing a lot of the Airbnb rentals are just those traditional sublets showing up in an easy to quantify form.
This not true for NYC. There's always demand for rooms in NYC with quick turnover. There's always real estate speculators with empty rooms.
In the end, you really answered your own question:
the 'rent per day' is going to be a lot better with the hotel room model
You're right, it is a different business to manage, and maybe you're after less risk/more passive income as a landlord, but you can't make that assumption for everyone. Plus, AirBNB takes care of most of the paperwork.
I'm not from NYC, not even from the US, but here are some reasons for locals to do that:
1) More money. Yes, stability is nice and all, and managing the reservations is annoying and/or expensive, but if the difference is big, people will choose it.
2) Renter-friendly laws. Here, if that stable leaser stops paying, it's a pain in the ass to get them out - you have to sue them in small claims court, and then have to go to another court to get an eviction order, which finally lets you kick them out. An Airbnb guest is only there for a few days, and after that they become a trespasser.
Rent stabilization rules may also prevent you from raising them as much as you could (though this is more a problem for longer than 12 month leases).
3) Fun. Some people I know really enjoy interacting with the guests and showing them around town :)
I think in general, it's very difficult if not impossible to realistically explore the counterfactual of "what would this property be if not for Airbnb".
However, in my neighborhood long term 12 month lease rentals most definitely seem to be being turned into Airbnb rentals. I live in Tahoe, so this isn't necessarily going to generalize to non-tourist areas. In the last five years there has been a steady conversion -- I personally know of four in my immediate neighborhood. (As in, they were long term rentals converted to Airbnb. I know the people that were kicked out of the long term rentals) When we'd recruit new people to Tahoe there used to be numerous options for local housing, things have gotten so bad that the company I work for opted to buy a condo to provide temporary housing for new recruits while they look for more permanent accommodations.
An additional (also anecdotal) data point: our realtor told us that investors looking to convert homes into Airbnb are very active right now.
On the plus side (potentially, not everybody agrees) Airbnb also seems to have converted a number of second homes that were previously unoccupied most of the year.
Tahoe has a surprising number of jurisdictions! I'm on the Nevada side, so I don't have personal experience with the SLT enforcement.
Here there seems to be a fair amount of teeth gnashing about airbnb -- there are clearly more people in the neighborhoods and rentals for locals are now hard to find. But the homeowners think it's raising property values and are kind of happy that if they ever leave Tahoe there is now a pretty straitforward way to hold on to their property. The end result is not much happening.
The SLT ordinance is addressing the what I think is the major fear for many -- that a nearby house will become an unbearable party house. I think pretty much all of the Tahoe jurisdictions have moved quickly to ensure that doesn't happen. In our neighborhood, I've been told the sheriff responds in minutes to a noise complaint, and that the visit results in fairly draconian fines to the property owner.
Maybe, but the regression they use to argue this is pretty bonkers...they need to assume that once they control for income, population, education, and employment, the coefficient on the Airbnb share captures the causal effect of Airbnb on prices. But obviously AirBnB share will be correlated with many other things that make a neighborhood nice, which will also be correlated with prices. So this just says that desirable neighborhoods are desirable.
Note that the regression is on the differences, y_t - y_t-1 not the levels, just y_t.
So the argument is more subtle, that the "change" in AirBnB share is correlated with changes in rents. So level effects such as being a nice neighborhood are accounted for.
Having said that, a large change in AirBnB share is probably still related to unobservables related to factors that would increase rent. E.g changes in hipness of a neighborhood unaccounted for by changes in demographics. Therefore the $616M figure is biased upwards, though I bet in reality still a large number.
Residents are not renters. The number of renters in NYC was evidently around 5.4 million in 2016.
Even so, not every renter is a separate rental unit; dividing the figure by the number of rental units would be more useful since it would indicate the impact on the price of rent.
The problem is still that your $109 is per renting person. A family of five in one dwelling is five renters: but they are not paying 5 x $109 more on their rent because of AirBNB!
The denominator has to be the number of rental dwellings; then we have a better idea what the impact is on rental prices, on average. Still, it must be dependent on area, and the size of the place and rent amount. Not everyone pays some sort of "flat AirBNB tax" across the board.
And anyway, AirBNB allows more people to visit NYC, so it's good for tourism. That has to be counted as money coming in. It's just not going into the pockets of some traditional hoteliers.
I am curious, doesn’t the legality of roommates also drive up rents? It seems like if roommates weren’t a thing, it would drive rents down simply because people wouldn’t be able to afford apartments in many cases without a roommate.
I am not suggesting a ban on roommates of course, but it does seem like there are a large number of variables that affect rent prices. We could argue that AirBnB constricts long term housing supply while roommates constrict long term housing supply for single or family renters as well.
If a one bedroom goes for $4000 and there are two roommates, that means the price the market would support for a single person is $2000. So without roommates, the market would have to adjust to the price people were able to pay: $2000. But then again, that could also restrict supply since there are more people competing for a finite supply.
My point is that while it’s convenient to blame AirBnB — the truth is far more complex. We also have to consider the effects of the extra income earned by owners — that income goes to buying things or investing, which, it could be argued, benefits the economy. There is also the question of how many visitors to New York actually can now afford to visit New York because of wider housing availability — if we drive up lodging rates, that’s less money coming into the city. If I have to spend $250 for a hotel vs. $150 for an AirBnB, that means I can buy more pizza, thus putting more money into pizza shops and supporting those workers. Additionally, if a hotel is $250, maybe I don’t visit at all, which would result in 0 economic benefit to the city.
The economics of this aren’t as sound-byte friendly as many might think.
If we want to be fair, we should also address how much additional rent New Yorkers pay due to rent-control and the housing illiquidity that promotes.
If the hotel industry is so concerned, then perhaps they ought to reevaluate their efficiency and pricing and reconsider their years and years of charging $10 for a bottle of water. Perhaps the city could also reconsider the occupancy taxes, sales taxes and all the other fees cities love to stick tourists with.
Tourists already pay sales taxes when they buy a meal. They buy products and experiences which generate significant economic activity, jobs and all the tax revenue that creates. But for some reason, cities see tourists as a piggy bank rather than the engine of economic activity they are.
Prohibiting roommates would drive the rent per person up and the rent per unit down. That would make the city less affordable to both renters and landlords.
The problem with AirBnB is that it benefits landlords and tourists at the expense of renters by driving the rent per unit up, the short term rent per person down and the long-term rent per unit up.
Wait a second. The entire population of New York state is 20 million. How could they possibly have paid an extra $616 million? Each person in New York paid an extra $30 million?
If a few thousand airbnb units cost renters that much money, imagine how much renters would save if more and taller buildings were allowed to be built!
Yes, much of the city is limited to four or five stories or otherwise restricted [1]. Keep in mind also that much of NYC is not just the financial district of Manhattan.
In addition to actual height restrictions, neighborhood associations also fight tooth and nail to prevent new development and to limit the height of new development when they can't.
Yeah, my neighborhood in Brooklyn is mostly 2 to 3 story building. Many of them were multi-family homes until the 1980's, and are now single family homes.
There are height caps based on FAR(floor area ratio) that vary by zoning. The super talls are quite new and due to some changes to FAR restriction and trading of air rights.
There are a few historic districts (read: well-off NIMBYs) such as Park Slope where height is strictly capped.
In Manhattan the caps are generally designed to ensure that at least some light and air still reaches the street (before they were imposed, buildings were build to their full height to the edges of lots, and contributed to the city being very dark.
Much of Manhattan is actually somewhat low-rise (3-5 stories). In those areas, developers can buy "air rights" from neighboring low-rise buildings if they want to build taller on a nearby lot.
Accidentally, in most cases. It's the parking requirements that do it. For every X number of units, you need to guarantee Y parking spaces. Building more parking lots is poor real estate utilization and underground parking is prohibitively expensive. This is why developers build hotels instead of housing when the neighborhood can't absorb more parking (which is nearly always).
There's already a major building boom going on in NYC at the moment!
11+ super-talls (300m+) and 40+ talls (150m+) are under construction at the moment, and more than that has been completed in just the last few years. Massive amounts of rental units and co-ops are coming online in UWS (Riverside Center), Hudson Yards in Mid-Town etc [1]. And prices have come noticeably down as a result, you can also get more concessions than ever. I just recently received 3.5 months free on a 14 month contract in a brand new building.
Median rent was down ~4% in 2017 [1], some areas like UWS, Hell's Kitchen, LIC are down ~10%. Those are also incidentally the places with the most new construction. The whole Hunter's Point area in LIC has been completely transformed in just a few years from industrial to residental. 3K in Hunter's Point will now get you a new construction with all the bells and whistles and a few free months.
Indeed, we should be increasing housing supply further.
But even at a record breaking construction pace, we're building <20K units annually (that's 50 400-unit buildings) while population is increasing by >100K annually. And that doesn't even include the people who would move here if it were less unaffordable.
Zoning laws can only control what developers choose to build so much.
If you look at the rezoned mixed use districts like the garment & flower district and the lower east side, they've been flooded with hotel development (in some cases clusters of hotels on the same block) because it's more profitable.
It's important to look under the surface of what this is saying. This boils down to an extra 77 dollars per person per year, so basically this amounts to an extra 10 dollars per month for any given unit.
If you divide by number of people in Manhattan (8.538 million) you get roughly $72.14 per person, but this isn't really accurate since not everyone in Manhattan rents- maybe you're a kid, or you own a co-op, or you're homeless.
You'd really need to divide the value by the number of rented units in NYC to figure out the average raise in rents per apartment, and even then that won't draw a perfect picture because many people live with roommates who contribute to rent.
The exact same true is for hotels, only worse. ANYTHING that uses up space that is not used for housing is by definition increasing rent for everyone. Hotels have a much bigger effect than Airnb because you'll find hotels in all of the most expensive and densely populated cities. If you replaced all hotels with regular rental units, think about how much rents would go down.
To be more accurate, the report should say: NYC Renters paid extra thanks to ANYTHING that takes up space that is not a rental unit, especially hotels.
Exactly. I wonder too if they are accounting for increased tax revenue due to more travelers visiting the city thanks to AirBnb. Honestly I've been able to travel a lot more because of AirBnb, and how affordable it is compared to a hotel.
At this point, prices are starting to stabilize with hotels in some of the bigger cities like NYC and SF, but still. I prefer the idea of freeing up under-utilized space for dynamic purposes as opposed to a fixed number of hotel location.
Hotels are taxed differently. They also tend to be somewhat denser than apartments, since they typically include only bedroom and bathroom, not kitchen or living room. And people are often willing to put up with a smaller hotel room than bedroom, since they only need space for a few days' worth of stuff there.
Unfortunately, Airbnb is probably the only way a middle-class family can earn money on investment properties. No one in their right mind would rent a $1,000,000 condo for (1% rule) $10,000.
The rule is a residential rental is only worth the risk or has a good return if the property can be rented at about 1% of the value per month or more (e.g. a $100k home should rent for $1k/mo). I generally try to get an annual cap rate of 9% or more (1%/mo less expenses).
Not smaller, just different areas. It's fairly easy to achieve that in the Midwest and larger urban areas in the southeast. I typically got ~0.8%/mo or more.
I'd go so far as to say that if single family residential is your strategy it's better to take the multi-million dollar investment in a single home in the Bay and make one in 5-7 (or more) homes elsewhere. The appreciation is drastically lower but the cap rates are amazing (much higher cash flow) and the risk is spread out. Of course, with that kind of investment it's better to go multi-family or commercial anyway.
If you have a million dollar condo in addition to your primary residence then you aren't middle class by any common sense definition of the word middle.
Repeating this cliche is not a counterargument to a regression analysis. If you have specific covariants that you think better explain their results, present them. Otherwise, "correlation does not imply cause" is little more than a lowbrow dismissal dressed in a labcoat.
This article is totally worthless without some way to gauge what $616M actually is... I have a VERY hard time believing in NYC that's anything but "piss in the wind" compared to total amount spent on rent.
Too many articles come out with a "shocking number" that doesn't mean anything except to those who don't know the scale.
According to [1], there are 2,146,892 occupied rental apartments in NYC. So this works out to an average of $287 per rental per year. Hardly "piss in the wind".
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[ 3.0 ms ] story [ 220 ms ] threadIn any case, assuming people travel the same amount, it is zero-sum (Airbnb saved NYC visitors 616 million dollars and also transferred some percentage of tourism income from hotels to a broader collection of residents). However, I think Airbnb enables people to travel more (I certainly travel more with the incentives of cheap, reliable Airbnb lodging), so we need more data to determine whether the lower prices actually incentivize a sufficiently high increase in tourism to be a net positive for tourist-mecca economies.
Even if it comes out to a net negative to tourism-based economies and it increases costs for local residents, I'm curious what the Airbnb witch-hunt crowd is proposing. Limit tourism / make it harder and more expensive to travel? Reinstate the hotel cartels?
As it stands property owners and tourists are coming out on top. Property owners can now easily make more money renting short term than long term, this raises property prices (because, hey, i can buy that house and make a bunch of money renting it on AirBnB) while also reducing the rental housing stock (because houses that would have been rented to long term renters are now on AirBnB). So now, as a renter, I pay more for rent because I'm competing for fewer houses AND it's going to cost me more money to get into my first house. So I save less money per month because more goes to rent and I have to save up more money to put a down payment down on a house.
Now, sure, how big this effect is is up for debate but I think it's naive to assume it doesn't exist. I expect cities with housing crises that also don't rely too heavily on tourist revenue to start regulating short term rentals aggressively to combat this effect (this has already happened in many places).
Sure, if you're a tourist town and most properties are second/vacation homes then this is less of an issue but in growing cities where renters are already barely getting by this is going to continue coming to a head. Alas, homeowners are more likely to get out and vote and have more directly measurable skin in the game vs a renter who might be more transient and less aware of the effects that are conspiring to squeeze them out.
I live in SF so while I wholeheartedly agree that more building should help solve the problem the reality (here at least) is that existing homeowners have strong incentives to oppose rezoning and new development as it might hurt their home's values. Many people have overextended to be able to buy here that anything that could cause dips in prices is vehemently opposed. I'll admit SF has a broader set of issues at play here but AirBnB just further strains an already strained situation.
In fact, I'd go so far as to say that Airbnb increases equality by democratizing travel for the lower middle class in a way that was inaccessible before, at the biggest expense to hotel owners. I'd also like to see numbers on real estate usage in NY (defined as the percentage of each unit occupied per unit time) before and after Airbnb -- I would wager that living quarters are being used more efficiently as a result. And of course how much people travel now vs. before (which I think could be considered a quality-of-life metric).
If we only look at one part of the picture we may miss that an overall trend is different. Is it really beneficial to talk about how many died because they were wearing a seat belt without also considering how many who lived for the same reason?
Sure, allowing residential property to be used for short-term rental drives regular residential rents up and short-term rents down (forcing, over time, more residential proerties to be used for short-term rental to the extent possible), narrowing the gap between short-term and long-term rentals. It makes things less expensive for travellers and more expensive for non-travellers.
Did Airbnb publish what these wrong facts and substantive issues are?
They do not address the possibility that the atypical minority (which presumably is apartments used exclusively for AirBNB and not otherwise occupied by a tenant) might cause the $626M rent increase illustrated by the study. This paragraph seems to be a diversionary tactic, "No, look only at these facts".
IIRC, NYC passed a law against this and Airbnb has bee cracking down on those types of listings. I think SF has a similar law as well.
I also wonder if NYC now charges any occupancy taxes in Airbnb like SF does. If so, the revenue collected should also be weighed against any increases in rent. I also wish the article had actual calculated how much of a per month rent increase the $600m figure resulted in. In a city as big as NYC, I don't know if 600m is a big deal or not.
https://www.airbnbcitizen.com/airbnb-new-york-and-housing/
They are in a position where what they need hosts to believe is directly at odds with what they want policymakers (including people voting directly on policy or for politicians) to believe.
The end goal is not always maximum profit extraction. NYC is served best by balancing the needs of both long term and short term renters, while ensuring investors reasonable compensation/rates of return on capital invested for services provided.
TL;DR: Extracting rents from things you own by providing economic value to a customer is not "rent-seeking."
It means you get to enjoy lower rent, but at the expense of the unit's full economic potential being utilized.
In economic terms, if a unit can fetch a higher rent being rented short term, then it provides more economic value as a short term rental, and laws preventing that reduce economic utility.
In a democracy it makes sense that a city would prioritize the needs of the citizens who live and vote there over short-termers and people looking to make a quick buck.
You can argue the pros and cons or rent-seeking or of Airbnb, but "rent-seeking" clearly covers Airbnb.
"In economics and in public-choice theory, rent-seeking involves seeking to increase one's share of existing wealth without creating new wealth."
An example of rent-seeking would be lobbying against the construction of new housing to inflate the value of one's own home. A non-example of rent-seeking would be renting your house out to someone else. More from Wikipedia/economics 101:
"Rent-seeking is distinguished in theory from profit-seeking, in which entities seek to extract value by engaging in mutually beneficial transactions . . ." such as a transaction between a property owner and someone seeking to rent that property for temporary use.
"In economics and in public-choice theory, rent-seeking involves seeking to increase one's share of existing wealth without creating new wealth." - Wikipedia
I would say that applies to making a profit off of property one owns by charging people to use it.
Just a quote from an article that sort of illustrates the attitude I have towards it:
> One disturbing implication of Thomas Piketty’s new book, Capital, is that the American economy is slipping into a form of “rentier” capitalism, in which passive income from wealth, increasingly in the form of inherited fortunes, is supplanting dynamism, hard work and innovation. - https://qz.com/196575/to-get-rich-forget-entrepreneurship-an...
Apparently I'm not the only person with this attitude, although this poster was down-voted: https://news.ycombinator.com/item?id=13151809
There's also some links there. I do use passive investing, but I do consider it a kind of rent and I think society might be better off with less of it.
The reality of the situation is that hotels make terrible neighbors, particularly terrible hallway neighbors. Most people do not want to live next to temporary accommodations, and if they were going to they would rather have a separate building designated for the purpose. It is completely valid for a city to be in favor of its citizens, and not for a few short-term visitors and someone looking to make a quick buck on their apartment.
I ponder I ponder
I bet it depends on the city
Certainly, for short-term rentals.
Not for residential, long-term habitation. AirBnB drives long-term and short-term rental prices closer together, which is good for travellers and bad for non-travellers.
AirBnB arguably increases supply of people in beds through more efficient utilization.
That's not supply (which is a measure of what is on offer to be sold), it's market clearing quantity. And, yes, AirBnB increases the supply and market clearing quantity (and decreases average price) of short-term occupancy by transferring units already purchased or rented in the long-term market to be rented the short-term market (which drives up demand and market clearing price in the long-term market.)
If you put a fancy restaurant that sells gourmet popcorn, you raise the price of popcorn in general, and you can also increase the amount of people that eat popcorn.
You could sell any realistic amount of gourmet popcorn without affecting the supply of corn nor the price of other popcorn products, while selling housing affects the supply of land and the desirability of that housing stock.
It will increase mobility of occupants, but it probably won't increase occupants (which is equivalent to decreasing homelessness) much, though the decrease in short-term rental pricing could reduce transitional homelessness (but the increase in long-term residential prices could also increase the more durable kind of homelessness)
I will not increase permanent local occupants, it will increase number of occupants in general. Thats because airbnb's are out of towners using under-utilized housing stock.
Airbnb's increase homelessness, but its not about market efficiency, its about use of land. Any office building will also increase homelessness.
https://www.airbnbcitizen.com/airbnb-new-york-and-housing/
Airbnb should have posted estimates of how much this over-counting could distort the data, because it sounds like a lot. $616M is one of those numbers that sounds high but in context probably isn't, so it wouldn't surprise me if those two distortions wiped out the number, or at least cut it to below headline worthy.
Whether it's $100MM or $616M - it's a sign that there are external costs that that city and society must shoulder because of the higher prices people can charge with shorter-term rentals, primarily to non-locals who may or may not be staying or moving to the city.
Alright.
I would also imagine that most of the people for whom $68/month is a lot of money also don't generally live in neighborhoods that are ones with lots of Airbnb rentals, and are probably some of the least effected by this.
Those for whom $68 really is 5% of net monthly income don't live in Airbnb-infested neighborhoods, and thus are even less affected by the impact Airbnb has on rental prices.
I don't mean to sound insensitive to the plight of those for whom NYC is too expensive. I think such people need to be helped, but spending even an iota of thought on Airbnb is a waste of time: its impact is concentrated in neighborhoods that are already too far out of the reach of rent-challenged New Yorkers. And this isn't the case because of Airbnb.
This is bad math based on already uncertain math.
In a pathological case where we have a rich neighborhood consisting of 3 owners and 7 renters transformed into 3 owners 3 renters and 4 airbnbs not only would the price increase presumably by much more than 68 for the remaining renters the other renters would seek rent elsewhere increasing demand and therefore price. Given more buyers than sellers they would push someone out presumably to a still less desirable neighborhood where they would displace someone else.
Your neighborhood isn't a market unto itself and you can't pretend changes their don't have pervasive effects on the rest of the market and decreasing supply MUST increase price throughout the market.
Then my point is even stronger: this doesn't matter!
I see $68/mo as a decent chunk of change (that's enough to pay for a new computer every two years or so) so that's probably where the confusion stems from.
It's a tangible amount, but if you're paid enough to live in that area, it's likely not a huge burden. And again, this is an change that is likely disproportionately raising rents in desirable and trendy neighborhoods that are more expensive than that already and likely seeing natural rent growth of more than $68.
A brief description of how they attempted to control for other factors:
> We also control for demographic and economic changes in neighborhood level by including average household income (in log form), population (in log form), and the shares of college-educated and employed residents in the neighborhood. We also included year and neighborhood-level fixed effects (dummy) variables to control for otherwise uncontrolled-for trends and neighborhood characteristics.
I hypothesize an antidote to capitalism could be collaboratively learning how to sustainably contribute to all life's needs together through science, art, and love.
I'm very interested in picking apart this hypothesis. If you (the person reading this) disagree, would you be willing to specify the words you disagree with and/or specific examples explaining why you disagree? Same for if you agree <3
> Any kind of analysis such as this one relies heavily on _ceteris_ _paribus_ --assume everything else is the same
That's not the assumption made by this report.
Of course, predicting alternate futures when humans are in play is always a non-trivial task, but they did put some effort toward controlling for the obvious stuff:
"A summary of the regression results is presented in Table 1. We find that as the share of units listed on Airbnb goes up by one percentage point, rental rates in the neighborhood go up by 1.58 percent, after controlling for neighborhood level demographic and economic changes. The result is statistically significant at the 1-percent level. Coefficients of other control variables including household income, population and share of college graduates are positive and statistically significant at 1-percent level. Employment rate is not statistically different from zero."
Just fine renter and airbnb 100x what they are liable to earn in the former case and shockingly such a case will trivially go away.
Those caught with their pants down because they invested a bunch of money in illegal hotels can sell and roll that money into another illegal enterprise of their choosing that is less trivial to regulate out of existence.
I mean, I'm sure there are a few, but if I'm a landlord, why would I give up having a stable tenant paying market rate rent for 12 months at a time for essentially managing a hotel room?
Sure, the 'rent per day' is going to be a lot better with the hotel room model, but it seems like an entirely different business to manage say 30-100 property rentals per year rather than 1.
People have always subletted their apartments when they are out of town -- I'm guessing a lot of the Airbnb rentals are just those traditional sublets showing up in an easy to quantify form.
I'm open minded to the possibility I'm wrong -- I don't have the data on the history of the properties showing up on Airbnb -- but it seems like the profile for the landlord/apartment that ends up on Airbnb is a bit different from the ones that show up on StreetEasy with 12 month leases.
As of today, there is a lot less paperwork involved, and also the tenant has fewer rights. If you rent for 12 months, and they stop paying you, it could take you many months to get rid of that person, and you'd never get the money back. You also have to find renters and negotiate leases yourself.
With AirBnB, they take care of the finding and negotiating part, and if you manage to get a popular spot, you'll make far more money with the short term rentals, even accounting for AirBnBs cut and any service providers you might need to maintain the place.
I still see more risk/work in the AirBnb model, but I can see where some landlords (esp. local ones w small numbers of apartments) could find it worth it.
This not true for NYC. There's always demand for rooms in NYC with quick turnover. There's always real estate speculators with empty rooms.
In the end, you really answered your own question:
the 'rent per day' is going to be a lot better with the hotel room model
You're right, it is a different business to manage, and maybe you're after less risk/more passive income as a landlord, but you can't make that assumption for everyone. Plus, AirBNB takes care of most of the paperwork.
1) More money. Yes, stability is nice and all, and managing the reservations is annoying and/or expensive, but if the difference is big, people will choose it.
2) Renter-friendly laws. Here, if that stable leaser stops paying, it's a pain in the ass to get them out - you have to sue them in small claims court, and then have to go to another court to get an eviction order, which finally lets you kick them out. An Airbnb guest is only there for a few days, and after that they become a trespasser.
Rent stabilization rules may also prevent you from raising them as much as you could (though this is more a problem for longer than 12 month leases).
3) Fun. Some people I know really enjoy interacting with the guests and showing them around town :)
However, in my neighborhood long term 12 month lease rentals most definitely seem to be being turned into Airbnb rentals. I live in Tahoe, so this isn't necessarily going to generalize to non-tourist areas. In the last five years there has been a steady conversion -- I personally know of four in my immediate neighborhood. (As in, they were long term rentals converted to Airbnb. I know the people that were kicked out of the long term rentals) When we'd recruit new people to Tahoe there used to be numerous options for local housing, things have gotten so bad that the company I work for opted to buy a condo to provide temporary housing for new recruits while they look for more permanent accommodations.
An additional (also anecdotal) data point: our realtor told us that investors looking to convert homes into Airbnb are very active right now.
On the plus side (potentially, not everybody agrees) Airbnb also seems to have converted a number of second homes that were previously unoccupied most of the year.
https://www.sfgate.com/travel/article/Study-Tahoe-s-Airbnb-l...
Here there seems to be a fair amount of teeth gnashing about airbnb -- there are clearly more people in the neighborhoods and rentals for locals are now hard to find. But the homeowners think it's raising property values and are kind of happy that if they ever leave Tahoe there is now a pretty straitforward way to hold on to their property. The end result is not much happening.
The SLT ordinance is addressing the what I think is the major fear for many -- that a nearby house will become an unbearable party house. I think pretty much all of the Tahoe jurisdictions have moved quickly to ensure that doesn't happen. In our neighborhood, I've been told the sheriff responds in minutes to a noise complaint, and that the visit results in fairly draconian fines to the property owner.
So the argument is more subtle, that the "change" in AirBnB share is correlated with changes in rents. So level effects such as being a nice neighborhood are accounted for.
Having said that, a large change in AirBnB share is probably still related to unobservables related to factors that would increase rent. E.g changes in hipness of a neighborhood unaccounted for by changes in demographics. Therefore the $616M figure is biased upwards, though I bet in reality still a large number.
Even so, not every renter is a separate rental unit; dividing the figure by the number of rental units would be more useful since it would indicate the impact on the price of rent.
https://www.citylab.com/equity/2015/06/new-york-is-a-city-of...
https://www1.nyc.gov/site/planning/data-maps/nyc-population/...
> Approximately two-thirds of dwelling units in New York are renter-occupied, over twice the national average.
Ok, not insignificant, but the order of magnitude is roughly correct. I'll update the computed figure.
The denominator has to be the number of rental dwellings; then we have a better idea what the impact is on rental prices, on average. Still, it must be dependent on area, and the size of the place and rent amount. Not everyone pays some sort of "flat AirBNB tax" across the board.
I am not suggesting a ban on roommates of course, but it does seem like there are a large number of variables that affect rent prices. We could argue that AirBnB constricts long term housing supply while roommates constrict long term housing supply for single or family renters as well.
If a one bedroom goes for $4000 and there are two roommates, that means the price the market would support for a single person is $2000. So without roommates, the market would have to adjust to the price people were able to pay: $2000. But then again, that could also restrict supply since there are more people competing for a finite supply.
My point is that while it’s convenient to blame AirBnB — the truth is far more complex. We also have to consider the effects of the extra income earned by owners — that income goes to buying things or investing, which, it could be argued, benefits the economy. There is also the question of how many visitors to New York actually can now afford to visit New York because of wider housing availability — if we drive up lodging rates, that’s less money coming into the city. If I have to spend $250 for a hotel vs. $150 for an AirBnB, that means I can buy more pizza, thus putting more money into pizza shops and supporting those workers. Additionally, if a hotel is $250, maybe I don’t visit at all, which would result in 0 economic benefit to the city.
The economics of this aren’t as sound-byte friendly as many might think.
If we want to be fair, we should also address how much additional rent New Yorkers pay due to rent-control and the housing illiquidity that promotes.
If the hotel industry is so concerned, then perhaps they ought to reevaluate their efficiency and pricing and reconsider their years and years of charging $10 for a bottle of water. Perhaps the city could also reconsider the occupancy taxes, sales taxes and all the other fees cities love to stick tourists with.
Tourists already pay sales taxes when they buy a meal. They buy products and experiences which generate significant economic activity, jobs and all the tax revenue that creates. But for some reason, cities see tourists as a piggy bank rather than the engine of economic activity they are.
The problem with AirBnB is that it benefits landlords and tourists at the expense of renters by driving the rent per unit up, the short term rent per person down and the long-term rent per unit up.
In addition to actual height restrictions, neighborhood associations also fight tooth and nail to prevent new development and to limit the height of new development when they can't.
[1] https://www1.nyc.gov/site/planning/zoning/districts-tools/re...
There are a few historic districts (read: well-off NIMBYs) such as Park Slope where height is strictly capped.
In Manhattan the caps are generally designed to ensure that at least some light and air still reaches the street (before they were imposed, buildings were build to their full height to the edges of lots, and contributed to the city being very dark.
Much of Manhattan is actually somewhat low-rise (3-5 stories). In those areas, developers can buy "air rights" from neighboring low-rise buildings if they want to build taller on a nearby lot.
11+ super-talls (300m+) and 40+ talls (150m+) are under construction at the moment, and more than that has been completed in just the last few years. Massive amounts of rental units and co-ops are coming online in UWS (Riverside Center), Hudson Yards in Mid-Town etc [1]. And prices have come noticeably down as a result, you can also get more concessions than ever. I just recently received 3.5 months free on a 14 month contract in a brand new building.
[1] https://ny.curbed.com/maps/nyc-new-development-hudson-yards-...
https://ny.curbed.com/2018/1/24/16925172/nyc-rent-2017-decre...
But even at a record breaking construction pace, we're building <20K units annually (that's 50 400-unit buildings) while population is increasing by >100K annually. And that doesn't even include the people who would move here if it were less unaffordable.
If you look at the rezoned mixed use districts like the garment & flower district and the lower east side, they've been flooded with hotel development (in some cases clusters of hotels on the same block) because it's more profitable.
If you divide by number of people in Manhattan (8.538 million) you get roughly $72.14 per person, but this isn't really accurate since not everyone in Manhattan rents- maybe you're a kid, or you own a co-op, or you're homeless.
You'd really need to divide the value by the number of rented units in NYC to figure out the average raise in rents per apartment, and even then that won't draw a perfect picture because many people live with roommates who contribute to rent.
I started picking out values from here: https://www1.nyc.gov/assets/rentguidelinesboard/pdf/17HSR.pd...
I don't know the nature of rent control that well in NYC so I'm just going to take a few approaches:
If we assume only unregulated apartments picked up the burden, the cost per unit is 725.80.
If we toss in the "other regulated" apartments, 546.42.
If we toss in all rent-stabilized (pre and post 46), it's 368.96.
All rented units together? $363.
To be more accurate, the report should say: NYC Renters paid extra thanks to ANYTHING that takes up space that is not a rental unit, especially hotels.
At this point, prices are starting to stabilize with hotels in some of the bigger cities like NYC and SF, but still. I prefer the idea of freeing up under-utilized space for dynamic purposes as opposed to a fixed number of hotel location.
So a million dollar condo would be 50K a year, or about $4200/mo, which is exactly in line with current nyc rents.
On the other hand, all the properties I manage do 0.5% per year and have all been profitable, not even including the appreciation on the property.
I'd go so far as to say that if single family residential is your strategy it's better to take the multi-million dollar investment in a single home in the Bay and make one in 5-7 (or more) homes elsewhere. The appreciation is drastically lower but the cap rates are amazing (much higher cash flow) and the risk is spread out. Of course, with that kind of investment it's better to go multi-family or commercial anyway.
Correlation does not imply causation[1]. Looks to me this is one of the studies that I would label as "shallow" or "problematic".
https://en.wikipedia.org/wiki/Correlation_does_not_imply_cau...
Repeating this cliche is not a counterargument to a regression analysis. If you have specific covariants that you think better explain their results, present them. Otherwise, "correlation does not imply cause" is little more than a lowbrow dismissal dressed in a labcoat.
Too many articles come out with a "shocking number" that doesn't mean anything except to those who don't know the scale.
This is mostly a click-bait article and study.
[1] - https://www.nakedapartments.com/guides/nyc/renting-in-new-yo...
The average rent for an NYC apartment per month is $3375 (https://www.rentjungle.com/average-rent-in-new-york-rent-tre...) totaling: $40,500 per year.
So that $287 increase is less than 0.7% per year.