On Monday afternoon, Bill Lipton, state director of the Working Families Party, sent out an email blast to the organizations New York City supporters on the subject of Airbnb. Lipton is urging Working Families Party members to “Stand with Attorney General [Eric] Schneiderman and tell Airbnb: Stop contributing to the crisis of affordable housing in NYC” and add their name to a ‘support list’.
In his letter, Lipton alleges that Airbnb is hurting the average working family by driving up the cost of rent. In what he calls the “Airbnb fee”, Mr. Lipton argues “that thousands of affordable apartments are taken off the market for everyday New Yorkers and shifted into a shadow economy, secretly driving up the cost of your own housing” by “users who abuse the site by buying up or renting dozens of New York City apartments and illegally operating them as nightly hotels.”
The Attorney General believes that about fifty percent of Airbnb listings operate illegally. In a data extraction of Airbnb’s website performed by Skift, they estimate that this is closer to two thirds. It is up to New York State courts to determine the validity of this claim, the hearing over the 15,000 Airbnb customer records requested in a subpoena by the Attorney General is still in progress. Regardless of the outcome, Airbnb has been extremely diligent in researching their larger impact on urban apartment markets.
Airbnb requested that a study about San Fransisco and New York rental markets be done by Ken Rosen, a housing expert and professor at U.C. Berkeley. The study concluded that “the short-term rental industry is having little effect on urban apartment markets”, finding “global gateway cities such as New York benefits from a consistent level of tenant demand created by the diverse local economics as well as a relatively larger share of the population that rents rather than owns because of the high cost of housing.”
Airbnb has also determined sixty two percent of Airbnb hosts in New York “said Airbnb helped them stay in their homes” by supplementing their income. The average Airbnb host in New York earns $7,530 per year. Betabeat calculated exactly how long a way that $7,530 can go. As of February 2014, the average Manhattan rent is $3,932 per month. Brooklyn is slightly lower, at $3,178 per month. According to most recently available Census information, the average median household income in Manhattan is $68,370, Brooklyn comes in at $45,215. Manhattan residents spend an average $47,184 per year on rent, sixty nine percent of their annual median income. For Brooklyn, average yearly rent is $38,136, eighty four percent of annual median income.
This means the additional income from Airbnb can offset almost two months of rent for the average New Yorker, driving down the overall cost of rent to $3,305 for Manhattanittes and $2,551 for Brooklyn dwellers. The extra Airbnb income allows New Yorkers to reduce their income spent on rent to fifty eight percent in Manhattan and sixty seven percent in Brooklyn. The general rule for what is considered affordable is still much lower: rent and utilities should be no more than thirty percent of a household’s income. New York is so far beyond that average, and clearly experiencing a housing shortage crisis. Airbnb supplemental income is arguably helping drive down the brutal income percentage by around ten points.
Betabeat reached out to the Working Families Party for a follow up on the letter. Khan Shoieb, New York communications director for the Working Families Party said, “The face of Airbnb’s PR campaign–the struggling New Yorker renting out a spare room–belies the more prevalent story of their multibillion dollar business, where many hosts run illegal hotels by buying up dozens of apartments and taking them off the market. The result–less housing and higher rents for all New Yorkers–leaves Airbnb’s worst hosts squarely in the position of contributing to the affordability crisis in this city. It’s these hosts that Attorney General Schneiderman is after, folks who Airbnb itself calls ‘bad actors.’”
The ‘bad actors’ Mr. Shoieb refers to have been removed from Airbnb’s website. They found 2,000 listings which qualified for permanent removal, composed of multi-unit renters.
Though the Working Families Party claims Airbnb is perpetuating the housing crisis, New York was experiencing massive rent increases before Airbnb came onto the scene. Airbnb started becoming a major player in the New York short term rental game in 2011—at that point, New York rents were already well over the recommended thirty percent of annual median income. Additionally, short term zoning laws were already enforced by then. There was a time at which the city’s apartment market did not have almost 20,000 Airbnb listings and did not have major influence from illegal hotels, yet rent did not decrease. The New York housing market’s prices are driven by far more than the ‘bad actors’ of Airbnb.