New study shows effects of Airbnb on cities

Nashville 2019

New research compares the economic costs and benefits of Airbnb.  

They’re popping up in cities around the world, and they’re not always welcome. Airbnb was founded in 2008 and makes money by charging guests and hosts for short-term rental stays in private homes or apartments booked through the Airbnb website.  

It started as a prototype in San Francisco and is now operating in hundreds of cities around the world, including Nashville.  

The Airbnb website lists Economic Impacts of Home Sharing in cities as people who stay in Airbnb’s get to ‘live like locals,” and staying longer and spending more in diverse neighborhoods throughout the city, and it helps hosts “make ends meet.”  

But according to research from the Economic Policy Institute, the economic effects or Airbnb aren’t all positive. 

“One reason why we don’t just allow, we have zoning and why some places are zoned for residential areas and some are zoned for hotels and some for businesses it’s the idea that you know sometimes you don’t want to live around businesses and around a bunch of tourists and if Airbnb just comes in and just sort of ignores those zoning distinctions and says nope, if you’re in town in New Orleans for Mardi Gras you don’t have to stay at a hotel, just go stay in a residential neighborhood, that’s maybe not great for the neighbors or the long term residents there,” said Josh Bivens with the Economic Policy Institute. 

And we’re told in many areas where homeowners are supposed to have a permit to list their property on Airbnb, they don’t, and they’re able to just fly under the radar. 

Bivens said, “It’s all very murky. I would say one big problem is that Airbnb tends to not pay much attention to are we, or are we not allowed to have units rented in this particular building. They basically don’t ask don’t tell. Like if I list on Airbnb, I think Airbnb is like I’m going to assume that’s a legal place for a tourist to rent a room. It’s not always the case and I don’t think Airbnb really wants to know if that’s allowed or not. They would say, “oh, we just post it on a website. It’s not our obligation to tell the person listing their apartment whether or not this is zoned correctly, and I think that’s part of the problem is essentially just trying to ignore regulations by punting the obligation to adhere to them to somebody else.” 

Airbnbs can push up real estate prices if you’re trying to buy a home or rent one. 

“We have a housing affordability crisis in a lot of cities in America and you might not think Airbnb is big enough to sort of add significantly to that but when you’ve already got cities like San Francisco and New York that have really fast growing rents and all, even if you just take a couple percentage points of apartments off the long-term rental market and dedicate them toward Airbnb, you’re actually going to put some serious upward price pressure on long-term rentals and it’s already showing up in the data. And rents are a big part of people’s budget and so this is not a small deal. It doesn’t take much of a movement of houses away from the long-term market to the tourist market to push up rents in a way that really starts to hit people’s pocketbooks,” Bivens told News 2. 

And some people operating an Airbnb are doing it in areas that are zoned residential. In addition to the zoning requirements, some city officials have said Airbnb owners need a business license to operate, but many times that doesn’t happen. According to the Economic Policy Institute, this is when city leaders need to step in– but where should they start? 
“It’s a good question. I think the first place to start, the most obvious place is on sort of the tax side of this. At the moment, so you’ve got a lot of cities that rely on hotel taxes pretty heavily and it makes sense. Taxing out of towners to spend on your own residents, that’s something cities are going to want to do. Airbnb tends to enter into voluntary tax agreements as cities, and it’s sort of they tell the city, “we’ll tell you how many people booked in New York City under Airbnb and then we’ll give you appropriate taxes.” But not many other businesses are allowed to do that. I’m not to just on a voluntary basis if I’m a grocery store say, no, I’ll tell you how many groceries I sold and then I’ll pay you the appropriate taxes. And so, I think one thing cities can do is say, nope, taxes are not voluntary. You need to hand over all your data,” Bivens told News 2. 

Right now, the people behind Airbnb are not required to share data.  

You can read the full story about the economic costs and benefits of Airbnb here.

You can read more about the positive effects of Airbnb here.

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