Are Airbnbs driving up your rent?
Image by Airbnb Office used with permission.
Airbnb listings, especially “commercial listings” by hosts who own multiple properties, mean fewer homes people can live in for the long term. That can cause city-wide ripple-effects on rent increases, according to a new study from the DC Working Families Party.
Just as ride-hailing services like Uber and Lyft have left cities unsure of how to update their regulations to fit the way economic realities have changed Airbnb, Flipkey, and other “short-term rental” (STR) services have introduced difficult debates around how such listings impact local housing markets.
Image by ShareBetter DC used with permission.
These commercial listings circumvent DC law in a number of ways. Sixty-seven percent of Airbnb listings in the District are “entire-home” rentals; these violate the DC Zoning Code, which requires that “the [rental] dwelling shall be owned and occupied as the principal residence of the operator.”
Many of these commercial listings also take a building with multiple units in it (like an apartment building) and convert all or most it into a short-term rental, effectively creating de facto hotels without proper business licensing. For instance, the majority of an Adams Morgan apartment building, or the entirety of a 21-unit building in Columbia Heights, were just discovered as being used for short-term rentals as opposed to residential leases.
Airbnb has often played it close to the chest when it comes to making data publicly available. Thus, the DC Working Families Party report had to rely on automated “scrapes” of data from public Airbnb listings. Data scraping is a method where an automated script will regularly pull publicly available data from a website — in this case, Airbnb’s listings at a neighborhood level, and assemble a larger dataset. Airbnb has claimed that data gathered this way contradicts its own (usually private) data.
Below is a table the DC Working Families Party put together using the data it found, along with rental opportunities in the same neighborhoods. Because of the fluctuations in available rentals over time, there are considerable variations in the data, but the snapshot it provides is still illuminating.
This table from the DC Working Families report shows the number of commercial Airbnb listings by neighborhood as a percentage of vacant units, from a data snapshot taken in October 2016 (adjacent months were excluded because of seasonal variations). Margins of error in columns two and three are the result of Census Bureau approximations of vacant units. Image by ShareBetter DC used with permission.
The report argues that the more than 3,000 commercial listings have put upward pressure on an already tight rental market in DC. What does that mean for rental prices? That’s a little complicated.
Basic economics tell us that when the supply of something in high demand, like housing in DC, goes down, the price goes up; it stands to reason that if units go off the housing market, housing becomes more expensive. But the question is one of magnitude. Exact estimates haven’t been done for STRs’ impact on DC rents, but one analysis in New York found that Airbnb raised rents an average of about $70 in the most high-demand neighborhoods.
While Airbnb units constitute only a small percentage of DC’s housing stock, city-wide estimates — like those that Airbnb often cites in its defense — mask potentially significant impacts in some of the city’s most rapidly-changing neighborhoods.
For instance, in October of last year, there were at least eight neighborhoods in DC where 15% or more of the vacant units were used as commercial Airbnb listings.
Zooming in, the study found that in the U Street Corridor, there were 102 illegal AirBnb commercial listings, and over that same period of time there were between 88 and 210 vacant rental units. That means that illegal commercial listings made up anywhere from 40.6% and 96.4% of the rental options during the period of the study. The “% Rent Increase” column can’t be attributed solely to short-term rentals, but it does suggest that there’s a strong correlation between places with soaring rents and high numbers of illegal short-term rentals.
This can create a ripple effect, where those displaced by short-term rentals must look for housing elsewhere in the city, driving up prices even in neighborhoods that don’t have many Airbnb listings.
While the exact impact of short-term rentals like Airbnb will continue to be a topic of research and discussion, reports like this one are giving advocates reason to demand closer scrutiny of these services and their impact on affordable housing.
Already, DC Councilmember Kenyan McDuffie has introduced legislation that would more closely regulate such rental properties to eliminate some of the loopholes or lapses in enforcement that have been utilized by commercial listings.