When Your Neighbors are Tourists: The Problem with AirBnB

What Should be Done About AirBnB?



AirBnB

If you’ve done any amount of travel recently, you've undoubtedly heard of AirBnB. That’s the "hotel" service where you rent out a room or apartment from someone who actually lives in the city. You get a fresh look at a city, usually in great locations downtown, without having to either stay in a chain hotel or, if you are a poor college student studying abroad for a semester, slumming it in a hostel room with 12 other people. It’s great right? You get a taste of the real city and a local gets to make money instead of some big hotel corporation? What could go wrong?

Well, as it turns out, not everyone is so pleased with the business model. Since the short-term rental company was founded in 2008, the popularity of it with locals in a highly visited area renting out an apartment for a weekend has exploded. And with good reason. A quick search of three cities often visited for vacation - San Diego, New York, and Washington, DC - all revealed per-night prices at AirBnB accommodations ranging from $45 at the low end in San Diego, to $250 a night in New York City at the high end. Why bother renting out to a single tenant for $1,600 a month, the average price in San Diego, when you could make twice that, or more, renting out the room each weekend to whichever flavor of tourist is in town that week?

And this is where the trouble starts. Property owners want to make money from their property, which is understandable. But what about the locals in cities such as San Diego, DC, or New York City who are trying to find affordable housing?

The problem is even worse in some European cities, including Barcelona, as locals are repeatedly finding it harder and harder to find a place to rent. Why? Well, it’s a mix of factors: rough economy, lack of well-paying jobs for young people, high youth unemployment. But it also can’t be denied that part of the problem is property owners are continuing to hold onto their property and just rent it out to tourists instead of leasing it to locals who want to live in the city.

In cities that are already notoriously expensive to live in and were already going through housing difficulties, such as San Francisco and New York City, it's becoming almost impossible to find affordable housing in neighborhoods where rent used to be cheap because property owners are able to make three times as much renting out the rooms by the night. Now, the staunch capitalists among you will surely be saying “Why is that any of AirBnB’s problem? If the market is allowing them to rent space, and people will pay for those rooms, then it is the responsibility of the city to fix the problem.” And that’s partly the case. Cities have a responsibility to build new housing units as the population grows. But capitalism only really works if both sides, the market, and the government, play fair. And that’s what AirBnB currently isn’t doing.

Yes, in fact, laws exist that cover the length of time a person can rent an apartment. Cities including New York, San Francisco, and Paris all have laws on the books stating that people can’t rent an apartment for a period of less than 30 days. With these laws in place, estimates place the number of illegal offerings on AirBnB for these cities somewhere around 70 to 75 percent. The problem is that the law is only as good as the enforcement. And since there’s no enforcement, there’s no reason for AirBnB to not just continue on, business as usual.

There is a real threat that locals, people who have lived in an area all their lives, won’t be able to afford housing. No one is saying that AirBnB should be shut down, but there should be some kind of agreement between the company and the governments of cities most affected that allows people to rent out their rooms while still maintaining some semblance of what really makes a city a city: the people who call it home.

[Updated]